Gaurav Aggarwal, chief executive of outstation car rental startup is too shy to speak of his uncommon achievement—turning profitable. A first in the company’s 13-year history. 

We went out to raise money in 2015, but couldn’t,” Aggarwal recalls. “Since [cab aggregators] Ola/Uber had just received funding from [Japanese conglomerate] SoftBank, the market was pretty much written off from a VC perspective.

With its back against the wall and cash reserves dwindling, Savaari was forced to strategise and make sense of its unit economics. It exited the airport transfer and rental segments in 2014, solely focussing on intercity cab transport. 

And it worked. 

“Every customer we get, new or repeat, we make Rs 450 ($6.5) per trip. This adds directly to our bottom line,” Aggarwal said. “The confidence of running a profitable business is unparalleled.”

In the last financial year, Savaari closed with a profit after tax of about Rs 20-25 lakh ($28,000-36,000) on a revenue of Rs 70 crore ($10 million)—a small yet significant sum in the cash burn-led cab aggregation business. The company’s revenue grew ~86% from Rs 48.6 crore ($7 million) in the year ending March 2017 while losses had remained steady at Rs 1.7 crore ($246,000) before the turnaround this year. 

Great, right? Not quite. For an intercity ride-hailing service to see hockey stick growth, like with intracity cabs, the segment needs a steadfast investor. Think Ola and Uber’s relationship with SoftBank. But with Savaari, investors in the space are apprehensive about the same kind of growth as the frequency of travel is a lot lower intercity than intra.

The less glamorous intercity travel remains an unorganised, fragmented segment dominated by ~1,000 local cab companies per metro, as per industry estimates. Several firms—including Gozo Cabs and—which operate in the online intercity space, according to industry estimates, have stayed under the radar nibbling on the ~$15 billion intercity market.

But as the heady days of fat commissions to drivers and heavy discounts to customers draws to a close, “it’s the business and not the incentives that’s getting attention,” Aggarwal says. This warrants a closer look at Savaari’s turnaround to examine if it’s a false positive or a glimmer at the end of the tunnel for investors to bet big. 

Moreover, if there is, indeed, a glimmer—how long will it take for Savaari to make that journey to reach it? And is SoftBank waiting on the other end?

It’s been a long drive

Intercity ride-hailing has always been tricky business.

Both ride-hailing giants Ola and Uber had tried intercity plays in the past and quickly scrapped the service before re-entering the space.    

Ola re-entered the intercity segment in 2016 with Ola Outstation, but that accounts for a mere 2-3% of its overall revenue, sources say.


Nilesh Christopher

Nilesh Christopher is a journalist who reports and writes on technology and startups. In his last assignment, he was a staff writer at FactorDaily, an online technology publication. Over there, he wrote long, deeply reported feature stories. Prior to that, he was a daily news reporter for the Economic Times. He tweets @nilchristopher and can be reached at [email protected]

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