In Hindu mythology, Mount Meru helped the gods and demons extract nectar during the churning of the ocean. In many ways, Meru Cabs, named after the mountain, has sped past road-weary, inefficient taxi services in India and taken metered cabs to a new level.
Neeraj Gupta, Founder and MD Meru Cabs, was inspired by similar services in London and Singapore, where he would often travel with his wife.
Gupta sensed an opportunity in running a fleet of air-conditioned, GPS-linked, electronic metered taxis in Mumbai when the Maharashtra government invited tenders for such a service for 10,000 cabs, replacing the old black-and-yellow taxis in 2006.
His confidence stemmed from running taxi services for BPOs and corporate clients. He was certain such a service would be an instant hit in India if a service provider could cash in on urban Indians’ aspirations.
So he took the plunge, but money was a problem. To attract private equity investment, Gupta corporatised his operations by creating a holding structure. A holding company, V-Link Travel Solutions, was floated to own two wholly-owned arms, V-Link Fleet Solutions which was running the pick-up services for BPOs and V-Link Taxis, the new firm launched to run air-conditioned taxis in Mumbai.
India Value Fund invested Rs 50 crore in the parent company in December 2006 to help finance Mr Gupta’s foray in the air-conditioned taxi market. The fund promised to pay another Rs 160 crore when required. Further, it enlisted the services of Accenture, KPMG and E&Y; to prepare the accounts and audit. Three India Value Fund representatives and Gupta make up the company’s board. Gupta says his association with the PE investor has been his best bet yet, as without it, it would have been impossible to get marquee consultants on board.
Meru now runs a fleet of 5,000 taxis in Mumbai, Bangalore, Hyderabad and Delhi and has 700 employees. The company has a topline of Rs 100 crore. It is likely turn in a profit in 2011, and targets sales of Rs 180 crore that year.
The market, says Mr Gupta, has grown from zero to 10,000 units in the past three years.
What has also stood Meru in good stead is its investment in technology. The company has developed its own software which directs the nearest taxi driver to pick up customers. “We spend Rs 60,000 apiece to set up the device, including the credit card swipe machine, in each taxi,” says Mr Gupta.
Meru is working on a technology to offer TV services in its cabs. It earns 10% of revenues from advertisements painted on the car front. The company plans to launch a dedicated workshop for the 1,700 cabs it runs in India, in association with India Value Fund.
Gupta’s entrepreneurial journey began with an automobile garage he opened with a friend in Mumbai with an initial corpus of Rs 1 lakh. The garage, ‘Elite Class’ entered into long-term contracts with corporates.
One such deal, for pick-up and drop services with Tata Infotech, was the turning point. A new company, Travel Link, was formed to execute the service. An 18-seater bus was acquired for Rs 14 lakh in 1999.
Gupta’s main challenge is to keep pace with the rising demand for Meru cabs, and the Mumbaikar crib that cabs are not always available. “The demand for our service has grown manifold but we are unable to scale up driver numbers rapidly,” says Gupta.
State government norms, which make it mandatory for drivers to read and write Marathi and stay in Mumbai for at least 10 years to get driving licences, are partly to blame. Meru also carries out rigorous checks of drivers’ records, to maintain the spotless reputation it has enjoyed so far.
Through it all, Gupta uses an old road saying to guide him. “I’d better be safe than sorry,” he says.