Ola Comes Closer To Profitability, Cuts Losses By 42% In FY18

Bengaluru-headquartered ride-hailing company Ola has been busy raising funds, expanding across the globe and addressing woes of its drivers and riders while aiming for the profitability in FY19.

However, looks like the dream isn’t too far fetched. According to the Ministry of Corporate Affairs filings of ANI Technologies Ltd, the parent company of Ola, accessed by Inc42, the company controlled its losses by 42% in the fiscal year ending March 31, 2018. The consolidated results of the company showed that its losses reached $400 Mn (INR 2843.69 Cr), 42% lower than the $690 Mn (INR 4,898 Cr) loss in  FY17.

On another positive note, the company’s consolidated revenue increased by almost 61% reaching $313 Mn (INR 2,222.6 Cr) from $194.52 Mn (INR 1,380.7 Cr) in the previous year. The operational revenue for the year was $260 Mn (INR 1,847.53 Cr), constituting 83% of its total revenues.

About expenses, the company controlled its losses marginally reaching $713.69 Mn (INR 5,066.5 Cr), as against $730 Mn (INR 5,183.5 Cr) in the previous year. However, further analysis showed some interesting figures:

• With continuous fundraising, the company’s finance costs grew almost 3x to $11.42 Mn (INR 81.1 Cr) as against $4 Mn (INR 28.7 Cr) in the previous fiscal
• These large fundings and tussle with state governments and drivers have also almost doubled the company’s legal professional expenses to $8.7 Mn (INR 61.97 Cr) as against $4.25 Mn (INR 30.19 Cr) in FY17
• The continuous churn at the top level with several new additions across the company with international foray, it has also increased its training and recruitment expenses by 193% reaching $2.47 Mn (INR 17.59 Cr), against $845K (INR 6 Cr) in the previous year
• To expand its customer base, in India and the world, the company’s advertising and promotional expenses have nearly doubled reaching $5.72 Mn (INR 40.6 Cr), against $4 Mn (INR 28.4 Cr) in the previous year.

Ola increased its valuation to $6 Bn this year as it raised $74 Mn (INR 520 Cr) from its existing investor, a Hong Kong-and London-based hedge fund, Steadview Capital, through preference shares.

However, it is struggling to maintain its growth levels in the main cab hailing business, as it saw growth decline to 20% on average in 2018 to 3.5 Mn rides across all segments, including taxis, autorickshaws and shared cabs. That compared with 57% growth in 2017 and 90% in 2016.

Earlier in July 2018, Ola CEO Bhavish Aggarwal wrote to Ola employees saying that the company has started making profits on every ride after taking into account expenses such as driver incentives and customer discounts in the home ground. With this positive inclination, the company expects to be profitable in 2019.