OTL Cab launches new business model to take on car rental companies

Company is leasing cars from their owners for a period of three years and then putting these cars on rental through app based bookings

In an age of cab service where the rentals are provided by the aggregators, a company has come up with a different model in the space recently and hopes to break-even by the end of this fiscal year while the dominant Ubers and Olas are still to achieve the break-even point.

OTL Cab which launched its services on Wednesday after a month's pilot run is leasing cars from their owners for a period of three years and then putting these cars on rental through app based bookings.

The company is paying between Rs. 22,000-30,000 per month to the owners for the dry lease while it is keeping the drivers on its payroll which costs the company between Rs. 12,000-15,000 a month.

 

"Unlike the dominant players in the market, we own the cabs on a leased basis as well provide the drivers who are on our payroll", founder and chairman of OTL Cab, Adhrick Roy said.

Effectively, the cost of running each car per month is costing the company between Rs. 34,000-45,000 excluding the fuel and associated costs.

Furthermore, the company has funded this project from its own coffers and will need Series A funding only in 2017-18, which will be the second year of its operations.

"By March 2017, we will break-even", Roy said.

The company is also assisting the owners to get dealer discounts of Rs. 40,000 in purchasing the cars as well as assist them to avail the state government's Gatidhara initiative under which the car purchasers can avail Rs. 100,000 of subsidy from the state government while buying a cab.

The company presently has a fleet of 185 cabs which is running in the city which will be scaled up dramatically to 2,500 this year. Also, it will be hiring around 5,000 drivers of which 35% will be women drivers.

A unique feature of this enterprise is women drivers will only cater to fellow women passengers between 8 am to 10 pm.

"We do not have any surged pricing model, neither is there an extra ride time charged - there is no hidden cost", Roy claimed.

According to Roy, the pricing has been kept simple to avoid any discrepancy in the model.

For the first two kms, the company is charging Rs. 51 for sedans and Rs. 35 for hatchbacks and for every subsequent kms, Rs. 10 is charged for sedans and Rs. 9 for hatchbacks.

"The pricing seems higher when compared to the dominant players, but with no surged prices and no ride time charges, the effective bill will be cheaper", Roy said.

OTL Cab will operate Honda Amaze and Ford Aspire in the sedan segment and Chevrolet Beat and Hyundai Eon in the hatchback segment.

These cabs have additional security features like CCTV inside the cars, GPS and RMS tracking of the vehicle, alarm and others.

OTL Cab's services, this year will be limited to Kolkata and West Bengal. However, the company has plans for a national rollout in 2017.