A company that started 25 years ago believes that its best is yet to come.
Yeah, it's kind of surreal. And even when I saw Young Turks 25 years, I told you the same thing. I said, 'My god, we've come a long way.' When you look back, it doesn't feel like 25. I think life in the internet industry is life in the fast lane.
Till six months before the IPO, we weren't even planning an IPO. It was Sanjiv Bik Chandani, who was an independent on our board, who said IPO. He told us on a January board meeting that guys, you are ready to IPO. We said, 'What are you talking about?' He said, 'Three years ago, we were at the same level and you guys are growing faster.'
What's the most unusual celebration case that you've seen? I believe they're now breakup and turning single again parties. Breakup and turning single again parties and get-togethers. Like, 'Listen now, guess what? We're all single, let's party.' But all kinds of stuff is happening, as we know, like the proposal economy is happening. People, now youngsters are choosing exotic locations to go make a proposal and they actually travel. So for the last few quarters, we see our frequent travelers are actually taking more trips than they were ever before. It's a combination of short-term locations and we've seen trends like the YOLO phenomenon is here to stay, and Gen Z, and it's real.
25 years ago, a young man called Deep Kalra decided that he wanted to get into the online travel business. 25 years later, MakeMyTrip is one of India's leading travel companies and has seen a record-breaking FY24. Here's the MakeMyTrip story over the last 25 years in numbers: 80 million plus lifetime transacted customers, 490 million plus app downloads, 519 million shopper visits. That tells you the story of MakeMyTrip over the last 25 years. In 2010, they decided to list on the NASDAQ. They've seen a flurry of acquisitions through the course of their journey, and there's been plenty of learnings, plenty of setbacks, but it's been an exhilarating ride. Joining us now to talk about the story, the last 25 years, but more importantly, the next 25, is Deep Kalra and Rajesh Magow. Deep, Rajesh, many thanks for joining us.
Deep, let me go back 25 years. So much has changed. So many low points in the course of your journey. On many occasions, it was almost a question of will you be able to make it through. But you have and you survived and you're here to tell the tale.
Yeah, it's kind of surreal. And even when I saw Young Turks 25 years, I told you the same thing. I said, 'My god, we've come a long way.' And when you look back, it doesn't feel like 25. I think life in the internet industry is life in the fast lane. So it moves so fast. I mean, you can look back and typically, I think somehow it's waves of five years for us has been that kind of story. So first five years were all about survival. And making sure that we live to see another day. At least three of those five years were really dark. But when I look back, the best years because that's when really the germ of an idea became proof of concept, became a business, started making money, the team was together, and there was a shared common passion and dream, and it actually was happening despite all the odds. So I think that was a great period, and 2005 to 2010 was just this ferocious run to IPO. And till six months before the IPO, we weren't even planning an IPO. It was Sanjiv Bik Chandani, who was an independent on our board, who said IPO. He told us on a January board meeting that guys, you are ready to IPO. We said, 'What are you talking about?' He said, 'Yeah, three years ago we were at the same level and you guys are growing faster. You were growing 50%, you should IPO.' And this is a man who didn't know whether the NASDAQ was in Pat or... Well, this is a man who knew a lot actually. But he told us and we took it very seriously. We were surprised at the meeting. Rajesh was CFO then, and we put our heads together and he called a meeting. I think for the next six months, he and the auditors and the lawyers just pitched tent in office, and in six months we had IPOed. August 2010 we IPOed on NASDAQ, being one of the first internet companies from India to IPO there, first travel company from India to IPO there, and it was great. And then I think from 2010 to probably right up to COVID was overall a really good run. Some hiccups, of course, when Kingfisher went down, it kind of challenged the whole domestic air industry. We were very domestic air dependent. We started building out a hotel business in right earnest, but it was a pretty good run till then. And we had a huge acquisition. We acquired Goibibo and RedBus at that time. Learned a lot about how to assimilate large acquisitions. And then COVID. So I'm just giving you the short version. And I think COVID all over again was truly, I won't say near death for the company, but it was a complete reset because our business went down. We reported a quarter we were 96% down on revenues, and it was crazy because no one... This was national lockdown, of course. And to come back after that, to restructure cost space as much as you can, obviously COVID had to lift, but the way travel has come back, we all know you can't get a room, you can't get a seat, everything is double the price. But people have, I think, in their minds have said, 'Listen, if I have a bucket list, I'm going to take it off now.' I think we as a company came back stronger, longer, because we went about restructuring cost in a very serious way. We said, 'Okay, fixed cost wherever we can reduce, we should.' Some of the toughest decisions ever were taken, which is yes, we had to let go of almost 10% staff, which was very hard. We have tried to take many of them back as things have got better, but I think we came out much stronger, definitely stronger than the industry. And as crazy as it sounds, I think our last year has definitely, by all measures, been our best year ever. Over the last few years, we've seen growth and profitability both come together. The holy grail of the internet world, we probably, I think that's what a couple of VCs had reported, we probably make more EBITDA, more profits than any other internet company in India, which is a great feeling. And it's a biggish company now. So when you look at the number of people and all, it's a little scary, but knock on wood, couldn't have asked for a better 25-year script.
And an appropriate 25-year gift is the fact that you've reported your best numbers ever: $46 million in quarterly profit, that's your best performance, $11 billion in market capitalization. So it's been quite a run. But Rajesh, before I get to the numbers, I want to talk about how you and Deep got started, your exit, and then your return to MakeMyTrip, because that's also an incredible story and it's really part of what keeps MakeMyTrip going.
Yeah, absolutely. You should share that.
To get back to the same level of safe size and scale will also take some more time. So then if we have to make it up, because just before COVID we were just about to become fully profitable, right? So it was a complete setback. Now when you come out of that and if you have to make up on the lost time, you had to look for new avenues. And that was the sort of driving thought behind. So we started looking at many opportunities at that point, and we had resources at our disposal because they were not doing anything else, and we were not by any stretch of imagination to just cut back on them. So we didn't want to rationalize that because we needed them eventually in any case. So we went back to the drawing board and we looked at corporate business, which was actually one business we had just about started prior to COVID. We accelerated that big time. We built our fintech platform called Trip, we built our advertisement platform internally, which is doing about 100 crore of revenue, a large part of that is actually going into profits. We launched in the GCC market in the middle of COVID, like we were in UAE, because we built all that platform based out of India, because all those engineers and product guys who we had were redeployed there. And then we built our MyPartner travel agent platform. So we built so many new platforms during that time. Now all of them, as we were rebuilding the business, our core B2C business, they started to add new streams of revenue for us, new streams of profitability. And then once we were over sort of bringing the old business back on track, these new streams of revenue or the businesses that we built started to add. Now therefore, at a scale also we were growing in the mid-20s and we were making profits. So it completely changed the game. So we didn't want to sort of lose on the time that we had lost. I think the number of projects that we ended up doing in those two years were probably the best ever or the maximum ever that we would have kept our people busy. Not to forget Aarogya Setu, that was another very exciting and obviously not a monetary project, it was really our give back. But how did that happen? Because I don't think people know MakeMyTrip linked to Aarogya Setu, and most people have also forgotten about Aarogya Setu, which is not necessarily a bad thing because we want to get past it, but want to learn the lessons from it. But how did Aarogya Setu happen?
Yeah, it's an amazing story and I'll give it to you in short. So we had an engineer, senior engineer Rahul Goyal, who had a brilliant idea and he said, you know, COVID had broken out, this was just before Holi of 2020, one day before I remember that for a reason, and he said, boss, we can build a contact tracing way to figure out how this is spreading. And I said, are you serious? We had a chat. He said yeah. And I said, write me a short note on WhatsApp because I'm going to send it to someone. And that someone was Amitabh Kant, a common friend and obviously an amazing person. And I said, Amitabh, I think we can do this and it'll be really helpful because things were just about breaking out. And he replied with Happy Holi on the message, and I said okay. But in a few days he called me back and he said, can you build that what you said? I said yeah we can. He said, you sure? I said absolutely. And he said, okay, go ahead, build it. So we started building it with a small team, Rahul, another very senior guy Vikal, both of them, and then a team of engineers out of Bangalore, some guys from here. We started building it. I was program manager talking. And then it suddenly became a way to get approval. Obviously, the national scientific adviser at that point of time was involved, and they were looking at two or three such platforms. So a couple of other companies, I think in Mumbai, built something similar at that time, and someone else was building, and they did a lot of rigorous testing. This was Mr. Vijay Raghavan, and somebody finally said, okay, these guys are doing the right thing, go ahead and build this. So we were very clear we were going to build it pro bono. This was our give back to the nation. We had almost 20 people working on it, and we were having calls every day with PMO, morning evening, and they were very clear on how to do it. And it scaled up to 50 million users in two weeks because obviously government mandate, but it held on, never crashed. It was built so beautifully and well, and we were in the thick of it. I think we ran the project for about three and a half months, a little over 100 days, and then we realized, now we need our engineers to do other stuff. We didn't want to make money out of it. So we actually handed it to the ministry, and that time it was the Ministry of... I'm forgetting who it was. The secretary was Mr. Ajay Prakash. And then we just kind of... we were still there to help out, but then they took it over. But it was very satisfying. Yeah, it was really, really satisfying. The whole team got felicitated on Zoom. Couldn't meet anyone, but everyone got felicitated. They got the days of Zoom celebrations. Yes, it was an amazing Zooming. We would have done the team Zoom calls, but that also kept our people going.
Challenge. How do we retain our good people? Because engineers were freaking out, and engineers' skill was fungible. So they knew they can move to any industry, and we wanted to keep our key guys. Our travel guys we knew won't go to any other place because everyone in travel was down and out, and they trusted us. But the fungible skills were... and we did lose some people obviously.
But you know, going back to the next 5, 10, 25 years. So how, what is the growth aspiration now as far as the business is concerned at a group level? Where do you believe you would like to see this? What are the big bold bets that you're willing to make at this point in time?
Yeah, sure. So I don't know whether I can talk about the growth rate specifically. Do you know we are a listed company at this point in time and no future etc. But I'll give you direction, aspirational.
So I'll tell you directionally the way we are thinking about it. I think for the foreseeable future in the internet world, maybe 5 years, maybe 10 years, we think there is an opportunity for MakeMyTrip as a group to grow higher than the industry growth rate. Now whether it is 1.5x of industry growth rate or 2x, time will only tell. But let's say the industry growth rate is X, then we will definitely be higher than that. And that is likely to be across all the businesses, even the matured businesses that we have. The other places where we see an opportunity where there's underpenetration, where those are younger businesses, relatively low base, the opportunity is higher, the growth rate is going to be higher. So I'll give you a few. I think Deep was mentioning earlier, overall e-commerce business still is underpenetrated in India, but also the international business. And I don't think it's going to come at the cost of domestic market because the size of the domestic market is also really, really high. Whether it is international flights or international hotels, within the overall e-commerce business is also alternative accommodation because there's so much new supply coming into the market of villas, home stays, huge, and that's going to drive the new wave of growth as well. If you look at the corporate business that we got in, really younger business, growing at about 40% year on year, huge market. Or if you look at the total size of the pie, the corporate business is about 30% of the total pie and we just have a small share of that. So we will continue to keep scaling that business up. Activities and experiences, in-destination activities and experiences, is another new bet that we are taking. We are also looking to bring cruises on our platform. So I think the vision which was always there, that we want to be a one-stop shop for all the travel needs, now including all the ancillaries, whether it is forex or visas, consumer loans, curated holidays, booking all modes of transport. We recently invested in intercity cab use cases in Savaari as well, and we think that on the back of infrastructure improvement that is happening in the country, the road infrastructure particularly, that is going to be another space because it's really fragmented at this point in time. So if you look at all of these put together, whether it's international or the overall accommodation, alternate accommodation, experiences, the holidays business, the corporate business, the plate is frankly full. And then not to forget about expanding from UAE to KSA as well. And by the way, I just wanted to also share, and less talked about, the redBus business. Overall ground transport business, in fact, redBus management team, Prakash who's the CEO there, is overseeing the overall ground transport business for us. That playbook we have actually taken to international destinations already. The bus booking platform, we are already the market leader in Malaysia and Singapore, and we are investing in places like Indonesia, Russia, and Vietnam, and we're also in Latin America there, believe it or not. So we want to take that playbook. The international playbook is going to be limited, let's say redBus, that international playbook, and the OTA market is going to be regional to start with, and we don't really want to completely change it to become like a global platform. The only new thing that we've done, and that is to cater to the Indian diaspora market globally, is to become GDPR compliant. So we are now accessible from 150 countries, and now anywhere to anywhere booking can happen. But the way we are trying to position it is to first organically get all the Indian diaspora which is spread out, because I think it's a very big opportunity there as well, and we'll get that organically because my brand is popular with Indians. When they come here, they all use us, they are all our customers. And talking about customers, by the way, the other thing that we should have mentioned perhaps was also the high point for us is about 80 million customers who've transacted with us, life to date customers. And every year we will have about 12 to 14 million bookings, so about 20 million customers. So literally about 230 bookings a day, about 4,000 people on platform every minute, all three brands put together. So that's the kind of scale. But it's not all, because if you look at the overall e-commerce category, that's a growing population, 250 million to 300 million. So I think if you try to see big picture with all of this, the outlook looks quite positive to me.
Well, you know, I want to pick up on the pet peeve that we've often spoken about, Deep, and that is how do you get more inbound traffic to India? We've talked about the outbound opportunity. I mean, Indians are traveling abroad like never before, between Vietnam and Thailand and of course Europe and the US, and all of that continues. But what are you seeing there in terms of the outbound trend? But more importantly, how do we draw in inbound traffic? Singapore, Thailand, they're in double digits, 16 million, 30 million, and so on and so forth. We're still under 3 million today. A pure tourist, if you look at that number, it's abysmal. And Shireen, wearing the industry hat, clearly India has so much to offer. We all know it, right? India's got probably as a country more to offer than maybe any other country. If you look at culture and heritage and history and scenic beauty, food, anything, whatever. Marcom just reminded us of what all we can offer. I think the reasons are multiple, but at a very base level, if you really look at it like Maslow's pyramid, I think the first thing we have to address is safety and hygiene. I think we have to be perceived, and we'll only be perceived if we are a very safe place to travel for everyone, including particularly women travelers. So I think we all know there have been enough incidents, they keep happening, that has to stop. Otherwise, what happens? People, we'll have two kinds of tourists: we'll have the super rich tourists who come and have the five-star premium holiday, rose-tinted glasses, they go see everything, they don't really feel India, but they're seeing a very sanitized India. Or you have the backpacker who's out in the hills and doing whatever they're doing. So you don't have the classic middle class. Because when that classic middle-class Caucasian family is looking for a holiday, India is not... they want to go to India, but they have too many concerns. They're saying, is it clean? Is it safe? Will I get sick? So many people get sick because they go and eat street food, and when they have street food, even we guys can't now stomach it. So I think we need something around safety and hygiene. At the next level, we just don't have enough rooms. That's the reality. You said it for domestic, how expensive things are. They're even more expensive when people are coming inbound. So I think that's a big concern. People are saying we have a budget, we are ready to spend, maybe you know.
But is it just a supply issue? I mean, or is it also a tax related issue? Is it also price gouging? I mean, what are we talking about?
Well, tax takes it up further, but it's a supply issue also. Inbound, please be clear, people will only come for four to six months of the year. If you want to go to Kerala, it's probably two months of the year, otherwise it's so hot. So five, six months to come to India, those are the peak months, it's super expensive. On top of that, the GST is not cheap, so everything really piles up. Yes, we have e-visa now, but people who fill the e-visa, they still say that you got to do a lot of hops. It's not that easy. So I think we have hurdles along the way, and we should solve this problem the same way as we solve other things: get to the root cause, address that. You will need to probably have a lot more projects coming up for hotels or open new circuits. The Buddhist circuit is a great example, it's full up all the time. There are new flights. So I think where we've done tremendously well is infrastructure. So just new airports, and therefore you have a lot more connectivity by plane. I think our highways, our expressways are fantastic. Our last mile I will not speak about, but the highways are phenomenal today. I mean, any expressway that you take. So I think we've done a great job of getting how to get there, but where to stay and what to do. The biggest lament, and I think it's just about getting fixed. I had some inbound, like non-resident Indian and foreigner family visiting, and they went to Agra and they actually saw a lovely show, they stayed back, and they saw a lovely show in the evening which is quite new apparently, and I haven't seen it. Because the common refrain for hoteliers in Agra was no one stays, people come in the morning, it's so quick, so easy, see the Taj and exit. But there's much more, but they'll stay if there's something to do. So I think we've got to think holistically from the tourist point of view, how to make that circuit more engaging, things to do in the evening. And I think we see that wherever we go.
But is the experience space going to be something that you look at as MakeMyTrip?
So you know, we will market, we will promote, we will sell, but we won't get into it. That's not our skill set. We just not, I don't think that's what we are. And there are enough people who are very good at that, like who will do that. It'll be the same people who are local operators on the ground. But I think the signals are there, and we will help them promote it. So if a new thing comes up, we would love to talk about it and promote it, because that just helps us also. It's again a win-win. It helps us promote more, it helps the tourists, it helps everybody. So I think India will have to take this very seriously about new circuits and how to enjoy these places in a different way. Definitely many more hotels, and therefore zoning and more incentives to set up hotels, and rationalization of tax. We've spoken about that many times. This is not a luxury good any longer. I think you'll make more if you bring down the taxes, have a much larger base, and it does have a multiplier impact as far as the economy is concerned. Huge, and jobs specifically. It is the biggest job contributor, job producer in the country as an industry, over 10%. And AI-proof largely, because in hospitality people will be there, you need them. And the trickle down or the multiplier effect to artisans, to food and beverage, to guides, to local communities is huge. So I think tourism potential, which I think this budget there was serious talk around it, so we're very hopeful.
I think there's one more thing that maybe we can also do as a country. If I draw a parallel, since you mentioned about outbound, when I see some of the countries, whether it's Singapore or Thailand or let's say even Saudi Arabia is actually a big example, they're spending huge amount of money, they do a very good job, they come to us for example, and we have a tie-up with pretty much all the tourism boards in the world to promote tourism. They take it very, very seriously because the underlying driver for them is that India is a very big source market. It's a very targeted sort of marketing drive because India is a source market for them. So now if we have to do the opposite, let's say we have to sell India as a destination, so bring back Incredible India in a targeted fashion. What a great campaign, but also go out to the local, exactly online and offline people over there, and go and market with them. Because today also a lot of the business moved online. So who's the MakeMyTrip equivalent in Germany or in Spain or whoever, and talk to them and say, listen, how can we promote? They have the traffic, they have the high intent travel, so you create awareness. So I think we have to up the game there as well. And then of course, last but not the least, is the visa.
All right. Because visa and connectivity, see connectivity we already have, like there are many flights that are just ease out the friction point. And on digital, we've done a great deal for domestic travelers. I think we all use DigiYatra and my god it's great, or the FDI coming back, like now leaving and coming, your passport doesn't get stamped. It works like a charm. So hats off to those initiatives. I think now even for foreigners who come back, facial recognition, like if you've been to Dubai once, you never need to show your passport again because they've got you, they know you're coming back. I think Singapore is the same. Saudi is moving the same way. We are way ahead in this. We should use it even for foreign tourists and open it up for a lot more people.
You know, I want to address the regulation issue, Deep, and through the course of the last 25 years, you've had your run-ins with regulators and with regulation, whether it's the CCI or other agencies. 2016 perhaps was the lowest point as far as dealing with regulation and regulators was concerned for you. As you look at what's happening today, do you believe that there is a need for greater engagement with regulators to really understand the nuances of what it takes to run e-commerce businesses, digital businesses, an understanding of creating regulations that are necessary to put the guardrails in place but also there isn't a sort of overreach? What's the thinking on that front and is it difficult today?
I think it's a rhetorical question, absolutely, and we've spoken about it. We've obviously had our fair share, like almost all companies. And happy to say, the service tax case went on for a long time, came out finally, won the case, but it takes a lot of energy and takes a lot of time and money, almost seven years, and a lot of distraction to the business. And it was actually baseless because I guess the way it's structured, the powers that be who can come and ask you all kinds of questions, whatever they can do, probably don't have that full understanding. So you also answered it in your question. I think a lot more working together, explaining the business model, how these models are working, are they very different in some cases yes from traditional models, to understand. But the fact is that these are contributing a lot to the economy, paying a lot in taxes, giving a lot of employment. So please understand this new sector and let's figure out a smart way. You explain what is required, and we will explain what the companies are going to do. And then at least the way... the overreach is definitely.
