Uber to drive $1 billion into India operations

A day after the high court here rapped taxi aggregators for plying in the national capital despite the ban against them, Uber announced a fresh investment of $1 billion (Rs 6,400 crore) into its India operations. In less than two years of its foray into the country, India has become the largest market outside the US for the San Francisco-headquartered taxi aggregator.

Amit Jain, president of Uber India, said the company was extremely bullish on the Indian market and saw tremendous potential here. "We're committing an additional $1 billion to India in the next six to nine months, so that we can expand and improve our operations, grow into newer cities, develop new products as well as payment solutions, and establish a great support network," Jain told Business Standard.

Jain added with the additional investment and month-on-month growth of about 40 per cent, the company expected to record about one million trips a day in the next six to nine months. It also hopes to help support about 200,000 jobs, essentially drivers, on its India network. According to industry estimates, Uber has 50,000 drivers and undertakes about 200,000 trips a day. Its revenue run rate stands at about $250 million.

In the past two months, Uber has been extremely aggressive about India. In the first week of July, it announced an investment of $50 million in building a response and support centre in Hyderabad. The investment, Uber's first significant one in India, will be spread through five years and the facility will be the taxi aggregator's largest international office. A week earlier, the company said it had started operations in seven additional cities, raising the overall count to 18. This made its India operations larger than those in China, Germany and the UK.

Though the company has become a force to reckon with globally, it faces stiff competition from the SoftBank-backed Ola (formerly Ola Cabs) in India. Ola, which acquired taxi aggregator TaxiForSure for $200 million in March this year, has operations in about 100 cities.

According to a statement by Ola, it has 2,50,000 vehicles on its network; these undertake about 750,000 rides a day. The company also claims it is adding 1,500 vehicles a day. A company spokesperson refused to comment on Ola's fund raising plans.

According to a report in The Economic Times dated July 28, Ola is in talks with existing investors to raise Rs 3,150 crore ($500 million). In April, it had raised $400 million.

To fight competition better, Uber recently extended the pay-by-cash feature to four cities - Ahmedabad, Chandigarh, Jaipur and Kochi - in addition to Hyderabad. Many say this might be the cursor to a nationwide launch. The move was perhaps triggered by the fact that Uber's largest rivals, Ola and Meru, allow customers to pay in cash.

Since mid-July, Uber began accepting credit card and debit card payments, after building a technological solution to meet the Reserve Bank of India's payment norms.

Uber's $1-billion fund infusion will primarily come from the company's financing round of $1.2 billion in December last year. In a blog, Uber global chief Travis Kalanick had said, "This financing will allow Uber to make substantial investments, particularly in the Asia-Pacific region." Kalanick has also been quoted as saying India and China are Uber's priority markets.

"We have grown exponentially in India, a global priority market for us, which has also quickly become the largest market for Uber outside the US. We continue to see 40 per cent growth month-on-month and with more investment in product, hiring, and payment solutions, we expect to grow even faster," said Jain.

In India, the top five cities for Uber contribute about 80 per cent to the company's total trips. The company is planning to start operations in more cities by the end of this year and double its headcount (support staff on its rolls) from the current 120-140.

/> STEPPING ON THE GAS

200,000

Number of rides/day in India for Uber

1 million

The number of rides a day Uber expects in 6-9 months

$250 million

Uber's revenue run rate in India, according to industry sources

  • Uber's proposed $1-billion investment will go into expanding and improving operations, developing new products and payment solutions and setting up a robust support network