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Burning cash: Ola reports 3-fold jump in losses at Rs 2,313 crore in FY16

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Ola which is engaged in a battle with global rival Uber has been burning money

BS Reporter  |  Bengaluru  May 1, 2017 Last Updated at 12:10 IST

India’s leading taxi aggregator Ola reported a threefold increase in losses at Rs 2,313.6 crore for the year that ended March 31 2016, on the hand of increased spending on salaries, marketing and technology.


Ola which is engaged in a battle with global rival Uber has been burning money on discounting rides for passengers while paying drivers hefty sums.


The move saw losses shooting through the roof, but it also yielded strong revenue growth which increased by over seven times to Rs 758.2 crore in the period from Rs 103.7 crore in the previous year, according to regulatory documents sourced from Tofler.


According to the documents, Ola spent around Rs 381 crore on salaries, Rs 437 crore on advertising and Rs 120 crore on technology in the 12 months to March 2016. The company’s income from operations stood at a paltry Rs 438 crore in comparison, indicative of just how much money it was burning to maintain a lead over Uber.


Concerns over Ola’s rising losses showed when investors bit off over 30 per cent of its valuation in a round which saw it raise $330 million from Softbank, RNT Capital and Falcon Edge Capital in December. Experts say the increased aggression from Uber along with huge burn led to investors losing some amount of confidence in the company.


In the year that has followed, both Ola and Uber have significantly cut their burn by slashing incentives paid to drivers that has led to protests and some amount of attrition. However, both maintain they are still seeing strong adoption of their service in cities where public transport remains inadequate.


It is to be seen how this will affect Ola’s performance in FY17, but for now the company is continuing to invest in areas such as shared electric mobility and in-car infotainment with its Ola Play platform. 

Burning cash: Ola reports 3-fold jump in losses at Rs 2,313 crore in FY16

Ola which is engaged in a battle with global rival Uber has been burning money

Ola which is engaged in a battle with global rival Uber has been burning money

India’s leading taxi aggregator Ola reported a threefold increase in losses at Rs 2,313.6 crore for the year that ended March 31 2016, on the hand of increased spending on salaries, marketing and technology.


Ola which is engaged in a battle with global rival Uber has been burning money on discounting rides for passengers while paying drivers hefty sums.


The move saw losses shooting through the roof, but it also yielded strong revenue growth which increased by over seven times to Rs 758.2 crore in the period from Rs 103.7 crore in the previous year, according to regulatory documents sourced from Tofler.


According to the documents, Ola spent around Rs 381 crore on salaries, Rs 437 crore on advertising and Rs 120 crore on technology in the 12 months to March 2016. The company’s income from operations stood at a paltry Rs 438 crore in comparison, indicative of just how much money it was burning to maintain a lead over Uber.


Concerns over Ola’s rising losses showed when investors bit off over 30 per cent of its valuation in a round which saw it raise $330 million from Softbank, RNT Capital and Falcon Edge Capital in December. Experts say the increased aggression from Uber along with huge burn led to investors losing some amount of confidence in the company.


In the year that has followed, both Ola and Uber have significantly cut their burn by slashing incentives paid to drivers that has led to protests and some amount of attrition. However, both maintain they are still seeing strong adoption of their service in cities where public transport remains inadequate.


It is to be seen how this will affect Ola’s performance in FY17, but for now the company is continuing to invest in areas such as shared electric mobility and in-car infotainment with its Ola Play platform. 

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BS Reporter

Business Standard

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