Ola Fleet Technologies Pvt., Ltd., Ola’s cab leasing arm, has reportedly received $7.7 million in fresh funds from parent company ANI Technologies Pvt., Ltd. Filings with the Ministry of Corporate Affairs show Ola Fleet received the fresh capital on 12 October 2017.
VCCircle reported, Ola Fleet allocated close to 50 million equity shares at a subscription price of Rs. 10 apiece. This round of investment follows a Rs. 50 crores and Rs. 100 crores funding by Ola in July this year. Launched as a leasing programme in 2015, Ola Fleet has already managed to secure multiple loans from Yes Bank, Axis Bank, HDFC Bank and ICIC Bank. The company has been steadily expanding its consumer vehicles fleet. Ola Fleet allows the company’s partner drivers own vehicles through periodical installments.
While Ola is yet to comment on this latest fundraising round, the development comes at a time when the company is facing a series of setbacks. Both Ola’s and Uber’s cab leasing business have been battling driver exits and defaults on car loan EMIs. According to sources, the State Bank of India also suspended car loans for the Uber and Ola taxis, following loan defaults of about Rs. 120 crores. A news daily reported, the bank even seized around 300 cars owned by both companies, in May this year.
Despite loan defaults, the company posted a net sale of Rs. 5.6 crores for the financial year 2015-2016. Ola Fleet was started on the principle of an asset light model, where instead of purchasing a new car, drivers could enter into a contract with Ola. Both Ola and the driver partner could then share a certain percentage of profit arising out of the business. Subsequently, Ola Technologies launched the cab leasing programme to gain more control over the driver partners and restrain them from migrating to rival companies. However, extensive driver exits has put the leasing businesses in a limbo. It is still unclear how Ola Fleet will use this infusion of fresh capital.