Last week, Gurgaon-based Yatra Online Travel Pvt Ltd, the company behind the online travel portal Yatra.com, raised Rs 140 crore ($23 million) led by IDG Ventures and Vertex Venture Management, the VC investment arm of Singapore’s sovereign wealth fund Temasek. Existing investors including seed investor Norwest Venture Partners (NVP) also participated in this round.
Founded in 2006 by former Ebookers Group (UK) executives Dhruv Shringi, Manish Amin (CIO) and Sabina Chopra (EVP -operations), Yatra is one of the top travel services company in the country. The firm claims that it is doing 20,000 domestic tickets and 5,000 hotels and holiday packages per day, and is mainly competing with NASDAQ-listed MakeMyTrip.com, Cleartrip.com, Expedia.com, Goibibo.com and Via.com, among others.
In a chat with Techcircle.in/VCCircle Dhruv Shringi, co-founder and CEO of Yatra.com, talks about fundraising, acquisition pipeline, IPO plans and more.
Here are excerpts.
How much has Yatra raised in private funding to date? Can the latest funding be seen as a pre-IPO round?
We have raised approximately $120 million to date. But this cannot be described as a pre-IPO round; it is in fact a growth equity round.
Did you look at other investors before signing on IDG Ventures and Vertex? How would they help you in the next phase of growth, besides providing funding?
Yes, we did consider multiple investors. However, given IDG's experience of working with other online companies in India (like Myntra, FirstCry, Lenskart, etc.) and some of the leading Chinese internet companies (Baidu), we felt that they will bring a lot of synergies and experience that would help Yatra strengthen its position in the OTA space.
The entry of a new investor is seen as a positive move while investment from existing investors is seen as a measure for sustainability rather than growth. What is your take on this?
I think a new round should have a combination of both. While you are right that a new investor reflects positively, co-investment by existing investors gives the new investors the confidence that the insiders also believe in the company and have the financial wherewithal to support the business.
You had earlier mentioned that the fresh capital will be used to grow the hotels & holiday packages business, and enhance mobile technology. Can you elaborate on the growth plan?
The funding will be used to strengthen our position in the domestic holidays and hotels segment. We are the leaders in the domestic hotel space and what we want to do is further increase our supply of hotels. The other part where funding will be used will be on the mobile front. We want to enhance our features and our product offerings. We will be adding new lines of business on the apps and will also be expanding the penetration of the apps.
Another aspect where we want to focus is to increase our brand presence. As the market becomes increasingly vast, you will see a lot of people coming on the internet for the first time. Because of this we want to ensure that we have top-of-the-mind recall and are brand leaders in this category. So a part of the funding will be invested on the brand side as well.
How it is faring:
How much share of the OTA market in India do you command as of now?
All our brands together would account for 27 to 30 per cent of the OTA market.
Can you share the percentage breakdown of how much you earn from air ticketing, hotel and holiday packages, etc? How much does each of them account for in terms of total revenues for Yatra?
About 70 per cent of our revenue comes from flights and 30 per cent from hotels and packages. With the evolution that the customers are following, in the next couple of years we expect to improve significantly in hotels and packages.
Yatra already provides reservation facility for more than 15,000 hotels across 450 cities in India and over 200,000 hotels around the world. How do you see this number growing?
We are expanding our inventory as we speak. As online adoption of hotels is also increasing rapidly, customers are looking for more choice across more cities. Our plan is to expand our reach to at least 25,000 domestic hotels by 2015.
What is the contribution of mobile to traffic and revenues for Yatra?
Mobile is growing very rapidly—over 20 per cent of the total traffic and 15 per cent of flight bookings come from mobile. This surge in mobile business has come within the last 12 months, and we are very keen to grow our presence on mobile.
Are you actively looking at acquisitions? If so, which are the domains that you are looking at? Are there plans for an overseas acquisition like what MakeMyTrip did?
We are actively looking for opportunities on the technology side, especially in mobile technology. We consider ancillary services too, but mobile technology is really up there as something that we are looking at exponentially growing.
Also, India itself is a large enough opportunity; so we would rather concentrate here than expand horizontally. Our focus has always been to go deeper into India as we believe that there is a lot of upside as far as the Indian travel market is concerned. Hence, it’s unlikely that we would consider an acquisition outside the country.
The integration has been seamless and the Travelguru business is growing very strongly with a set of very loyal users. It is a key part of our hotels strategy and we have no plans to kill the brand. Rather we are investing aggressively online to grow the business.
We are also witnessing steady growth at Buzzintown.com. It has a loyal community that is very highly engaged with the brand.
Your IPO plans were not coming along as imagined due to the negative market conditions in 2013. By when can one expect to see you going public?
Compared with the past when the industry was in an overhang due to Kingfisher going out, today's market conditions look more positive and our business has the scale and size to go public anytime. So it's not the issue of us not being ready, it's really an issue of us deciding at what point of time we want to take the next step. We want to time it perfectly and we might want to put certain internal metrics in place before we decide to leap forward. When we get a clear visibility on the benchmark we have set for ourselves and when we feel the market is receptive enough we will decide to go public. For us it's not a question of 'if', it's a question of 'when'.
Our business is growing and our losses have reduced significantly. We are certain that we will break even in less than 12 months.
(Edited by Joby Puthuparampil Johnson)