Ola Invests $7.5 Mn In Leasing Subsidiary; Protests In Bengaluru Gain Political Support

Ride-hailing service Ola has invested about $7.5 Mn (INR 50 Cr) in its wholly-owned leasing subsidiary Ola Fleet Technologies.

Ola began with the leasing programme initially in September 2015, thereby allowing its drivers to borrow taxis at cheaper interest rates. In January 2015, it acquired Gurugram-based radio taxi service GCabs. This entity was then renamed Ola Fleet Technologies.

According to the documents filed with the RoC, ANI Technologies (Ola’s parent company) made the investment in Ola Fleet Technologies on 30 December, reports Mint.

Earlier this week, it was reported that Ola raised $350 Mn from existing and new investors. The latest round of funding has valued the company at $3.5 Bn.

In January 2017, Ola appointed Shalabh Seth as the CEO of Ola Fleet Technologies, a wholly-owned leasing subsidiary. This move comes at a time when the company is experiencing rapid growth and is transforming the ride-sharing industry through product and business innovation.

As CEO of Ola Fleet Technologies, Shalabh was reported to be responsible for driving supply growth through leasing and other driver-focussed initiatives, to consolidate Ola’s position as the market leader in the Indian ride-sharing space.

An email sent to Ola did not elicit a response at the time of publication.

Ola’s chief rival, Uber started with its leasing business globally in 2013, In India, it got associated with Xchange Leasing in December 2015. In June 2016, it was reported that Uber had invested $6.4 Mn (INR 43 Cr) in Mumbai-based car leasing firm Xchange Leasing India Pvt. Ltd, between January and March.

In October 2016, reports surfaced that Uber had continued its investment in Xchange Leasing and invested about $30 Mn (INR 200 Cr) between June and September.

Ride-hailing Woes In Delhi, Bengaluru

Taxi aggregators Ola and Uber have faced a lot of resistance from state governments, and auto-taxi unions in 2016. 2017 seems to have given no respite either. In February 2017, UberPOOL and Ola Share services were deemed illegal in Karnataka. Later that month the driver partners of both the cab aggregators went on a strike in Delhi-NCR.

The protesters’ demands included better perks and to be paid as per government sanctioned fare (INR 21/km) and accidental insurance. They were also demanding for discontinuing ride-sharing services, as it leads to a decreased fare (INR 3/km) and a halt to the addition of new cars in the existing fleet.

The strike in Delhi -NCR was called off after 13 days, on February 24, 2017.

However, protests by drivers in Bengaluru, that had the same demands took a violent turn, when a few protesters vandalised the Uber office. It was resolved after the Police intervened in the matter.

It was reported yesterday that twenty protestors went on an indefinite fast to protest against the cab aggregators for not meeting their demands. The Drivers and Owners Association (OTU) President Tanveer Pasha reassured the members that former Chief Minister and Karnataka JDS President Kumaraswamy will be supporting the drivers’ cause.

Uber-Meru Court Case

At the same time, Ola and Uber are also facing flak from competitors. Mumbai-based cab service provider Meru accused Uber of using predatory prices to drive competitors and small taxi operators out of business. The Competition Commission of India (CCI) rejected Meru’s plea stating lack of relevant data. However,  the Competition Appellate Tribunal ordered an investigation into the case by the antitrust body’s director-general.

As per an ET report, taxi aggregator Uber on March 1, 2017, notified the Supreme Court that such a probe cannot be ordered in the absence of a prima facie finding supporting the charge.

Uber’s lawyer Kapil Sibal said, “Such a probe has a wider effect internationally and cannot be ordered lightly. It has huge ramifications in international business.”

He further added, “We do not have exclusive arrangements with the drivers.We do not own the taxis. The same drivers have the (rival) Ola app, too. Nor are we in a position to influence the customer’s choice. Any probe without such a finding would set a wrong judicial precedent in the emerging area of competition law.”