The ride hailing firm, Uber Technologies Inc. explored options for its Indian ride-hailing business, including a sale, but now it has suspended discussions as tech startup valuations cratered, according to the sources.
How Did This Happen?
Sources said that the US company began weighing alternatives and reached out to several interested parties after recognizing it had limited potential for profitable expansion in the country.
It has considered the options of a stock swap with local companies or even a pullout, before a global equity market route upended plans, said the sources.
Further adding that a stock deal was favored in exploratory talks as it would have allowed Uber to retain a foothold in India.
Why Did This Happen?
It appears that Uber and its local-rival Ola had been struggling to eke out a profit in a rapidly growing market.
Although, the price-sensitive market, where constant driver attrition continued to pressure the margins.
Possibility of a sale with a local operator could have mirrored the similar deals the firm has already struck with Didi Global Inc. in China and Grab Holdings Ltd. in Southeast Asia.
These are the markets where Uber ceded but kept an equity stake in the dominant local player to tap future growth.
Ending of these maneuvers added a full stop to the costly turf wars waged with driver incentives and cash subsidies.
Retreating From Indian Market
It seems that Uber disputed the idea of considering retreating from India.
In an emailed statement, Uners spokesperson Ruchica Tomar said, “Bloomberg’s reporting is categorically false. We have never explored exiting India — not even for a minute,”.
Adding that Uber remains committed to India and continues to hire people “aggressively.”
Coming to the profitability, the company’s shares have gyrated wildly since its 2019 IPO.
Uner has hived off money-losing businesses to achieve its goal of being consistently profitable.
The firm has delivered a positive outlook for earnings during May.
Thus, signaling the company plans to capitalize on robust ride demand without compromising profits by focusing on product changes, rather than incentives, to address a driver shortage.
So far, India and Japan are the sole major remaining Asian markets for Uber.
Although, they have reduced sharply since the tumultuous days of former chief Travis Kalanick.
If we talk about the Indian business, this San Francisco-based company started services in India in 2013.
Presently, it offers ride-hailing in almost 100 cities across the country, as per its website.
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