“Failure of Rapido in Maharashtra Region”

A Case Study Report submitted to

(BALAJI INSTITUTE OF MANAGEMENT AND

HUMAN RESOURCE DEVELOPMENT)

SRI BALAJI UNIVERSITY, PUNE

MBA Batch (2021-23)

SUBMITTED BY: - Rakshita Jain

UNDER THE GUIDANCE OF: - DR. Paheli Nigam

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 DECLARATION BY THE CANDIDATE

I declare that the Project titled “FAILURE OF RAPIDO IN

MAHARASHTRA REGION” is submitted by me is an original under the
guidance of Dr. Paheli Nigam and I further declare that there is no falsification
of data/material to the best of my knowledge.
I further declare that the material obtained from other sources has been duly
acknowledged in the Report.

Date: 15th March 2023

Place: Pune

(Signature of the candidate)

Rakshita Jain

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 ACKNOWLEDGEMENT

I would like to express my sincere gratitude to my Faculty Mentor Dr. Paheli

Nigam for her never-ending encouragement and support.
I would like to extend my sincere appreciation to other faculty and others for
sharing their wisdom and experience during research work.
My sincere thanks to my friends for their unconditional proactive support and
timely permissions for project work. Finally, I thank God for making this
journey an enriching experience for me.

Date: 15th March 2023

Place: Pune (Signature of candidate)

Rakshita Jain

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 Table of Content

Page
S.N Topic
No
1 Executive Summary 5

2 Introduction 6

3 Industry Outlook 6

4 Company Overview 7

5 Rapido Funding 7

6 Rapido Marketing Strategies 8

7 Revenue Model of Rapido 8-9

8 Expense Model of Rapido 9

9 Case Scenario 10

10 Financial Overview of the Company 11-12

11 Findings 13

12 Conclusion 13

13 References 14

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 Executive Summary
Rapido is a ride-hailing start-up based in Bangalore, India, that offers on-demand
bike taxi services to customers. Founded in 2015, the company has rapidly grown
to become one of India's leading ride-hailing companies, operating in over 100
cities across the country. Rapido's service is based on a peer-to-peer (P2P) model,
in which riders can use the company's mobile app to schedule a ride with another
bike rider nearby. But Rapido could not survive in the market because of legal
complications and has to stop its bike taxi services in Maharashtra in 2022.
The objective of the case study was to ascertain the reasons behind the downfall
of Rapido and the reason behind why it is banned. To get a deeper understanding
on the failure of Rapido in Maharashtra, a descriptive study has been conducted
to understand the reasons behind the failure of Rapido in Maharashtra. The data
used to complete the study was secondary data provided by reliable sources.
After the collection of data, analysis and interpretation of data has been done. On
the basis of that, I found that due to the license issues company has to shut down
its 2-wheeler taxi services in Maharashtra and also found that the company is
facing losses for the last 3 years.
The major limitation of the study was time period and unavailability of data as
Rapido is not a listed company. Although, maximum care has been taken in order
to arrive at appropriate findings and solutions.

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 Introduction

Industry Outlook
The transportation industry has undergone significant changes in recent years,
largely driven by the rise of ride-hailing services like Ola, Rapido, and Uber.
These companies have disrupted traditional taxi and transportation services by
offering customers the convenience of on-demand rides via mobile apps. The
number of users in the Ride-hailing & Taxi segment is expected to reach 110.30
million by 2027.
The outlook for the transportation industry is positive as these ride-hailing
services continue to grow and expand into new markets. According to a report by
Allied Market Research, the global ride-hailing market is expected to reach
$126.5 billion by 2025, growing at a CAGR of 20.2% from 2018 to 2025.
The ride-hailing industry’s growth can be attributed to several factors, including
the rise of mobile technology, changing consumer preferences, and the
convenience and affordability of ride-hailing services. In addition, the COVID-
19 pandemic has accelerated the adoption of ride-hailing services as people seek
safe and contactless transportation options.
In 2023, revenue in the Ride-hailing & Taxi segment is expected to reach $1.03
trillion and it is expected to grow at a CAGR of 2.26% from 2023 to 2027,
resulting in a market volume of $1.12 trillion by 2027.

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 Company Overview
Rapido is a ride-hailing service in India that specializes in providing bike rides.
It was founded in 2015 by Aravind Sanka and Rishikesh SR. The company
operates in more than 100 cities across India and has over 15 million registered
users.
Rapido's service is based on a peer-to-peer (P2P) model, where riders can use the
company's mobile app to book a ride with a nearby bike rider. The service is
designed to be fast, affordable, and convenient, especially for short-distance trips
in urban areas where traffic congestion is a problem.
The company's fleet consists of trained and verified bike riders, who undergo
rigorous background checks before being onboarded. The bikes used by the riders
are regularly serviced and maintained to ensure the safety and comfort of
passengers.
Rapido's app allows users to book rides, track their rides in real time, and pay for
their trips using a variety of payment methods, including cash, digital wallets, and
credit/debit cards. The company also offers various features such as ride sharing,
split fare options, and group bookings to make the service more accessible and
affordable for its customers.
Rapido Funding
Rapido is a popular bike taxi service in India, and it has received funding from
various investors over the years. Rapido has raised a total of around $182 million
in funding through multiple rounds.
1. WestBridge Capital: In December 2020, Rapido raised $26 million in a
funding round led by WestBridge Capital.
2. Shunwei Capital: In November 2019, Rapido raised $53 million in a
funding round led by Shunwei Capital.
3. Nexus Venture Partners: In July 2019, Rapido raised $55 million in a
funding round led by Nexus Venture Partners.
4. Integrated Capital: In December 2018, Rapido raised $10 million in a
funding round led by Integrated Capital.
5. Skycatchr: In March 2017, Rapido raised $700,000 in a funding round led
by Skycatchr.

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Rapido Marketing Strategies
Rapido, the bike taxi service in India, has employed several marketing strategies
to reach and retain its customers.
1. Referral Program: Rapido has a referral program where existing users can
refer their friends and earn credits for free rides. This strategy not only
incentivizes existing users to refer new ones but also provides an easy way
for new customers to try out the service for free.
2. Social Media Marketing: Rapido leverages social media platforms like
Facebook, Twitter, Instagram, and YouTube to promote its brand and
services. They regularly post engaging content, promotions, and discounts
on their social media accounts to attract new customers and engage with
their existing user base.
3. Influencer Marketing: Rapido partners with influencers and celebrities in
India to promote its services. The company has collaborated with actors,
cricketers, and other social media influencers to increase brand awareness
and reach new audiences.
4. Onboarding Promotions: Rapido offers new users discounts and
promotions for their first ride, making it more attractive for them to try out
the service. This is an effective strategy to acquire new customers and
increase their usage of the platform.
5. In-app Notifications: Rapido sends push notifications to its users about
promotions, discounts, and new features available on the app. This keeps
the users engaged and informed, and increases their chances of using the
app more frequently.

Revenue Model of Rapido

1. Commission-based model: Rapido charges a commission from the fare
paid by the customer for each ride. The percentage charged as a
commission can vary, but it typically ranges from 15% to 20%.
2. Surge pricing: During peak hours or high demand, Rapido charges a higher
fare, which is known as surge pricing. This helps the company generate
more revenue during peak hours.
3. Advertisements: Rapido also generates revenue through advertisements.
The company partners with brands to display their advertisements on the
bikes or in the app. This is a common revenue model for ride-hailing
companies.
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 4. Subscription plans: Rapido has introduced subscription plans for its users,
where they can pay a fixed fee for a certain period to get access to
discounted fares, no surge pricing, and other perks. This generates
recurring revenue for the company and encourages more frequent usage of
the platform.

Expense Model of Rapido

1. Rapido reimburses its drivers for each completed ride.
2. Cost incurred in technology development.
3. Administrative and Operating Costs.
4. Marketing and Advertising Expenses
5. Insurance coverage for drivers and riders.

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 Case Scenario

Rapido, which quickly became well-known for providing slightly less expensive
rides, is no longer accessible to residents of Maharashtra.
The Maharashtra government outlawed Rapido and other bike taxi services in the
state in November 2020. The Maharashtra government imposed the ban due to
worries about the safety of passengers using bike taxis as well as the legitimacy
of such services, but they persisted.
The owner of Rapido bike taxi services, Roppen Transportation Services Private
Limited, was denied a bike taxi aggregator licence by the state government. The
company was informed of the refusal on December 29, 2022, but they continued
to offer bike taxi services.
The Bombay High Court ordered Rapido to immediately cease operations in
Maharashtra earlier in the month of January. When asked to provide evidence of
the company's legal operations, Rapido was unable to do so in court. The court
has ordered Rapido to discontinue its auto service, 2-wheeler parcel service, and
2-wheeler passenger service.
According to the government, bike taxis are not covered by the Motor Vehicles
Act of 1988 and are therefore not permitted to operate in the state.
While the company has agreed to cease operations, the court has stated that a ban
will be imposed on Rapido until January 20, 2023, but the company has returned
with its auto services while the main business of providing bike services has been
completely suspended.
Rapido was also ordered to stop operating auto rickshaw aggregator services in
the state by the Karnataka High Court in October 2022 after it was brought to the
HC's attention that the companies were billing customers more than the legal state
rates.

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 Financial Overview of the Company

The financial data for RAPIDO TRAVELS INDIA PRIVATE LIMITED's fiscal
year which ends on March 31, 2022, is summarised below.
 RAPIDO TRAVELS INDIA PRIVATE LIMITED's revenue or turnover
is below INR 1cr
 The company's net worth has dropped by -3.32%.
 The company's EBITDA has dropped by -106.34%.
 The company's total assets have decreased by -45.21%.
 The company's liabilities have decreased by -77.36%.

The operating revenue in the year financial year 2020 was 42.6 crores thereby it
increases to 75.6 crores in the financial year 2021 and in the year 2022 the
operating revenue was 144.8 crores.

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The total expenses in the financial year 2020 was 301 crores whereas it reduced
to 254 crores in the year financial year 21 and in the year 2022 to expenses of 500
and 97 crores which are way ahead of its revenue.
The overall loss in the year financial year 2020 was 244 crores as the expenses
were 301cr and the revenue was just 42.6cr whereas in the year 2021 the loss has
been reduced to 166.4 crores as the expenses were 254cr and the revenue was
75.6cr. In the year 2022 the loss was the highest in terms of 439 crores as the
expenses were around 600 crores and revenue was only 144 crores.

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 Findings
 Rapido requested a license from the Maharashtra government to run two-
wheeled bike taxis within the state, but this request was denied because the
state has not yet established a policy to do so.
 The Maharashtra government has also come under fire for creating an
ambiguous policy that allows bike taxis in the state. The court has also
requested clarification on the policy or rules for two-wheeler taxi services.

Conclusion
The transportation industry has seen significant changes due to the rise of ride-
hailing services like Rapido, and the outlook for the industry is positive as these
services continue to grow and expand into new markets. The global ride-hailing
market is expected to reach $126.5 billion by 2025, growing at a CAGR of 20.2%
from 2018 to 2025. Rapido, a bike taxi service in India, has successfully leveraged
various marketing strategies to reach and retain its customers, including referral
programs, social media marketing, influencer marketing, onboarding promotions,
and in-app notifications. The company has also introduced various revenue
models, including commission-based models, surge pricing, advertisements, and
subscription plans, to generate revenue and provide value to its customers. With
its rigorous background checks for bike riders, safety measures, and a customer-
centric approach, Rapido is well-positioned to capitalize on the growth
opportunities in the ride-hailing industry in India and beyond. The ban on Rapido
and other bike taxi services in Maharashtra has put a halt to the company's
operations in the state. The decision was made due to concerns over passenger
safety and the legitimacy of such services. Despite being denied a license to
operate, Rapido continued to offer bike taxi services, leading to the court ordering
the company to immediately cease operations. The financial data for the company
shows a significant increase in operating revenue over the years, but expenses
have also increased at a faster pace, resulting in substantial losses. The findings
reveal that there is a need for a clear policy and rules regarding two-wheeler taxi
services in Maharashtra, which can help prevent such situations in the future.

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 References

https://www.tofler.in/rapido-travels-india-private-
limited/company/U63030KA2017PTC100500/financials
https://www.statista.com/outlook/mmo/shared-mobility/shared-rides/ride-hailing-
taxi/india#:~:text=Revenue%20is%20expected%20to%20show,to%20hit%207.5%25%20by
%20202
https://en.wikipedia.org/wiki/Rapido_(company)
https://inc42.com/buzz/ban-in-maharashtra-sc-refuses-to-grant-relief-to-rapido/
https://timesofindia.indiatimes.com/gadgets-news/rapido-suspends-its-services-in-
maharashtra-till-january-20/articleshow/96971482.cms

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