Ola, the homegrown ride-hailing giant giving Uber a run for its money, has today revealed its financials for the previous financial year. As per the numbers disclosed by the company, it has incurred loss before tax of ₹2,313.66 crore in FY16.
This is a steep increase, compared with a loss of around ₹796 crores in the previous year. The major reason behind such heavy losses seems to be the company’s expenditure on defending its market leadership against U.S-based rival Uber.
For the same period, the company has reported a seven-fold revenue growth. Ola reported a revenue of ₹758 crore in the year ended March 2016, according to regulatory filings with the ministry of corporate affairs. The revenue numbers are up from ₹103.8 crores in the year earlier. The reported revenues also include revenue of subsidiaries like leasing unit Ola Fleet Technologies and TaxiForSure’s parent entity Serendipity Infolabs.
Further, employee costs for the company also went up more than five times to ₹379 crore in FY16. Ola currently has around 5,000 employees. After the acquisition of TaxiForSure, it added 1,700 staff members in early 2015, of which a large number was laid off in September 2016.
The advertising and sales promotion cost rose four times to ₹385.5 crore, a major increase compared to ₹100 crore spent in the previous year. The money was majorly spent towards brand building and customer acquisition to increase the company’s market share.
While Ola has reported operating revenues of ₹383.44 crore for the previous fiscal year, its arch-rival Uber India closed the year with revenues of ₹374.79 crores coupled with a profit of ₹28.84 crores. Both Ola and Uber are charging around 15-20% commission from their drivers.
In 2016, Ola and Uber together clocked almost fourfold increase in the number of rides booked through their platforms compared to the previous year, as per the report from RedSeer Management Consulting. The industry estimates place the market share for Ola at around 65 percent with Uber holding most of the rest in the taxi aggregation business. After selling out its operations in China to Didi Chuxing last year, Uber seems to have made India (along with SEA regions) one of its top priorities.
Ola has recently raised $250 million from SoftBank. This capital was raised by the homegrown cab aggregator in November last year, as per the filings with Registrar of Companies. However, the company has not announced the round officially. The funding was raised at a valuation of $3 billion, indicating a “down round” as the company was previously valued at $4.5 billion.
As per the reports, Ola is in talks with new investors to get at least $500 million more, and if Ola gets new investors, SoftBank will most likely invest more in the company.