First Hand Research - How Ola Cabs work on profit margin

1. ANI Technologies Pvt. Ltd.
Indian Online Transportation
Company

2. About OLA
– OLA was founded in January, 2011, by Two IIT Bombay Alumni
Bhavish Aggarwal (CEO) & Ankit Bhati (CTO – Chief Technical
Officer) and presently based in Bangalore.
• Name has been derived from a spanish word – Hola means Hello.
• OLA ensures convenient, transparent and quick service
• Customers can access OLA on the web, through the mobile app
or through the customer service centre.
• OLA does not own or operate its own fleet, but aggregates small
operators and single vehicle owners.
• OLA’s GPS enabled mobile app for the driver helps receive
booking requests from customers in the vicinity and navigate to
the customer’s pickup point with utmost ease.

3. Number Crunch
• OLA is present in 102 cities with over 2.5 lakh vehicles, includes:
– Cabs
– Two-wheeler (on rent & with Driver - Bangalore)
– Auto Rickshaw.
• Over 70% of the bookings come through the mobile app!
• Ola's revenue is growing at an average of 30% month on month.
• 2000 cars get added on the platform every month pan-India.
• Ola has raised ~$70mn through venture capital funds and has
prestigious investors like Tiger Global, Matrix Partners, Steadview
Capital, Sequoia Capital and ‘Ratan Tata’.

4. Micro-Entrepreneurs
• OLA has transformed lives of Drivers and motivated them to
become Owner well known as DCO – Driver cum Operator.
• OLA also works with leading car manufacturers and financial
institutions to help drivers buy their own cars at huge
discounts - nurturing micro-entrepreneurship.
• Payment may be received through cash, Paytm, OlaMoney,
etc. from customers.
• DCO : OLA ratio – 80% : 20%
– OLA has recently increased its commission from 15% to 20%.
– OLA also provides ‘Minimum Business Guarantee’ (MBG)*
to drivers to secure their earnings.
* MBG: Will be explained in coming slides

5. OLA PINK
OLA has empowered girl drivers keeping into consideration
the safety concern in the mind of girl customers.
Lady
driving a
cab in
Bangalore

6. Business Model
• OLA ensures that every driver earns Rs. 1300 per day in 10 bookings
which is MBG* - Minimum Business Guarantee.
• OLA compensates by adding money to Driver’s account linked with OLA
after deducting 20% commission If driver fails to meet MBG.
• OLA also charges 1x, 1.5x, 2x of normal fare during peak hours which
are usually between 7 am to 11 am and 4 pm to 8 pm.
• Different fares for different categories of vehicle:
– Ola Share
– Micro
– Mini
– Prime &
– Auto
• It’ll be better understood with an Example in next slide:-

7. Example – Micro Category
• Base Fare: Rs. 28 /-
• Per Km: Rs. 6 /-
• Ride Time: Re. 1 per minute (time consumed in travelling)
• Taxes: 7.8% (Service Tax + Swach Bharat)
______________________________________
Q. Calculate the fare for a Passenger ‘A’ books Micro for 10 Km
journey and covers it in 30 minutes.
A. Base Fare: Rs. 28
Per Km: 6x10 = Rs. 60
Ride Time: 30 min. x 1 = Rs. 30
Total Fare = Rs. 118
Taxes (7.8%) = Rs. 9.20
Total Payable Fare = Rs. 127 /- (round off)
(through cash, paytm, OlaMoney).

8. MBG Concept - Example
Minimum Business Guarantee by OLA (A) Rs. 1300
Cash received from customers by driver in a day (B) Rs. 900
Difference (A – B) Rs. 400
20 % Commission on MBG (i.e. 20 % of Rs. 1300) Rs. 260
Compensation to Drive Cum Operator (400 - 260) Rs. 140
*** In case, Driver receives Rs. 1300 as cash amount from customers; Rs. 260 as 20 %
commission amount shall be charged by company on daily basis and OLA shall deduct
the amount from DCO’s account when customer pays through OlaMoney and Paytm,
etc. else it reflects in minus.

9. Documents Required
• All India Taxi Permit
• Police Verification*
• Insurance
• PAN
• Pollution Certificate
• Cancelled Cheque**
• LTV License (Light Transport Vehicle for Cab)
* Police Verification is an essential document to ensure the
background of drivers.
** OLA compensates and deposit money in the account if driver
fails to meet MBG.

10. OLA’s Top Seven Cities
1. Bangalore
2. Chennai
3. Delhi
4. Pune
5. Mumbai
6. Jaipur
7. CHANDIGARH
5000 CABs in Chandigarh has successfully secured 7th rank in the list of 102 cities.

11. Employee Relations & Challenges
Employee Relations
• In cooperation with Avanti Learning Centres, drivers who are
associated with OLA can get their children studying in the ninth
and tenth standard to the learning centre and avail free
education.
Challenges
• Driver Credibility
• Car Pooling
• Over Billing & Transparency in Billing
• Mobile App Security – Customer Information

12. Data Sources
Secondary Data
• Case Study: IIM – Calcutta (LIME Season 6)
http://limeonline.org/wp-content/uploads/2016/09/LIME-6-case-Study-Ola-Cabs.pdf
Primary Data
• Mr. Davender Singh – Marketing Head – OLA Cabs (Tricity)
Thank You !