Ola Cabs cuts back on advertising & promotional expenses by 60%

In terms of net loss, the ride-hailing company witnessed a 57% drop from the last financial year

e4m by Misbaah Mansuri
Updated: Dec 2, 2019 9:27 AM

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Ola cabs

Online transportation network company Ola Cabs has tightened its purse strings, cutting back promotional and advertising expenses by 60 per cent. Its promotional expenses have been reduced from Rs 380 crore in FY 2017-18 to Rs 150 crore in FY 2018-19.

The company has reported a 57% decline in net loss from the last financial year, which has been recorded as Rs 1,160 crore for FY 2018-19.

It further reported Rs 2,155 crore as revenues for the same fiscal, a 16% jump from the last financial year. The company’s total expenses for the fiscal have been reported as Rs 3,315 crore, as per financial data accessed by business intelligence platform Tofler.

Driver-related expenses have reduced from about Rs 2,400 crore to Rs 1,700 crore in the same period. According to Anchal Agarwal, CEO, Tofler, “The reason for the losses is decline in its advertising, promotional expenses and driver related expenses (payments made to them). The numbers indicate the reduction in rewards and incentives been given to Ola cab drivers."

In response to exchange4media’s query, an Ola spokesperson said: "Over the past couple of years, Ola has grown its core mobility business and introduced new business verticals such as financial services, food, public transport technology, and electric mobility. To enable our rapid growth, we have continued to evolve every aspect of our operational philosophy at periodic intervals. With a view to becoming more nimble and have a sharper focus on growth and profitability, we are redesigning the organisation to build a structure that strengthens and leverages our local and global scale, and enables faster decision making across all of Ola's group companies.”

The spokesperson further said, “We also continue to attract the best talent across the board to support our growth and ambition. Our organisational redesign aims to right-size all our operations as well as leverage skills sets and experience of mobility employees in available positions in new business verticals. The resultant working model will form the foundation of the next chapter in Ola’s growth journey, as we continue to grow our existing businesses at home and around the world."

The ride-hailing major recently decided to undertake a restructuring exercise ahead of its planned IPO. According to sources, the move could impact up to 250 roles.

The company, which has been focussing on profitability along with building up scale as it expands into international markets, will accommodate some of these employees in other business units like food, electric and financial services, said sources close to the development.

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