Exclusive: Essel Group-backed ZipGo shutting down Bengaluru and Mumbai operations

Bus shuttle service provider ZipGo that had raised $44 million in a funding round led by Essel Infra, and had acquired Supreme Trans Concepts last year, seems to have to shut down its operations in Bengaluru and Mumbai.

A consumer raised a question asking if ZipGo is shutting down on the Bengaluru subReddit. The reason behind users' query was shared in a screenshot of an email where the ZipGo customer care had conveyed that the services will be suspended on the route from March 2019.

Confirming the suspension of operations across two cities, two sources outlined that crisis at Essel Group led the company's board to go for scale-down. "The company has decided to scale down operations in major cities at the moment," they added on condition of anonymity.

Further as per that email, if the consumer had any amount remaining in the wallet, it will be transferred back to their linked bank accounts, debit cards, or Paytm wallets.

The screenshot of the email and the Reddit thread are shown below.

It can be clearly seen that the services are being shut down in Mumbai and Bengaluru and customers are dismayed as they will now have to switch back to the likes of Ola/Uber and BMTC services which are either expensive or provide uncomfortable substandard travel solutions.

ZipGo's decision to scale-down is quite surprising for analysts and media tracking the shared mobility space. Entrackr was able to source the links and emails, however queries sent to the company's CEO behind the possible causation remained unanswered.

A few years ago, ZipGo had faced a backlash from the government and was on the verge of shutting down. However, it had not only managed to continue its journey but also expanded to Mumbai,  Delhi, Pune, Hyderabad, Jaipur, Kolkata.

Last year saw a spur of fundings in the shuttle service space where ZipGo had also picked up Rs 300 crore from Essel Infra, the infrastructural arm of Essel Group. Previously, Shuttl raised $11 million Series B round from Amazon India, Amazon Alexa Fund and Dentsu Ventures.

In October last year, ZipGo had acquired Pune based Supreme Trans Concepts to launch intercity bus services between Mumbai and Pune.

It also has similar such services running between Jaipur-Delhi and Bengaluru-Hyderabad. With closing down of operations in Bengaluru and Mumbai, two of these intercity bus services are expected to stop as well.

Looking at these recent past events, the news of the company shutting down operations in two of its largest cities raises a lot of questions. The expert speculation is that there is no regulatory crackdown.

Even if the reason isn’t that, it also isn’t the lack of funding.

Which raises another question, asked previously by Reddit user in above thread - is ZipGo shutting down completely? Are Kolkata, Bengaluru, and Mumbai part of the initial process of ZipGo shut down?

As per the sources, the move is not for a complete suspension of service, but the company is scaling down operations.

Another perspective that works in the uncertainty looming around the fate of its recent investor Essel Group itself.

The infrastructure giant has dug itself numerous pits by engaging in activities like faulty bidding,  unauthorised pledging of Videocon's shares, that led to a fiasco where it was barred from pledging or entering into more partnerships or bidding.

This combined with the burden of debts, and lack of funds has created a financial crisis that has led the company to chose to scale down and selling infrastructural assets.

These factors could also have impacted the announced funding from the group in ZipGo. This sudden change in the course of the company’s future leaves everyone including consumers and stakeholders in suspense and curiosity. A curiosity that can only be quenched by answers from ZipGo.