Bhavish Aggarwal’s email to Ola Cabs employees on 20 May, his first in six months, bore bad news. The co-founder and CEO said around 1,400 of the ride-hailing company’s 4,500-plus employees would be laid off. The reason: the Covid-19 pandemic had brought its operations to a standstill and cratered revenue by about 95% over the last two months.

The layoffs also included around 20% of the 750-odd people working for Ola Fleet Technologies, its cab-leasing business, said a senior executive. They requested anonymity as they are not authorised to speak to the media. Ola Fleet, started in 2015, was suffering the same fate as ride-hailing. About 96% of its roughly 33,000 leased-out cabs are gathering dust in Ola’s parking lots around the country. 

Ola Fleet, which Ola touts as India’s biggest fleet company in internal newsletters, leases out cabs to drivers who can’t afford to buy a car or do not have access to credit. In return, drivers pay a partially refundable security deposit of around Rs 25,000 (~$330), with daily rentals ranging from Rs 750-1,150 ($10-$15), depending on the city, car model, and other factors. The fleet cabs can be easily distinguished from others on Ola’s platform by their distinct green stripe, along with the company logo.

Aggarwal’s idea with Ola Fleet was simple. There was never going to be a demand shortage for cabs in India, with its poor public transport systems, high fuel costs, and a massive population. Instead, Aggarwal wanted to solve the supply side of the equation by enabling more drivers to join its platform.

This was great in theory. It helps solve for supply, which in turn sees ANI Technologies, Ola’s parent company, earn commissions on each ride. Ola Fleet also makes money through the daily rentals.

Ola Fleet enjoyed initial success between 2015 and 2017, when almost all the cabs it bought were leased by drivers. Aggarwal aimed to have 200,000 leased cabs on the road by the end of March 2019, according to a former executive who was with Ola Fleet from its inception. That would have constituted around 20% of the total number of cars on Ola’s platform. 

Not only is Ola Fleet nowhere close to that number, but even the cars it has on its books are a ticking time bomb for the company. To start with, the depreciation cost for its existing fleet was Rs 293 crore ($39 million) in the year ended March 2019. That alone accounted for almost 40% of Ola Fleet’s total expenses, which includes maintenance and insurance costs. That’s without accounting for the financing costs for all these cabs.

Moreover, only 50-60% of Ola Fleet cabs were on the road until mid-2019, according to the two sources. As Ola cranked the revenue lever by raising rental rates and decreasing driver incentives, drivers began pulling out.

AUTHOR

Pranav Balakrishnan

Pranav writes about the business of moving people and things around, i.e, mobility and e-commerce. Over the past two years, he has written about Ola, Tesla, Flipkart, Amazon, and the increasing role played by Reliance Industries in the Indian technology story. Pranav joined The Ken from Asian College of Journalism, Chennai, specialising in business journalism.

View Full Profile

Available exclusively to subscribers of The Ken India

This story is a part of The Ken India edition. Subscribe. Questions?

MOST POPULAR

Annual Subscription

12-month access to 200+ stories, archive of 800+ stories from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 2,750

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

Rs. 500

Subscribe
MOST POPULAR

Annual Subscription

12-month access to 150+ stories from Southeast Asia.

$ 120

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

$ 20

Subscribe

Questions?

What is The Ken?

The Ken is a subscription-only business journalism website and app that provides coverage across two editions - India and Southeast Asia.

What kind of stories do you write?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics.

We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

What do I get if I subscribe?

For subscribers of the India edition, we publish a new story every weekday, a premium daily newsletter, Beyond The First Order and a weekly newsletter - The Nutgraf.

For subscribers of the Southeast Asia edition, we publish a new story three days a week and a weekly newsletter, Strait Up.

The annual subscription will get you complete, exclusive access to our archive of previously published stories for your edition, along with access to our subscriber-only mobile apps, our premium comment sections, our newsletter archives and several other gifts and benefits.

Do I need to pay separately for your premium newsletters?

Nope. Paid, premium subscribers of The Ken get our newsletters delivered for free.

Does a subscription to the India edition grant me access to Southeast Asia stories? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

Do you offer an all-access joint subscription for both editions?

Not yet. If you’d like to access both editions, you’ll have to purchase two subscriptions separately - one for India and the other for Southeast Asia.

Do you offer any discounts?

No. We have a zero discounts policy.

Is there a free trial I can opt for?

We don’t offer any trials, but you can sign up for a free account which will give you access to the weekly free story, our archive of free stories and summaries of the paid stories. You can stay on the free account as long as you’d like.

Do you offer refunds?

We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Please write to us at support@the-ken.com detailing the error or queries.