Radio Taxi Market in India

Radio Taxi Market in India

Prepared by
Valoriser Consultants
Address: E-26, Amar Colony, Lajpat Nagar-IV, New Delhi –110024
Tel: 011-65028027 -28 | Fax: 011-26225380
Email: Info@valoriserconsultants.com| Website: www.valoriserconsultants.com

Radio Taxi Market in India – Evolution
• Taxi transportation system in India has long been characterized by paucity of
well-maintained vehicles, tampered meters and unruly behavior of drivers. For
most, taxi operators the two primary pain points are acquiring customers and
receiving timely payments.
• The need for a hassle-free and smooth ride has long been on the anvil for the
Indian transport authority. Though Government did not harp on the same tune, but
private operators could fathom the potential lying with a new and improved means
of communication through radio cabs.
• Demand for radio cabs have been soaring in the metros and large cities as MNC
executives, tourists, IT sector executives as also affluent Indians opt for a faster
and smoother means of transportation through well maintained radio cabs.

• Today, radio cabs capitalize on its comfort quotient and availability quotient to
attract people even though fares are comparatively higher than normal cabs.

© 2013 Valoriser Consultants Publication

2

Industry Statistics and Trends
Taxi Service
• 4,00,000 rental cars
• Rs. 11,000 Cr annual revenue
• 20% annual industry growth


Radio Cabs
• 15,000 cars
• Rs. 1,100 Cr annual revenue
• 35% annual industry growth

3

Radio Taxi Market in India – Demand
• The radio taxi services market in India has huge untapped opportunities. There
are very few players in the organised radio taxi services market who have failed to
address the market demand due to unavailability of required number of cabs.

• Today, the radio cab segment is 15,000+ cabs in size with 3 large multi-city
operators (Meru, Easy, Mega Cabs) holding nearly 70% market share as well as
several smaller operators mushrooming in different cities.
– Total operator revenue is estimated to be ~ Rs. 500 Crores, though a better
reflection of the industry size would be total revenue earned from customers, ~
Rs. 1,100 Crores at present.
• It is estimated that India radio taxi services market will reach 30,000 taxis by
2017. The company’s such as Meru Cabs has resulted in 120% increase in Net
(loss) profit after tax for their equity shareholder which shows the kind of return on
investments this newly created market segment is witnessing.


4

Radio Taxi Market in India – Opportunities
• Despite the tremendous growth in a short span of 5 years, radio cabs are a
minuscule portion of the overall private taxi business in cities.
– To take the example of Mumbai city, there are 150,000 – 200,000 cabs plying
on the road split almost equally between the black and yellow cabs, private
fixed rental cabs and fleets for corporates. In this pool, the total strength of the
radio cab offering is less than 5000 implying less than 3% market share.
• The current penetration of the radio cab segment is a direct indicator of the
market potential for the service offering plenty room for growth both within the
existing pie as well by expanding the pie itself.
– So, not only is the model attracting permit owners in the conventional private
taxi business to switch to the more remunerative radio model but is also
inducting fresh drivers with new licenses to expand the overall taxi offering in
the cities.


5

Radio Taxi Market in India – Revenue
• Chandigarh city became the first in the country in 2006 to launch comprehensive
regulation defining and introducing the radio cab segment to the urban
transportation framework. It was shortly followed by Delhi state govt. in the same
year. It was followed by Maharashtra, Karnataka and, Andhra Pradesh.
– In the last few years, the momentum has spread to other states with fleet
taxi model being introduced in several other cities including tier 2 viz. Kolkata,
Amritsar, Ludhiana, Gurgaon, Indore etc.

• Currently, operators earn between 30-50% of their revenue from the airport
segment. The radio cab market is also likely to witness a shift from largely catering
to airport pickups and drops to providing point-to-point commuting services across
big cities.
– With increasing demand for services within the city and rising tariffs for
parking at airports, operators are thinking about new ways to cater to the nonairport demand.

6

Radio Taxi Market in India - Regulations
• Grant of licenses to prospective operators for radio taxi networks is provided by
respective state government. Indian government allows state governments to
exercise powers mentioned in section 74 and other provisions of Motor Vehicle Act,
1988.
– Under this act, state governments are provided with powers to set fare
structure and other terms related for commercial passenger transport
vehicles.

• At state level, each state has a State Transport Authority with multiple Road
Transport offices. The RTOs work under directions of the state governments’
transport ministry and provides fleet licenses to Radio Cab service operators.
– They set minimum service requirements for operators to protect larger
public interests and cover aspects ranging from fare structure,
systems/processes to be followed, driver & operator code of conduct, fleet
strength, geographic scope of operations etc.

7

• Many state governments are encouraging radio cab services by issuing permits
for fleet operators, as they believe that efficient transport services are essential in
a modern economy with a fast emerging market.
– In Mumbai, for instance, the high court recently endorsed a move by the state
government to phase out 7,000 yellow and- black taxis that have been on the
roads for more than 25 years. There are about 55,000 taxis in Mumbai, but
most of them are old.
• However, still there is a need to strong regulatory structure in most of the states.

– For instance, Chennai and Pune still don’t have the requisite regulations in
spite of significant demand for these services and top operators’ eagerness to
cater to these cities.
– Similarly Kolkata has been very slow in adopting these regulations and has
only recently opened the market allowing each operator to have a maximum of
200 cabs.

8

• Each state levies varying permit cost on radio taxis starting from as low as 930
Rs/year to 7,500 Rs/year. Usually, marginal permit costs decrease in slabs as an
operator adds new taxis.

– As an exception, permits in Mumbai city can also be procured from existing
permit holders through a secondary market wherein prices range from Rs.
100,000 to 150,000. Unlike other city permits, that are typically valid for 5
years, these have lifetime validity and are completely transferable.
• Usually, states require each radio taxi operator to have a minimum operational
fleet size, between 100-500 taxis for tier 1 cities. In smaller cities like Chandigarh,
Ludhiana, Faridabad, Gurgaon this threshold drops to 5-20 Taxis.
– In some cases, an upper limit for total fleet strength under radio taxi model
is also defined. Currently, Mumbai allows maximum limit of 10,000 cabs by
single operator. At the other extreme, Chandigarh allows at most 100 cabs and
Kolkata a maximum of 200 by a single operator.

9

Radio Taxi Market in India - Fare
• STAs also reserve the right to decide & update fare structure for radio cabs.
Few states also segment radio cabs depending upon luxury and assign different
fare structures for each segment.

– In Delhi, economy cabs had standard fare of Rs 10/Km whereas luxury cars
may charge up to Rs. 20/Km. Additional charges related to night booking and
waiting are also guided by the STA notified fare structures.


10

Radio Taxi Market in Key Metro Cities
• Mumbai has the largest number of public taxis (besides the 55,000 taxis, there
are 30,000 auto-rickshaws) in India and provides tremendous opportunities for
operators of radio cabs.

– Other cities have far fewer public taxis and auto-rickshaws – Delhi has about
4,000 taxis and 30,000 three-wheelers and Kolkata around 5,000 taxis – but
radio cab operators see good potential for growth.
• Radio taxi is a popular mode of transport in Delhi. There are about 5,000 AC
radio cabs and 3,800 economy radio taxis plying in the Capital.
– The national capital region Delhi-NCR has highest potential where almost 30%
calls are dropped by the companies due to unavailability cabs/taxis.


11

Taxi Registration in Mumbai
• Mumbai has issued 51,000 license for Taxi Operation.
• The state recently launched the scheme of Fleet permit, under which a company
can operate minimum 500 taxis and less than 10,000 taxi. Five firms were
shortlisted for the same.
– Mumbai Taxi Company Pvt. Ltd., Goregaon (East), Mumbai - 63

– Mega Cabs Ltd., Andheri (West), Mumbai - 53
– V. Link Tours & Travels Pvt. Ltd., Goregaon (West), Mumbai - 104
– Mumbai Gold Cabs Pvt. Ltd., Kandivali (East), Mumbai - 101
– Smart Cab Transportation Pvt. Ltd., Goregaon (East), Mumbai - 63


12

Taxi Registration in Delhi
Particular
Cab Service

Fuel Type
Diesel
Petrol
RET. CNG Kit

2009-10
213
65
39

2010-11
324
84
64

2011-12
628
83
106

2012-13
584
42
31

Total
1749
274
240

Local Taxi

CNG
Petrol/CNG

24
425

1
520

0
173

345
147

370
1265

Radio Taxi

CNG
CNG/Petrol
Petrol/CNG
Ret. CNG/ Pet

9
1054
1076
3

66
1009
1119
41

569
166
276
0

26
162
0
0

670
2391
2471
44

Tourist Taxi

Diesel
Petrol
CNG Only
Petrol/CNG
Ret. CNG Kit

2023
162
0
0
537

3049
210
6
45
616

3710
384
4
195
752

3889
198
59
163
519

12671
954
69
403
2424

Economy Radio Taxi

CNG
CNG/Petrol
Petrol/CNG

0
0
0

0
326
636

1212
38
865

680
221
0

1892
585
1501


13

Online Taxi Booking Market
• Online cab hire in India is a sunrise industry characterized by huge demand and
high growth rates. Aimed at solving the intra city commuting problem in the country.
• Moreover, recent regular investments and expected entry of international players
like Uber in India speaks well enough for the market potential.
• To organize the rest of the market at a fast pace, the radio taxi market is moving
towards the asset-light model, in which sites such as TaxiForSure.com lend their
brand to drivers and cab operators in exchange for a fee. Meru, too, has become
part cab operator, part marketer.


14

Taxi Operators - Funding
Year

Campany

Business Category

Investor

Amount

Stake/Stage

2006

Carzonrent (Easy Cab)

Radio Cab Operator

Sequoia Capital, SIDBI Ventures

-

Series A

2007

V-Link Travel Solutions
(Meru Cabs)

Radio Cab Operator

India Value Fund

-

>50%

2011

Carzonrent

Radio Cab Operator

BTS Investment Advisors

$7 Million

20%

2011

ANI Technologies
(OlaCabs)

Aggregator

Anupam Mittal and Others

$1 Million

Angel

2011

ANI Technologies
(OlaCabs)

Aggregator

Tiger Global

$3 Million

Series A

2012

Saavari Car Rentals

Technology

Inventus Capital

$1 Million

Series A

2012

TaxiGuide

Aggregator

Anand RP

<$500 K

Angel

2012

LiveMinds Solutions
(Bookmycab)

Aggregator

Your Nest Angel, Mumbai Angels

-

Angel

2012

Taxi For Sure

Aggregator

Accel Partners, Helion Venture Partners
and Blume Venture

$4 Million

-

-

Zoom

Radio Cab Operator

Larry Summers, Rajkumar Elango,
Marquee Investors

$525 K

-


15

Business Models - Asset – Owner - Operator
Asset – Owner Operator

• There are those who take license from the government and
buy cars that they use for the service

Challenges

• High Capital Cost as the company will need to invest in the
assets.
• Parking Space and maintenance cost will be the
responsibility of the operator.


16

Business Models - Asset - Light

Asset - Light

• Those who work as aggregator of commercial cars and take
commission from car owners on every trip. pay-per-lead
model and pre-paid model

Challenges

• Getting initial consumer acceptance can be tough because
there is a shortage of brand presence.
• Maintaining a certain standard of customer service.
• If any new player comes into the market with a lower fee,
because there’s no commitment from the drivers toward the
aggregator, they will just shift and that aggregator would be
left high and dry.


17

Revenue Sources
Subscription
Fees

• Cab operators charge a daily fees for every cab plying on the roads on a given
day from the driver running the respective cab. This charge typically varies
between Rs. 900 – 1300 depending upon the model of the car and the
operator. This fees is the single biggest revenue stream for radio cab
operators.

Advertisement
Revenue

• Cab operators lease out marketing space to sponsors (typically FMCG,
Financial Services companies) for promoting the sponsors’ brands on the
exterior and interiors of their cabs. In return, the sponsors pay a monthly fees
for this promotional space. This is an emerging revenue stream for the radio
cab industry and currently comprises up to 10% of their total revenue.

Cab Booking
Charges

• This refers to the fees most cab operators currently levy on their customers for
every booking made by calling their helpline. It varies between Rs. 30-50 per
booking. The driver collects this fee separately on completion of the journey
from the passenger. No such fees is payable if the booking has been made
through the operator website or mobile application.


18

Companies
Asset – Owner - Operator
•
•
•
•
•
•
•
•
•
•
•
•
•

Aggregator

Meru
Mega Cabs
EasyCabs
Yo Cab
Hello Cab
Quick Cabs
Tab Cab
Select Cabs
Mumbai Gold
Metro Cabs
Delhi Cabs – Orix
Avis
Hertz


•
•
•
•
•
•
•

19

Ola Cabs
BookmyCab
Savaari
TaxiGuide
TaxiPixi
YourCabs
Uber

Meru Cabs
• Meru Cabs, launched in April 2007 with just 50 cabs, is the leader in the assetowner-operator category has not reported a profit till date. With its headquarter in
Mumbai, the company is operating a fleet of more than 5,000

• Meru Cab has a customer base of 1 million, which translates into an annual
turnover of Rs 350 crore, with more than 700 employees across India.
• The biggest player in the metros, Meru Cabs, began services with 50 cabs in
Mumbai in 2007, has a fleet size of 5,000 cabs across four cities today. It is as
good as your own car, says a regular traveller.


20

Fare Chart
Delhi
Details

Mumbai

Bangalore

Hyderabad

Ahmadabad

Day Time

Night
Time

Day Time

Night
Time

Day Time

Night
Time

Day Time

Night
Time

Day Time

Night
Time

Fares
Kms after

3 kms

3 kms

1 km

1 km

4 kms

4 kms

2 kms

2 kms

4 kms

4 kms

Start kms

Rs 69

Rs 86.25

Rs 27

Rs 33.75

Rs 80

Rs 88

Rs 40

Rs 50

Rs. 100

Rs. 125

Rate after
start kms

Rs 23 /
Km

Rs 28.75 /
Km

Rs 20 /
Km

Rs 25 /
Km

Rs 19.50

Rs 21.45

Rs 21 /
Km

Rs 26.25 /
Km

Rs. 20 /
Km

Rs. 25 /
Km

No charge
No charge
for the
for the
first 15
first 15
minutes
minutes
and
Waiting
and
thereafter Rs 2 / min
Charges thereafter
Rs.
Rs. 30/37.50/per hour
per hour
or part
or part
thereof
thereof.

Rs 2.5 /
min

No charge
for the
first 20
minutes
and
thereafter
Rs.10 /
15 mins or
part
thereafter.

Average
Fare
(50 Kms)

Rs.
1,258.75

Rs. 1,150

Rs.
1,437.5


Rs. 1,007

No charge
for the
No charge
first 20
No charge
for the
minutes
for the
first 10
and
first 10
mins
Rs 2 / min
thereafter
mins
Rs 1.25 /
Rs.11 / Rs 1 / min
min
15 mins or thereafter
thereafter
part
thereafter.

Rs 2.5 /
min

Rs. 977 Rs. 1,074.7 Rs. 1,048 Rs. 1,310 Rs. 1,020 Rs. 1,275

21

Mega Cabs Ltd.
• Mega Corp of Delhi, among the first to launch radio cab services in India, aims to
increase its fleet size from 1,000 cars at present to over 20,000 in about three
years.

• Mega Cabs started in Delhi with a fleet of 81 taxis in 2001. Today, it has services
in Mumbai, Bangalore, Kolkata, Chandigarh, Ludhiana, and Amritsar, and it has
now become the largest network of radio taxi services in India.


22

Fare Chart
Delhi
Details

Mumbai

Bangalore

Kolkata

Chandigarh

Amritsar

Day
Time

Night
Time

Day
Time

Night
Time

Day
Time

Night
Time

Day
Time

Night
Time

Day
Time

Night
Time

Day
Time

Night
Time

Fares Kms after

3 kms

3 kms

1 km

1 km

4 kms

4 kms

--

--

--

--

2.5
km

2.5 km

Start kms

Rs 69

Rs
86.25

Rs 27

Rs
33.75

Rs 80

Rs 88

--

--

--

--

Rs. 55

Rs. 55

Rs
Rs 23 /
Rs 20
28.75 /
Km
/ Km
Km

Rs 25 /
Km

Rs
19.50

Rs
21.45

Rs 18/
Km

Rs
21.6 /
Km

Rs 23
/ Km

Rs
28.75 /
Km

Rs 25
/ Km

Rs
31.25 /
Km

Waiting Charges
(per hour)

Rs. 30

Rs. 30 Rs. 30

Rs. 30

--

--

Rs.
120

Rs.
120

Rs.
100

Rs. 100

Rs.
100

Rs. 100

Convenience Charge

Rs. 50

Rs. 50

Rs. 30

--

--

Rs. 20

Rs. 20

Rate after start kms

--

--

Rs. 35 Rs. 35 Rs. 30

* Convenience charges applicable on cab bookings done via call centre. No Convenience charges for the cab bookings done
online(website/mobile apps)


23

Easy Cabs - Carzonrent (India) Pvt. Ltd.
• In May 2006, it launched EasyCabs from Chandigarh, and now operates across
Delhi, Bangalore, Hyderabad and Mumbai with a fleet size of around 2,000.
• The company is currently providing car rental solutions through its fleet of 6500
cars across the country.


24

Fare Chart
Delhi

Mumbai

Bangalore

Hyderabad

Details
Day Time

Night Time

Day Time

Night Time

Day Time

Night Time

Day Time

Night Time

Fares Kms
after

3 kms

3 kms

1 km

1 km

4 kms

4 kms

2 kms

2 kms

Start kms

Rs 69

Rs 86.25

Rs 27

Rs 33.75

Rs 80

Rs 88

Rs 40

Rs 50

Rate after
start kms

Rs 23 / Km

Rs 28.75 /
Km

Rs 20 / Km

Rs 25 / Km

Rs 19.50

Rs 21.45

Rs 18/ Km

Rs 22.50 /
Km

Waiting
Charges

Rs. 30/- per
hour

Rs. 30/- per
hour

Rs 2 / min

Rs 2.5 / min

Rs.10/15
min

Rs.10/15
min

Rs. 1/mins

Rs. 1/mins


25

Ola Cabs
• OlaCabs, the leader in the asset-light-operator category, has burned through a lot
of cash from its last funding very quickly. B

• A graduate in computer science from the Indian Institute of Technology (IIT)
Bombay, Aggarwal worked with Microsoft Research for two years before setting up
Ola Cabs in December 2010.
• Ola Cabs for instance, has a network of 1,500 operators and 4,500 cabs across
the four cities of Mumbai, Bangalore, New Delhi and Pune.


26

Taxiforsure
• TaxiForSure has a pool of 18 operators and 1,750 cabs in Bangalore and New
Delhi.
• The founders, both Raghunandan and Radhakrishna, are alumni of the Indian
Institute of Management, Ahmedabad as well as the National Institute of
Technology Karnataka, Surathkal.
• TaxiforSure has tied up with MakeMyTrip to tap into that site’s customers. It is also
in talks with redBus for the same. The partnerships would allow a customer who
books a bus ticket on redBus or an airline ticket on MakeMyTrip to also book a taxi
for the airport or a bus depot pickup and drop.


27

Bookmycab
• Bookmycab, which works directly with owner-drivers, has 3,000 cabs in Mumbai.
• Bookmycab holds the exclusive license to aggregate those taxi owners in Mumbai
who hold state government permits for the yellow and black (non-air conditioned)
taxis and Cool Cabs (air conditioned taxis).
• Ansh Synergies, Tri-Star Solutions Pvt Ltd, Taximen Services Ltd, Trump Cab Pvt
Ltd and Livemind Solutions.


28

Uber
• Uber does not own cars, uses state-of-the-art technology to connect drivers with
passengers within minutes through a mobile app for a fee.
• Given their track records in some of the emerging markets they have entered,
Uber’s play is just to create a foothold in India.
– Hertz, Avis etc. have all been in the Indian market but are tiny. So unless Uber
makes a big investment in India, local players need not to worry much.


29

Fare Chart
Delhi

Bangalore

Details
Day Time

Night Time

Day Time

Night Time

Fares Kms after

0 kms

0 kms

4 kms

4 kms

Start kms

Rs 70

Rs 87.5

Rs 80

Rs 88

Rate after start kms

Rs 20 / Km

Rs 25 / Km

Rs 19.50

Rs 21.45

Waiting Charges

Rs 2 per minute (it will
start once you will hire
taxi)

taxi)

taxi)

taxi)

Average Fare (50 Kms)

Rs. 1,310

Rs. 1,577.5

Rs. 977

Rs. 1,074.7


30

Thank You!!
To be Successful Entrepreneur 1. Find a real and sizeable problem to solve;
2. Create a very strong value proposition;
3. Execute brilliantly.

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