Heavy discounts, driver incentives increase Ola’s losses threefold to Rs 2,313 crore in 2015-’16
However, the cab-hailing firm’s revenue grew seven times to Rs 758.23 crore from that the previous financial year.
The parent company of Ola Cabs, ANI Technologies, reported a threefold loss in the financial year that ended on March 31, 2016. Its losses nearly tripled to Rs 2,313.7 crore from Rs 796 crore a year before, according to figures revealed in the firm’s filings with the Registrar of Companies assessed on business research platform Tofler.
ANI Tech attributed the loss to heavy discounts for customers and incentives for Ola drivers, among other factors. Employee costs also surged by more than five times to Rs 379 crore, while cost of advertising and sales promotions spiked four times to Rs 385.5 crore. “Advertising, initial driver incentives, strikes in major cities and customer discounts are some of the contributory aspects to the losses seen for Ola,” an analyst told The Economic Times.
At the same time, Ola’s revenue grew seven times to Rs 758.23 crore in 2015-’16 from Rs 103.8 crore the previous year. However, there are discrepancies regarding Ola’s revenue in the 2014-’15 financial year, according to Mint. According to a regulatory filing from June last year, the cab-hailing firm had posted some Rs 418 crore in revenue in 2014-’15, but its latest filings say Ola earned Rs 103.8 crore that financial year.
Cab-hailing services such as Ola and its rival Uber generate revenue from the commission they charge drivers. They usually charge 15% to 20% commission, but in the last six to eight months, Ola has hiked the fee, reported The Hindu.
Apart from earnings through commission, the company had also raised funds lately. In November last year, the taxi aggregator had received Rs 1,675 crore from SoftBank. The Japanese telecom and internet major had bought nearly 13 lakh shares in ANI Technologies, which runs the Bengaluru-based taxi-hailing service.
SoftBank is also Ola’s largest shareholder. Experts said the company had pumped in the money to give Ola more strength to compete against Uber in India, which has been focusing on the domestic market since selling its Chinese business to Didi.