Meru to tie up with Paytm, Southeast Asian cab firm

Plans to go for IPO in three years

In an effort to be a ‘relevant’ opponent to cab aggregators Uber and Ola, India’s largest radio taxi provider Meru Cabs is planning expansion and strategic alliances with mobile wallet company Paytm and an undisclosed southeast Asian taxi provider. The tie-ups are expected to help Meru go for an initial public offering (IPO) in the next three years, sources said.

Meru is close to raising around Rs 150 crore from a single Indian investor, it is learnt.

The company has had talks with a number of probable investors as well as major e-commerce companies for strategic alliance during the past few months.

The fresh funds would be used for fleet expansion as well as entering new cities. The company is planning to increase its fleet size in Delhi and add 500 new cabs to take its fleet size to 3,500.

On the strategic alliance, a source close to the development said Paytm would promote Meru services to all its user base on its portal. Meru would give cashbacks to Paytm users and Paytm would offer deals such as free rides to its users.

Meanwhile, Meru’s recent 25 per cent fare reduction is seen as a way of fighting it out with rivals Uber and Ola. This was one of the ideas conceptualised along with Paytm, as a way of expanding its user base. Meru aims to increase its user base from four million to eight million by the end of this year by tapping Paytm’s 120-million customer strength.  Meru is likely to cut fares in other cities as well. However, the scheme would not be permanent. Its normal fare is fixed at Rs 23 a km.

The alliance with a southeast Asian cab provider will be primarily for technology support.  Meru is breaking even in almost all the cities it is present in and it is growing at 35 per cent compounded annual growth rate. While its revenue was Rs 600 crore last year, it is projected to grow to Rs 800 crore this year.