For Tab Cab, slowdown is a growth driver

For Tab Cab, slowdown is a growth driver

SMS Taxi Cabs Pvt Ltd, a part of SMS Infrastructure Ltd, which runs radio taxi cab service in Mumbai under the Tab Cab brand, sees demand growing due to rising petrol prices. The company, which plans to roll out 4,000 cabs by year-end, is looking at replicating the model in other cities, too. Prasenjeet Bagchi, chief marketing officer, spoke about the company’s plans. Excerpts from the interview:

Could you elaborate on the growth potential of the radio cab industry? Only in Mumbai there is a demand for 7,000-8,000 cabs. We see similar kind of demand in other cities, too. There is a good potential and that is why we have entered this business. We are the first tendered radio taxi services to be launched in India. As part of the tender, we have to procure total of 4,000 cabs by December-end. We have already launched around 1,200 cabs, out of which 100 are Maruti Suzuki’s SX4 in Tab Cab Gold in the premium category (`2 higher category) and 1,100 are Toyota’s Etios. Another 100 Etios and 300 SX4s are ready to be launched but because of driver shortage we have not been able to launch them. There is a huge shortage of drivers within the radio taxi industry. Could you elaborate? There is a huge shortfall of drivers across the industry. There is a requirement of drivers with a taxi badge who are willing to get into the radio taxi business. Because of a certain mindset, the existing black and yellow cab drivers feel that they do not have ability to get the business and pay a daily rental to the company. We are trying to break this mindset as a barrier. We have launched a promotional campaign, wherein we are guaranteeing them a monthly income of `12,000 for the first three months. It’s not salary though. We have also created a team which is encouraging potential drivers who fulfill the RTO requirements to acquire a taxi badge. What are the investment plans? Out of the `700 crore planned investment, `100 crore has already been invested by the promoters and `100 crore by banks. Another `100 crore will be pumped in by investors in the 3-4 months and banks will lend `200 crore more. So by end of December, `500 crore will be invested. What is the scenario on fare hike? There has been an increase in CNG prices (`5 per kg) since the time we have been awarded the tender, but we have not raised the fare. We have applied for a fare hike with the authorities. Black and yellow cabs have already given the hike. We plan to hike by around Rs.4 at least. Are you looking to add more categories? We are planning to add another category – Platinum – which is `2 higher than the Gold. These will be `12 lakh and above cabs. We are looking at 2-3 new models there. How has the overall slowdown affected the demand for radio cabs? This has given growth to the radio cab industry because people are hiring more taxis. A lot of people don’t want to use their own cars. We have seen demand increasing month on month. What is your expansion plan? We are looking at having similar services across India. By next year we are looking at covering other metros such as Delhi, Hyderabad, Bangalore, Chennai and Kolkata. As part of the long-term plan we would be launching in other countries such as Sri Lanka and Thailand.