4000 New Taxis to Hit the Streets of Mumbai
A private company in India has just won a contract to run a massive fleet of 4,000 taxis in Mumbai, the financial capital of India. With a city the size and density of Mumbai, this brand new fleet of taxis will bring some much needed capacity. A growing middle-class means that millions more can now afford private taxi travel within the city.
SMS Infrastructure Limited won this contract after a closely fought auction held by the state transport department. The winning bid was made by SMS Infrastructure, buying 4,000 taxi licences at Rs. 2.61 lakh each or 261,000 rupees (equivalent to £3,400). The company intends to spend Rs. 104 crore or 1,040,000,000 (equivalent to £13.8m) on acquiring the taxi licences, and a further Rs. 400 crore (equivalent to £53m) on the cars themselves. Together with a hi-tech call centre and other startup costs, SMS has estimated a debt-funded budget of around Rs. 700 crore. Conversations are being held with Tata and other manufacturers to supply the largest taxi fleet run by a private operator in India.
"Named TAB Cabs, the radio taxis will be controlled through a hi-tech call centre in Mumbai. A client can dial a number and order a taxi. Although there are five others players in the same sector in Mumbai, it is expected that higher number of taxis and the luxury features may give the brand an edge", said Anand Sancheti, a director in SMS Infrastructure.
There is no doubting the massive nature of this venture, which is expected to generate 6,000 jobs. A break-even timetable of four years is expected, with the challenge of dry runs being one of the major issues to be overcome, especially in a city the size of Mumbai. As taxi companies across the world will be aware, dry runs or dead mileage journeys (the distance travelled to pick up a passenger or get back to base after a drop-off) are a constant battle to minimise. Plans are already on the table to launch an Executive service for premium taxi passengers shortly after the launch of the initial service, however due to administrative, regulatory and some pending litigation concerns, this may be put back by a few months.
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