New Delhi-based Carzonrent, will be spinning off its self-driving business Myles, into a separate unit, and is also in the market to raise fresh capital to grow the venture. The decision to spin off Myles into a new entity was first reported in 2014, and the company has now appointed a consultant to oversee the process. Carzonrent, the parent company, will also look at raising about $20 million (about Rs 135 crore), specifically for Myles, according to Rajiv Vij, managing director of Carzonrent.
“We have taken the decision to spin Myles into a separate entity. We have done the seed funding and the Series A funding of this (Myles) business. The potential is much larger,” Vij told ET, adding that till date, Carzonrent had invested about Rs 50 crore in its self-drive unit.
Myles competes with Bengaluru-based, Sequoia Capital-backed Zoomcar and US-based car rental major Avis, among others, in India. Vij and his family, who are the promoters and largest stakeholders in Carzonrent, will continue to hold primary ownership of the new entity. Private equity firms WestBridge Capital, BTS India and Shriram Capital Chairman, Arun Duggal, who are all investors in the New Delhi-headquartered company, will also pick up a stake in the new unit.
“We’ve started the process already, and expect to complete the process in the next three months,” Vij said.
According to Vij, Myles, which was started in 2013, and has a fleet strength of about 1,000 cars, is currently clocking between 10,000-12,000 car rentals per month, and has a presence in about 22 cities across the country.
“On any particular day, we see about 400 rentals going out. The market has been phenomenally responsive to this (self-drive) concept, Vij said.
According to industry analysts, India’s car rental, taxis and self-drive industries currently have a fleet strength of about 800,000-900,000, but which is estimated to cross 1.5 million vehicles by 2020. Of this, 15%-20% will be from the self-drive cars-for-hire segment.
Myles will also look to further get into the franchisee mode to grow its business, according to Vij. The projection for the Myles fleet strength is 7,000-8,000 cars over the next 12 months that will generate over 100,000 car rental days per month.
“The existing chauffeur-driven regional players, who have about 200-300 cars, have become our franchisees for the self-drive business. They know that they have to align with one of the big players, who they believe is likely to be the more successful player, to build their presence in this space,” he said.
The company is currently in talks with about 45 players, across five cities, including the metros of Delhi, Mumbai, Bengaluru and Hyderabad.
“They will own the cars, take care of the maintenance of the cars, will be responsible for the creating pick-up and drive locations, and managing those locations. From Myles, they will get the technology, customers, training, processes and systems,” Vij said.
Source: The Economic Times