EXCLUSIVE: Meru CEO isn’t afraid of competition from Uber and Ola. He thinks there is enough place to co-exist

With Uber and Ola emerging as the leaders of the growing online taxi services space in India, it seems Meru who pioneered the industry is losing at its own game. From tying up with global companies, innovating new features on their apps to complying aggressively with government regulations, Ola and Uber are invading the industry with cheaper travel alternatives as their main motto.

In all this aggression, Meru seems to have lost out at the main idea of conception. Other than going slow on innovation, its rates are much higher too. But hold it right there! The fixed rates are the best strategy that the company is betting on right now and they believe this is what is going to make them grow at a much faster rate than the others. How?

Well, hear it from one of the most defined and aggressive CEOs of the space, Siddhartha Pahwa, CEO of Meru Cabs.
Can you give an overview of the present online taxi services space in India?

We analysed this industry 2007 and believed that the potential is pretty huge. We knew that a good quality transportation services is what the consumers require. The penetration of personal cars in India is very low, as low as about 5-6 %. While globally 40-50 % of the people own the personal cars. The reason is in India the cost of owning a car is significantly higher in India in terms of purchase parity. Therefore we provided taxis as a good travel solution to people.

Even after eight years, the industry is growing at a pace of roughly 25 per cent. We see an organised growth at 50 percent in the next 3-5 years.

What are your future plans?

Carpooling would become very big in India. By carpooling we mean that pooling of taxi rides as well as people pooling their personal vehicles. This is the future in the next 3-5 years.

There are many start-ups coming up who provide carpooling services. How is that affecting your business?

At this point of time the industry is not looking for a loss or gain. The category is still developing and it is known to develop by people coming from unorganised sector to organised sector. Newer players coming into the market will only open up the market in a larger scale. Like any other industry, we would go through a mushrooming phase and there would be a consolidation phase of 3-5 years.

You rates are much higher than Ola and Uber. How do you plan to compete with them?

People are ready to pray the price for our product. That’s why we are seeing 35 per cent stagger in our business. We give a robust, advanced product to our consumer where a consumer can book for a taxi even 10 days in advance at fixed rates. Secondly, we have the product at the airport too. Third is our fixed pricing. So people do not see us overcharging during peak demand, like the search pricing done by others.

But don’t you think if you bring down the price, there would be more growth of your company?

If the quality is not there, people will not use it after a point of time.

What is the future of the industry?

Partners would develop and they would start partnerships with technological companies. We would be able to provide good technology partnerships to these players.

How are the current government regulations affecting the industry and what should be done?

Both the central and the state government believe that it is an important industry and that is why the laws have been amended at such a fast pace. There are three things that the government is very clear about and they believe these will help the industry to grow in a better and balanced manner.

1. They say that more individuals and micro-entrepreneurs should partner in the industry to develop this category and therefore they have opened up the industry by saying that anybody who has a car can get a taxi license and join any of the operators.

2. We want good safety to be deployed by the aggregator or the operator. Who is the driver, driving patterns of the driver etc must be checked by the company. That makes the company responsible for any mishaps or misconduct by the driver.

3. The third thing they are saying is that they want to move away from a fixed fare structure. However we will not allow a free market economy completely because we have seen in the past that consumers have been forced to pay 5x, even 10x the fares. We will give a price range and within that the dynamics of the industry has to be governed.

How do you ensure the safety of the consumers?

We have three robust processes at place. The drivers go through four days of training, teaching them how to deal with passengers, people with special needs. There is a psychologist sitting in the panel. The customer can register a number of a known person on our app and we share details of the trip with him/her every time the customer takes a ride. There is also a ‘In case of emergency’ button in the app. If you touch the button and within 10 seconds an alarm goes in our call centres whereby we get in touch with the cab driver and passenger. The alarm also goes in the emergency number that is saved by the passenger.

What are your IPO plans?

At this point of time IPO might not be the right financial solution for the company because once you get listed the amount of pressure that is on you to disclose your company’s numbers and profitability is huge. The industry does not need this right now. This industry will need at least $1.5-$2 bn more investment to change the behaviour of the consumer markedly.

What is your estimated revenue growth?

We expect $110 m revenue at the end of this financial year.

(Image credits: Indiatimes)