CHENNAI: With a novel idea promising home ownership for drivers as incentive for high performance, C Sivasankaran, the Aircel founder now backed by billionaire investor Ajay Piramal in his new venture taking on Ola and Uber, has raised the bar for driver incentives in the hotly-contested cab aggregation market.
The avowed dissenter against cash incentives believes owning a house has been the tallest peak to scale for cab drivers. “I want my drivers to get rich,” he said.
“There is something called prosperity quotient… and this is what UTOO has on offer for the drivers,” he said.
Entering the fray just about eight weeks ago, UTOO is still in soft launch phase. In the early stage of aggregation in its first city, Chennai, UTOO faces an entrenched Ola and a fast-moving Uber heading to city’s outskirts in pursuit of new markets.
With a prominent logo on the bonnets and uniformed drivers, UTOO cabs are just getting to be seen across the city. Coming after the promise of not deploying cars without air-bags and building a model that shuns surge pricing and cash incentives, the home scheme arrives to bolster supply of drivers.
UTOO has purchased 200 flats in a project in Perambur in suburban Chennai from builder Arihant Group as its first expenditure. More residences in the Rs 15-25-lakh range will be bought on the Old Mahabalipuram Road, Ambattur, and Porur, areas on the city’s periphery burdened with huge unsold real estate inventory. To garner supplemental funding for the housing units, Sivasankaran will leverage central government scheme Pradhan Mantri Awas Yojana (PMAY), which is a credit-subsidy scheme for home buyers in the economically weaker sections of society.
The PMAY scheme offers a subsidised interest rate of 6.5% for a maximum loan of Rs 6 lakh and a tenure of 15 years. To be anchored by National Housing Bank, the scheme, earlier called Housing for All by 2022, is meant for families with an annual income of Rs 3-6 lakh. “Why the scheme did not take off so well as planned was that the prospective home buyers need to contribute significantly. A cab driver cannot bring in lakhs. UTOO will chip in with the margin money,” said Sivasankaran.
The gap funding that UTOO offers is based on an eligibility of 5,000 trips, which UTOO estimates can be done in 1.5 years. At a rate of 15 trips a day, close to the common performance metric for app-based aggregators like Ola and Uber, drivers will take 11.1 years to complete 50,000 rides, when they becomes eligible for UTOO to pay the balance of the home loan subject to a ceiling of Rs 20 lakh. The margin money UTOO floats to drivers is at an interest rate of 9.5%.
Credits ET Realty