Ride hailing entity Meru Cabs has got a new lease of life with automobile major Mahindra & Mahindra (M&M) Ltd. deciding acquire a majority stake and invest up to ₹201.5 crore in the company. M&M has signed a share subscription and shareholder agreement to acquire up to 55% stake in tranches in Meru Travel Solutions Pvt Ltd.
Upon acquisition of a majority stake, Meru will become a subsidiary of M&M and three of its subsidiaries — Meru Mobility Tech, V-Link Automotive Services and V-Link Fleet Solutions — will come under M&M.
For the year ended March 31, 2019 Meru had reported a consolidated revenue of ₹156 crore. The profit/loss numbers have not been disclosed.
In a filing with the stock exchanges, M&M said it was keen to grow its presence in the shared mobility space and through Meru, it will enter corporate and shared mobility space which is an area of its strategic interest.
The all-cash first tranche of the investment will be made by the end of October 2019. Of the total investment of ₹201.5 crore, a primary investment of ₹103.5 crore will be made to acquire 55% stake in Meru in tranches, M&M said.
M&M will have right of call option to acquire shares from certain existing investors of Meru and these existing investors would have put option to sell shares of the company for an amount not exceeding ₹98 crore to M&M.
Facing tough competition and with a dwindling fleet Meru’s consolidated revenue had been on a decline. In FY17, it reported a consolidated revenue of ₹277.2 crore which declined to ₹189 crore in FY18 and further dropped to ₹156.6 crore in FY19.
The company and its subsidiaries have operations in Mumbai, Delhi, Bengaluru and Hyderabad in metered radio taxi service and corporate and tourist transport service in many more cities. According to Meru’s website, the company offers five transportation products in 24 cities through a fleet of 20,000 cabs.
In February this year, Mahindra had forayed into shared mobility by launching an all electric vehicle fleet of a dozen cars under the brand name of Glyd.
