UTOO cab services offering flats as incentive is coming to Bengaluru

C Sivasankaran is the former owner of Aircel. UTOO cab services were launched in Chennai, and later expanded to Hyderabad. The housing scheme is a unique incentive for drivers. 

After expanding in Hyderabad, Chennai-based UTOO Cabs is all set to enter Bengaluru, Pune and Mumbai. The app promises 50 percent discount on first rides. You get to choose either a compact or a sedan. Also, the company has been gung-ho about eradicating surge pricing.

UTOO, according to Business Standard, would add up to 9500 cars in Bengaluru, starting with 500.  Needless to say, it is already known for its unique incentives for drivers. And interestingly, the new developments come just as Ola and Uber drivers are bickering over incentives. 

Housing scheme as incentive

While there has been bickering over driver incentives off late, C Sivasankaran is believed to have raised the bar of incentives with a housing scheme. According to a ET report, UTOO has purchased 200 flats and planned more in 15-20 lakh range. Sivasankaran plans to leverage central government scheme Pradhan Mantri Awas Yojana (PMAY), a subsidy scheme for economically weaker sections.

"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%," the report added.

Serial entrepreneur and bankruptcy

Chinnakannan Sivasankaran, better known as Siva, is a serial entrepreneur, who has dabbled with printing Yellow Pages to owing Aircel. He has also been marred with controversies like favouritism from MTNL to being forced to sell his stake at Aircel to Maxis. He was also believed to be a deal maker with Midas touch. However, he also filed for bankruptcy, not once but twice.

Ajay Piramal has a minority stake in UTOO, and it is backed by C Sivasankaran, his family and friends. "Our idea is not to replace Uber or Ola. We want to set standards which other service providers will follow," Sivasankaran told Business Standard. Now, as the cab war intensifies, newer entrants would only mean a win-win for all.