April 9, 2018
ET Bureau - 9 April, 2018: Meru Cabs is looking to sharpen focus on B2B clients, in an overhaul it hopes will help shore up its revenue in a market hogged by two heavily-funded players — Ola and Uber.
Meru Cabs, which started operations by serving B2C and B2B clients, is looking to double down on its B2B offering, which includes corporate employee transportation, car rentals and airport contracts, and grow that as the primary business line. "The best viable option for us is to focus on B2B. We are looking at a three-year time frame where the model will shift from a B2C business to a B2B business," Neeraj Gupta, founder of Meru Cabs, told ET. "Eventually, it will keep on growing much faster than B2C for us."
Meru's B2B business accounts for 40-45% of its revenues and Gupta is looking to increase that share to 70-75% in the next three years. The decision to change focus comes after loss of market share which has seen Meru's revenues and ride volumes dip by 30-40% in the past few years.
Meru Cabs clocked Rs 322.6 crore in revenues in FY16, growing 11% from a year ago, as per documents filed with the Registrar of Companies and sourced from business research platform Tofler.
The firm has not yet filed its financial returns for FY17, but industry watchers say the company's revenues have fallen both in FY17 and FY18. With the B2C segment's needs being completely taken care of by Ola and Uber, experts say capturing the B2B market will help Meru not just survive but also grant it competitive advantage.
"Beyond brand recall, Meru also has a wide range of contracts with corporates and airports. This B2B segment has not been tapped into properly till date and they have a platform where they can serve this segment. So, I think it is a good strategy for them to not just survive but also remain an important player in the market," said Jaspal Singh, partner, Valoriser Consultants. To enable cost efficiencies, Meru is looking to grow its fleet four times to about 20,000 over the next five years for its B2B model, and use the same to also serve its B2C customers.
To enable customer retention for its B2C business, it had recently launched the marketplace model to test the waters on affordability and viability. Meru is also in talks with several strategic investors to raise $20-25 million as it looks to create and retain market leadership in the B2B business. Currently, PE firm India Value Fund Advisors holds an ownership stake in Meru at about 87% and is looking to completely or partially exit its investment through an impending fund raise.
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