The BBC reported on Sunday (4 Oct) that London’s transport authority, Transport for London (TfL), has decided not to renew the licence of Indian taxi app Ola over public safety concerns.
India’s Ola started operating in London in Feb this year. TfL said the firm reported a number of failings including more than 1,000 trips made by unlicensed drivers. It also said that Ola did not report the failings even though it knew about them.
“Through our investigations we discovered that flaws in Ola’s operating model have led to the use of unlicensed drivers and vehicles in more than 1,000 passenger trips, which may have put passenger safety at risk,” TfL accused Ola.
Ola said it will appeal the decision and has 21 days to do so. It can operate in the meantime, according to the appeal rules.
GIC and Temasek involved with India’s Ola
Ola is an Indian start-up founded by IIT Mumbai alumni Bhavish Aggarwal and Ankit Bhati in 2011. It provides point-to-point services within the city, hour-based rental services and bookings for outstation travel.
In 2015, GIC participated in Ola’s US$400-million Series E round of financing. The deal was said to value Ola at US$2.4 billion, almost four times its valuation in 2014, which raised US$210 million.
VCCircle.com, a news site that focuses on investments in India commented the deal at the time, “For GIC, too, this marks a new-found love in Indian technology ventures. The sovereign wealth fund of Singapore had last year (2014) invested in India’s top e-commerce venture Flipkart along with DST.”
Three years later in 2018, it was reported that Temasek bought a stake in Ola (‘Singapore’s Temasek buys secondary stake in Ola for $225 million‘). It went in to buy up a large stake in Ola for around US$225 million. A group of early investors of the company decided to cash out and Temasek happily went in to mop up their stake. Not only that, Temasek also wanted to pump in more money into the company by way of subscription of new shares.
An industry executive commented, “Temasek has come in as a white knight in the company both because this will help Bhavish (the founder) ensure there is more bandwidth on the board and also because as a strong sponsor they have the ability to pump in more funds.”
Ola’s losses went up 92%
Meanwhile, it was reported last year that losses had increased for Ola by 92% for its cab-leasing business Ola Fleet Technologies. The losses went up from 845 million rupees (US$11.9 million) in 2018 to 1.62 billion rupees ($23 million) in 2019 (‘Losses mount for Indian taxi aggregator Ola‘, 12 Dec 2019).
Revenue, however, only increased by 59% from 3.70 billion rupees in 2018 to 5.91 billion rupees for the last financial year. The company reportedly owns more than 100,000 vehicles. The biggest chunk in expenses was depreciation, depletion and amortization expenses – 2.9 billion rupees that increased from 1.86 billion rupees.
With the cab services market nearing saturation, Ola has also diversified into a bike taxi service.