Auto sector experiences more Venture Capital involvement

Indian auto mobile sector growth has attracted various auto mobile manufacturers to India but as per a new found report a great amount of investment is being observed from the Venture Capitalist.

As per the reports the investment is greatly observed in radio taxi services to the used car business from two major Venture Capital investments. Sources says that the major investment by the VC is due to lack of public transportation and also the increased sales in the auto sector has helped in magnetizing the investment. If flipping the pages, it can be seen that Carzonrent India Pvt Ltd, the car rental firm which functions in the name of Easy Cabs raised Rs 36 crore in the last week from the BTS India Advisers, private equity company. The company has acquired investments from Sequoia Capital and SIDBI Ventures. Carzonrent also offers operating lease, limousine services and car rental and has over 4,000 cars.

K Srinivas, Managing Partner, BTS Investment Advisers Ltd, said that if compared to the far West, Indian public transportation is disorganised. In foreign countries this is an organised sector but in India it is at its neonate stage. Few of the players are employing the taxi segment. It is assumed that it will grow around 30 to 40 per cent yearly. As per the experts it is believed that it has 10 fold growth potential in the coming 10 years.

Rajesh Puri, CEO, Meru Cabs, established radio taxi service player in India said that the infrastructure between intra city is yet to be organized. Looking at the current status, this sector has a huge growth prospects for the radio taxi in the domestic auto sector. He made a valid point and said that in metros where parking and rising fuel prices are a concern, people are switching to cabs. In II tier cities such as Pune, Jaipur and Ahmadabad where the local transport is not adequate people opt for radio taxis. Its is being observed that more of the CV/ PEs are earnest in investment in this particular sector. He also said that it is observed that it is a high depreciation sector, the returns come after 3 to 4 years of its investments.

India Value Fund Advisers Pvt. Ltd, which holds $1.4 billion management invested in the V-Link Travel Solutions Pvt Ltd and acquired a major share in the company in the year 2006. In 2007, V-Link introduced Meru Services and in the first quarter of '11 is ready to add 600 cabs to its wagon. As per the company, it is expecting to accelerate its growth by 50 per cent for this year. Puri said that when the company will reach 10,000 cabs mark it may announce Initial Public Offer. The major players in this segment are Meru Cab which operates with 5,000 Cabs, Easy Cabs operating with 2,200 cabs and Mega Cabs with 1,000 cabs.

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