Meru Cabs to turn to corporate clients to shore up revenues

April 9, 2018

Meru Cabs to turn to corporate clients to shore up revenues

ET Now Digital - 9 April, 2018: Taxi operator Meru Cabs plans to focus more on corporate clients in order to shore up its revenue as the B2C segment is already hogged by two heavily-funded players - Ola and Uber. According to a report in the Economic Times, Meru Cab 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," the ET report quoted Neeraj Gupta, founder of Meru Cabs as saying. Mr Gupta believes the B2B segment will grow much faster than the B2C segment.

Currently, the B2B segment of Meru contributes 40-45 per cent of its total revenues and the company is now looking to increase that share to 70-75 per cent, the ET report said quoting Mr Gupta. The decision to change focus comes after loss of market share which has seen Meru's revenues and ride volumes dip by 30-40 per cent in the past few years.

Meru Cabs clocked ₹322.6 crore in revenues in FY16, growing 11 per cent from a year ago, the ET report said citing 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 a competitive advantage, the ET report said.

"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," the ET report quoted Jaspal Singh, partner, Valoriser Consultants as saying.

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.

According to the ET report, 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 per cent and is looking to completely or partially exit its investment through an impending fund raise.


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