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Meru Cabs gets $25 million from Brand Capital, amid claims of break-even in 10 & profitability in 5 cities

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While Ola and Uber battle it out in courts and everywhere else, a third brand — Meru Cabs — has steadily bult a decent enough brand. Although high-profile investors have heavily invested in those titans, they are far from profitability and still focussed on market share. Meru Cabs, on the other hand, has not only become profitable in 5 cities but also managed to raise $25 million from Brand Capital.

According to a report in the Livemint, Meru Cabs is looking to raise an additional $75 million to complete $100 million round this year. A large part of this funding will be used for advertising and brand awareness in addition to user incentives. These incentives include promotion schemes, discounts, and quality service.

Talking about the company’s plans to use funds, CEO Siddhartha Pahwa said,

Sixty-seventy per cent of the money will be used for advertising and providing user incentives which would include discounts, loyalty schemes and providing quality service.

However, he did not share the exact valuation of the company after this funding round.

We managed to get decent valuation for this investment. It is in low single digits, 

said Pahwa.

Meru Cabs basically operates as a radio taxi service with its own fleet of cars. This is different from Ola or Uber which are essentially online taxi aggregators.

But over the time, these aggregators backed by VCs have overshadowed Meru in terms of popularity. However, Meru has continued to strengthen its business. Last year, it had secured $50 million from India Value fund for further expansion.

Since then, it has expanded to 24 more cities, launched four unique services, and grown its fleet size to 20,000 vehicles.

Focus on profitability

Unlike Ola and Uber, both of whom have bled investor money to capture maximum market share, Meru has kept its focus on profitability. In fact, the company says that it is already operating on 10% profit margin in 5 cities. It has also achieved break-even in operations in 10 cities.

Commenting on this, Shrenik M. Khasgiwala, director, Brand Capital said,

Meru’s profitable and growing business, strong technology and analytics driven platform complemented by an experienced management team were strong and attractive determinants to partner with the company in this high-growth, consumer-facing industry.

He further added that Brand capital will help the company in creating the requisite brand positioning as well as awareness among customers.

Future growth plans

Meru aims to launch its services in 15 new cities in next 12-18 months. It is also looking at NorthEast as a potential market for expansion.

We are looking to increase the fleet by 15-20% over the next one year and will own 25% of the inventory. We should be present in 45 cities by end of 2018.

said Pahwa.

He further added that the company was looking to have 15-17% of the total market share at $1 billion valuation by 2022.

Meru currently claims to be having 4.5 million users with over 70% bookings on its mobile app. It is eyeing 850 crores in revenue in this financial year.

The company has launched several additional services such as carpooling and taxi for only women in Delhi, booking with facebook messenger bot,etc.

It has also launched special services called Meru Genie and Meru Enable. Meru Genie is a cheaper taxi service on the lines of UberGo and OlaMicro whereas Meru Enable offers specialized service for differently-abled and elderly commuters.

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