Indian multinational automotive manufacturer Mahindra & Mahindra has increased its equity shareholding in its subsidiary, the cab aggregator Meru Cabs, from 43.2% to 100%, the company announced in a filing with stock exchanges on April 30.
Mahindra had acquired a 55% stake in Meru for INR 201.5 Cr in August 2019, which would be completed over several tranches. In December that year, after its first tranche of investment, the company had acquired the right to appoint the majority of the directors on the Meru board.
By April 30 this year, Mahindra held 43.2% of the equity share capital of Meru. The company has now acquired the remaining shares from existing shareholders including True North, Nilesh Sangoi and Bennett Coleman & Co. Ltd, who together held 44.14% equity share capital in Meru worth over INR 76 Cr. Mahindra has also purchased over 12% equity share capital in Meru from existing shareholders, increasing its shareholding in the company to 100%.
With Mahindra’s acquisition, Neeraj Gupta, who founded Meru Cabs in 2007 and was the CEO, stepped down from his position on April 30. He would continue as an employee till June 30, 2021.
In the fiscal year 2019-20 (FY20), Meru Cabs’ losses increased by 198% from INR 3.57 Cr to INR 10.64 Cr. The company’s revenue fell marginally, by 1.35% to INR 115.96 Cr. At the same time, expenses increased by 12.9%, from INR 112.1 Cr in FY19 to INR 126.6 Cr in FY20.
As for the breakup of Meru’s operational revenue, the performance was in line with the company’s strategy of pivoting to a B2B-centric model. While the company’s metered taxi operations witnessed a 26.7% decline, from INR 75 Cr in FY19 to INR 54.95 Cr in FY20, it saw a massive spike in revenues from its employee transportation and car rental services. Its income from the employee transportation service increased 204%, from INR 8.57 Cr in FY19 to INR 26.11 Cr in FY20. Meru Cabs’ income from the car rental service also increased by 158%, from INR 86 lakhs in FY19 to INR 2.22 Cr in FY20.
Back in 2018, Gupta of Meru Cabs had conceded that the company’s revenue from the B2C (business to consumer) segment was falling due to Ola and Uber taking the lead in India. He had said that Meru Cabs would focus on ramping up its B2B offerings for corporate players.
“The best viable option for us is to focus on B2B. We are looking at a three-year time frame where the model will shift from a B2C business to a B2B business. Eventually, it will keep on growing much faster than B2C for us,” Gupta had added.
The company is looking to pivot its business to a B2B-centric model, where 70-75% of its revenues would come from its offerings for businesses, such as car rentals, employee transportation and airport contracts.
Meru Cabs offers the MeruBiz service for businesses, which includes employee commute, airport transfers, car rentals, city rides, outstation business rides and events and conferences, among other services.
Last year, it was reported that Meru Cabs was eyeing consolidation in the electric vehicles (EV) segment, with a planned investment of $10 Mn in the technology and electric mobility segment by 2020-end. It was also planning to create an infrastructure to operate a fleet of over 300 EVs across India. It planned to increase its fleet size and add 10,000 EVs.