Mahindra-owned Indian cab aggregator Meru Cabs is reportedly looking to raise INR 350 Cr to INR 400 Cr funding and has been in talks with a clutch of strategic investors over the last six to nine months. The company is said to be in advanced talks with Japanese car leasing firm Orix Auto Infrastructure for a possible stake sale.
According to an ET report citing sources, Meru plans to use this funding in order to boost its B2B business by bringing more corporate clients on board as well as fuel its fleet expansion. The company plans to expand its fleet by adding over 10,000 electric vehicles (EVs). The Mumbai-based company had previously said that it is looking to invest $10 Mn in the technology and electric mobility segment by 2020-end.
The latest development comes as Mahindra and Mahindra (M&M) is looking at an initial public offering (IPO) for its mobility unit, which includes Meru, cab aggregator for corporates called Alyte, electric vehicle cab service Glyd and used car business First Choice. But before going public, the automobile maker wants to make its mobility business a $1 Bn offering in the next three to four years.
M&M has acquired 55% stake in radio taxi operator Meru, in September 2019, for INR 201.5 Cr. With this deal, Meu’s subsidiaries — Meru Mobility Tech Pvt Ltd, V-Link Automotive Services Pvt Ltd and V-Link Fleet Solutions Pvt Ltd — became M&M’s subsidiaries as well. The company became a part of Mahindra’s mobility unit in February 2020.
Meru Cabs was founded in 2011 by Neeraj Gupta as radio taxi services but later decided to solely focus on B2B (business to business) clients as Ola and Uber took a lead in the B2C (business to consumer) cab-hailing market. Back in 2018, Gupta had conceded that Meru’s revenue from the B2C segment was falling due to tough competition, therefore the company shifted its focus to B2B offerings for corporate players.
The company launched an office commute service Meru Reserve in October 2020, but it also emphasised that the company plans to expand its service beyond employee transportation going forward. Besides this, the company also offer airport transportation services. The company still hasn’t been able to create much of an impact despite its focus on B2B segment.
In the financial year 2020 that ended in March last year, the company reported a loss of INR 10.64 Cr, translating into a 198% year-on-year (YOY) increase from the previous year’s INR 3.57 Cr losses. The company’s revenue also marginally dipped from INR 117 Cr to INR 116 Cr Cr. At the same time, the company’s expenses increased by 12.9%, from INR 112.1 Cr in FY2019 to INR 126.6 Cr in FY2020.