Ola Lost Rs 6 Crore A Day

Bengaluru-based cab aggregator Ola recently revealed some shocking financial figures in a filing with the Ministry of Corporate Affairs. The SoftBank-backed and ANI Technologies run cab aggregator revealed it has piled up a consolidated loss of over Rs 2,311 crore during fiscal year 2015-16. This means, Ola lost about Rs 6 crore a day. While these figures are shocking alone but what is more shocking is the fact that the company has ended up widening its losses by about three times from the Rs 796.11 crore figure in 2014-15.

According to industry experts, the ascending loss figures are a cumulative result of Ola’s heavy advertising spendings, promotional expenses and high employee cost. It is no secret that homegrown Ola is currently fighting out hard with US-based ride-hailing superpower Uber in a leadership battle in the country. This has resulted in both the companies shelling out huge amounts of money for acquiring more customers and eyeballs over another.

The smartphone explosion in the Indian subcontinent has resulted the second most populated country on earth also becoming the second largest telecom market in terms of subscriber base. This has further made it much more convenient for consumers to book a cab through their mobile phones and make payments online. Ride hailing apps like Ola and Uber have made booking cabs in India easier than ever at any time of the day/night.


It is important to note here that one of the possible reasons that Uber is particularly battling it out hard with Ola to capture the ride hailing market in India is because the ride-hailing superpower doesn’t want to repeat what happened with the company in China.

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Last year, China’s ride-hailing startup Didi grew to an overnight fame when it managed to win a multibillion-dollar and a year-and-a-half-long battle with Uber where the giant agreed to sell its business and leave the country. And now, Didi is all set to become Asia’s most valuable startup with a whopping USD 50 billion valuation. That’s why Uber is trying its very best to win over the Indian market as soon as possible but is facing a strong resistance from homegrown Ola.

What is interesting to note that even though Ola posted a huge loss, ANI Technologies managed to register an impressive Rs 758.23 crore growth during 2015-16 compared to the Rs 103.77 crore amount earned by the company in the previous fiscal. Also, even though absolute amount of losses have widened, but its loss margin has actually reduced considerably. In 2014-15, the firm spent almost Rs 8.5 for every rupee it earned, but in 2015-16, this figure reduced to almost Rs 4 for every rupee. The consolidated numbers include financials of Ola Fleet Technologies (leasing business), Serendipity Infolabs (Taxi For Sure), Zipcash Card Service (46% ownership) and ANI Technologies. While Ola Fleet Technologies Pvt. Ltd, the cab-leasing arm of taxi aggregator Ola, posted a loss of Rs 13.3 crore for FY16 compared to a profit of Rs 3.9 crore the previous year; Ola decided to shut down the TaxiForSure (TFS) business in August last year, about 18 months after acquiring the rival for $200 million. All this amounted to Ola’s troubles.

As per Ola’s filing with the Ministry of Corporate Affairs, Ola’s losses were widened on account of expanding its advertising and promotional expenditure to over Rs 437.89 crore in 2015-16 from Rs 99.84 crore in the previous year. Similarly, its employee related expenses also grew by over five-fold to Rs 461.60 crore in the said fiscal from Rs 85.16 crore in 2014- 15.

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Ola is currently operational in 110 Indian cities, and according to recent reports, the company’s Board has given a green signal for raising another $100 million from investors to fund its expansion plans. Ola’s 110 cities figure is much higher when compared to Uber’s 29 cities figure. Let’s see if Ola is able to convert its present day losses into huge profits in a few years down the line.

[Top Image: bloombergquint]

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