What was Ola’s claim to fame, apart from the hit-a-button-get-a-cab concept? It allowed you to upgrade your mode of transport from buses and autos to air conditioned cabs. What if someone wanted to disrupt that and take you back to autos? What if someone wanted to unchange that habit? That someone is Samar Singla and he is the co-founder and CEO of Jugnoo and that is his entire business plan. Jugnoo has to change customer behaviour that has already given up on using autos.
It is a tough proposition, to begin with. Theoretically, it could work. But, hold on to the word; theoretically. And yes, be ready to peel the onion.
Singla’s focus is tier-two cities. In tier-two cities, distances are shorter, the fares are lower, traffic jams aren’t a problem and most people like using their own vehicle. Also, in tier-two cities, if someone isn’t using their own vehicles, there is an aspiration to travel in a car not in an auto.
Add to that the fact that Ola is present in almost all towns that Singla calls his stronghold. Ola’s Micro variant offers fares competitive to autos and snatches passengers away from Jugnoo. Let’s look at all of Jugnoo’s top cities. Jaipur? Ola and Jugnoo fight it out for on-demand transportation. Ola, sources say, does 1.5X times the rides that Jugnoo does. Indore? Same answer. Delhi NCR? Let’s not even go there. Jugnoo’s headquarters, Chandigarh? Uber and Ola dominate the market. Ola is also better funded and regularly blows Jugnoo out of the water on marketing spend.
You see the challenge here?
The fight for mindshare, let alone market, hasn’t been pretty. And Jugnoo is losing. It could clock just Rs 24 lakh in revenue in FY15 and has losses to the tune of Rs 83 lakh, according to filings with the Ministry of Corporate Affairs (MCA). How much have they raised so far? Almost Rs 110 crore. According to a few former employees, Jugnoo’s average ticket size is Rs 50 and it keeps a 10% commission on each ride. So, it makes Rs 5.
The only way Jugnoo can actually make money is by sheer volume. It doesn’t. On an average, Jugnoo claims it does about 35,000 rides a day through its network of 10,000 autos across 42 cities. The per kilometer rate in almost all of its cities is Rs 5. But Jugnoo reduces it to Rs 3 to get customers, say former and current employees. What about the other Rs 2? Jugnoo pays for it. On every ride, on ever kilometer. So, on an average ride of 10km, Jugnoo burns Rs 20.
Another matter altogether that Singla denies this.
“We lose 76 paise per transaction.
