 "Won't back down: Flush with funds, Ola and TaxiForSure scout for radio taxis")
Flush with cash from foreign investors, technology-based taxi aggregators Ola Cabs and TaxiForSure are in talks to buy radio taxi operators in order to get the government’s approval to operate in India.
According to a report in The Economic Times, Ola Cabs and TaxiForSure are talking to licensed operators in Delhi and Gurgaon, including gCabs and Supercabz, and are planning to adopt similar acquisition strategies in other states too.
Following the alleged rape of a 27-year-old woman executive in a cab booked through Uber, the Delhi government banned the company from operating in the city along with other private radio taxi service ssuch as Ola Cabs and TaxiForSure, saying their services are illegal until they get a licence - barring the six registered under the Delhi government’s Economy Radio Taxi Scheme. Unregistered taxi services were also banned in Hyderabad, Mumbai and Bengaluru.
Meanwhile, they are also working with state governments to address registration and safety. Ola has started installing GPS devices in cars on its platform, while TaxiForSure is working with taxi firms to follow processes suggested by authorities.
Uber said it will review its India operations and intensify driver screening.
In October, Japan’s SoftBank led a $210 million investment in Ola, taking its total funding up to nearly $277 million.Other investors in this latest round include previous backers Tiger Global, Matrix Partners and Steadview Capital. Son’s $210-million investment in Ola was the largest so far in an Indian cab service operator.
TaxiForSure attracted $30 million in August from backers including US private equity firm Accel Partners, known for investing early in Facebook Inc.
Investors had built high expectations into the prospects of online taxi services in India on the view they would fill the gap left by a public transport system that has failed to cope with a surge in population. But those investments are at risk if operators are unable to resolve concerns of authorities and customers after the rape accusation.
Which is why perhaps both Ola and TaxiForSure have decided that it is probably cheaper, and faster, to buy out a company with a radio taxi licence, rather than apply for a fresh one which typically takes at least two-three months. Waiting for a new regulation could take even longer -six to twelve months, The Economic Times report added.
However, concerns are that the investors may have to take a haircut as valuations of these taxi companies will come down as they spend more to boost safety and meet the regulatory requirements.Some investors are even working with taxi app operators to improve practices, hoping the ban is temporary.
With inputs from Reuters
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