Ola had to incur a loss of Rs. 796 crore in the fiscal year ended, spending nearly double of its income, to maintain its lead over fierce rival Uber in the immensely growing taxi app business, according to regulatory filings made by the company.
Ola was competing with Uber and TaxiForSure in fiscal 2015. It has spent estimated Rs 920 crore on fleet operation costs and Rs. 100crore in advertisement and sale promotion. TaxiForSure, which was owned by Serendipity Infolabs, was acquired by Ola in February of 2015 in a primarily stock deal worth an estimated $200 million.
It has, however, not gone all south for the Bangalore-based company, though, as the most recent disclosures filed with the ministry of corporate affairs reveal earlier this month reveal that the company has also earned a total revenue of RS. 421 crore in the same period, which is an eight-fold increase over the previous year.
From that around Rs. 380 crores has come from the car rental service and the company earned Rs 2.26 crore through commission on taxi services, said Ola owner ANI Technologies.
Industry estimates say Ola commands more than 60 per cent-65 per cent market share, while burning as much cash as its rival Uber according to a letter by Association of Radio Taxis. The letter revealed that Ola and Uber are incurring operating cash losses of Rs 400-500 crore every month.
Ola has moved aggressively to establish its market lead over the San Francisco-based Uber since then. Uber, on the other hand, has announced that a significant portion of the massive $3.5 billion it has raised recently will be used in expanding its operations in India.
Both the competitors have different strength of exploring the market. While Ola has in-depth knowledge of the Indian market dynamics, Uber has massive financial strength.
After it expanded its service into outstation and rental category, Ola now offers a bus service called Ola Shuttle, auto rickshaw hire, carpooling, corporate car hire and five categories of on-demand cab service from low-cost Micro to luxury cars like BMW’s.
Uber, on the other hand, is focusing on its low-cost UberGo and UberX category in the 26 cities that it operates in. Ola is operational in more than 100 cities.
Ola is also backed by China’s largest taxi app company Didi Chuxing, which participated in Ola’s last round of fundraising of $500 million. Other major shareholders include Matrix Partners, Tiger Global, and DST Global.
