Despite cut-throat competition in the organised taxi service industry, Meru Cabs, one of the oldest operators in the country, said it will break even this year.

The company, which posted its first profits in FY-14 since its inception in 2007, is also targeting ₹1,000 crore revenue this fiscal, up from ₹600 crore in FY-15.

“In 2011, as an incumbent, we were accessing whether in this industry profits can be delivered because you can’t continue to have losses for ever,” said Siddharth Pahwa, CEO.

Newer cities

“We have proved that we can generate profits in this business and sustain it for a longer term as compared to our competitors who are burning $15-20 million per month on promotions and campaigns. Meru is able to achieve this rate of growth at $1-2 million a month.”

Despite stiff competition from new companies such as Ola, bookmycab and Uber, Meru would be able to achieve profits, Pahwa said.

The company aims to achieve this by expanding into newer cities, focusing on technology, mostly mobile apps, and on the small car segment.

The company, which launched Meru Genie last year, is already witnessing 10-fold growth month on month.

May cut fares

Pahwa expects this segment to grow faster than the premium car.

From just four cities until 2013, Meru wants to expand its services in 40 cities by December this year. It is present in 20 cities now.

“Our technology, good consumer base and business processes and network efficiencies have helped us achieve the numbers. Now, we want to pass on the benefits to consumers. We are looking at reducing the prices by another 25 per cent,” the CEO added.

In the last one year, most taxi operators have either reduced fares or are running campaigns to acquire more and long-term users.

San Francisco-based Uber, which has created a disruption in the taxi industry globally, has slashed rates by 30 per cent.

That apart, it offers free rides to the first-time users. Ola, which is present in about 100 cities after having acquired TaxiForSure, is also running various cash-back offers to woo first time riders across the country.

Funds to grow biz

According to industry reports, foreign private equity firms and strategic investors have pumped in over $1 billion into the $14-billion market, of which the organised segment is pegged at around $800 million.

Experts feel the market is set to grow 10 times to $7 billion by 2020 fuelled by high usage smart-phones and growing acceptance among consumers to use cabs as daily commute.

Meru, funded by India Value Fund and promoted by Neeraj Gupta, is also seeking over $100 million to grow its business.

The company is reported to clinch a deal with strategic investors by the end of this month.

Pahwa said the existing investors and promoters are not looking to exit at the moment.

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