We all know for a fact, that all startup companies run in losses after all, at least in initial years or at least till the time they are not done raising massive funds. Uber though, through a rather intelligent company structuring in India, has managed to run one of its Indian business units — Uber India Systems — in profits, for straight two years, i.e. since inception.
This came up in recent RoC Filings unearthed by Economic Times. The filings revealed a profit of close to₹3 crores against income of ₹69 crores for the financial year ending March 2015. The same metric was ₹7 lacs against revenues of ₹2.5 crores in an year before.
Since most of you might be well unaware of what Uber Systems India actually as, lets give you a brief. Uber systems is one of several probable companies which the ride-hailing app has in India, and handles the India marketing part for the $70 Billion plus valued US upstart. Do not confuse this though, with the Uber cabs you fare in everyday. Those come under Uber Technologies, a separate company which though hasn’t filed for RoC filings yet, unsurprisingly runs in losses.
So why such complex structuring you ask ? Well for one, it helps the company show profits in at least one of its business units — the joy of which can only be known to a startup founder. Secondly, experts believe that such measures are employed to safeguard one’s company from taxes within the country of operations. Thus the losses which Uber actually incurs, might have been loaded on some other company in some other country, to help lower tax burdens.
As for the larger cab hailing picture for Uber, things are going pretty much in the upwards direction. Travais Kalanick, in a fireside chat with Ronnie Screwvala at IITB, told students that Uber’s share has risen from just 4 percent when it started India operations to over 40% as of now. While that figure is obviously debatable, considering that Ola claims over 80% of market share with a million rides a day, it still shows that it has rather been a positive run so far, for Uber in India.