Politics or bad policies: What's plaguing Mumbai's Meru cabs?

by Ivor Soans and Ayeshea Perera

Popular radio taxi service Meru Cabs, which has seen repeated disruptions over the past few years in Mumbai thanks to union issues, has now resorted to an aggressive media and social campaign to tell consumers that it believes itself to be the victim of a ploy designed to steal away its drivers and ask for consumer support.

This comes in the wake of the most recent strike in Mumbai—where Meru Cabs is the biggest radio taxi operator--which has now lasted for over a week and has inconvenienced Mumbaikars, resulted in loss of earnings for drivers and business losses for Meru Cabs.

The campaign which issued prominent newspaper advertisements and sent out email newsletters, urged consumers to show their support for Meru either via e-mail, text messages, Facebook or Twitter. "It is our sincere appeal to all stakeholders and citizens of Mumbai to ensure that our driver-partners are allowed to engage in their business peacefully. It's a fair and reasonable expectation of every law abiding citizen, so that Mumbai's favourite taxi service is back on the roads to serve you again", read an e-mail newsletter sent out to customers.

Speaking to Firstpost over the phone, Siddhartha Pahwa, the CEO of Meru, said that the aim of the campaign was threefold: to erase misconceptions that Meru had an acrimonious relationship with its drivers, to appeal for government and police protection for drivers who wanted to return to work, and to draw attention to the plight of drivers who were suffering massive loss of livelihood because they were afraid to return to work.

Shot of an emailer sent out to Meru subscribers

Shot of an emailer sent out to Meru subscribers

The company estimates that the strike has caused it to incur a loss of Rs. 1.2 crore, while drivers have suffered a collective loss of over Rs 70 lakhs.

The strike was called by a group calling themselves the Meru Chalak Sena, which the company says it does not recognise.

"We do not have an employer-employee relationship with our drivers. Instead we consider them to be our partners and we have a business relationship with them. This means that we rent out our vehicles to them for a monthly subscription that is paid on a daily basis. How much drivers work and how much they earn is entirely up to them", said Pahwa, adding that the company did not believe in the concept of 'unions or collective bargaining'.

Among the Sena's demands are that they should be allowed to take one holiday a week that is exempt from the daily rental rate, and they also want the daily subscription to be waived when their cars are taken for repairs.

Some drivers also pointed out that in cases of sickness, etc, where drivers have been hospitalised, they are yet forced to pay subscription charges to Meru.

"We completely rejected this request. When a kirana store takes a space on rent, do they deduct rent for days that the shop is closed? No they do not, because that business model does not make sense", said Pahwa.

Instead, he said that Meru believed that it was being targeted by parties with 'ulterior motives' to lure drivers away to other cab companies. "Drivers are the essential commodity of a business. By ensuring that drivers cannot work for us through threats and intimidation, they go to other companies", said Pahwa.

However, the flip side of the story is that drivers say with Meru raising daily subscription rates to Rs 1300 per day, added to which they need to pay for fuel (CNG), telephone charges (for contacting customers), it leaves them with a meagre amount to make a living. One driver we spoke to said that they make between Rs 2000-Rs 2500 per day and spend close to Rs 1800 on the subscription fee and fuel and that hardly leaves them with Rs 200-500 a day as earnings.

Drivers admitted that rival radio taxi companies could be inciting these strikes—they say that rivals are only charging Rs 1100 as daily subscription while Meru recently raised it from Rs 1200 to Rs 1300.

The main issue here according to drivers is that a taxi driver in Mumbai needs a government-issued badge. And according to this report from the Times of India, the Maharashtra government has made it mandatory that those applying for taxi badges should have a domicile certificate of 15 years in Maharashtra. Unfortunately, as in every international city, taxi drivers are mostly migrants and in Mumbai they primarily migrate from UP and Bihar and so are unable to get badges. And locals are not very interested in such jobs.

Hence, both Meru and other radio taxi services are literally competing for scarce drivers. Some drivers said that they were going back to driving traditionally black-and-yellow taxis since owners leased out newer vehicles like the Hyundai Santro for Rs 6 per kilometre or a daily fee of around Rs 600-700. While radio taxis often have a full day because of demand for air-conditioned taxis, drivers feel that despite lower overall income, their profit margin could be higher while driving regular black-and-yellow taxis and many have reportedly moved from Meru to driving regular taxis, which could have resulted in more pressure on the company.

It must also be noted that drivers have in the past scuppered Meru’s moves to improve the offering. For instance, Meru was the first to allow payments using credit cards (a practice that’s followed in any decent international city, but is yet unavailable in India). However drivers wanted cash (also because cash transactions are untraceable from a tax perspective) and spread rumours about Meru not settling credit card transactions in time, and said machines were not working.

We have personally experienced many cases where drivers said that the swipe machine was not working and demanded cash, only to back down when threatened with a complaint to Meru.

So, while Meru may need to relook at its policies vis-a-vis their drivers, drivers may need to stop the constant bickering and allowing political parties to exploit the situation.

Faced with a massive loss in earnings since they earn on a daily basis, many drivers are seeing the writing on the wall and as Pahwa says, are returning to work.And of course, the government needs to do its bit by ensuring easier availability of taxi driver badges so that an artifical scarcity that breeds corruption is brought to an end.

Updated Date: Feb 05, 2013 21:30 PM

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