Yatra Online To Acquire Globe Travels For Rs 128 Crore
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00:00We have Yatra online as well, that one's been in focus recently following its acquisition
00:12of Globe Travels. Earlier in the day we spoke to the CEO Dhruv Shrinji and began by asking
00:18about the 128 crore acquisition that they've made and listening to a slice of that.
00:28This is a very important acquisition for us. Over the course of the last 12 months, we've
00:32been consistently talking about how we are looking at strengthening our position further
00:37in the corporate travel sector. We feel the business travel market is rebounding quite
00:42strongly in India and will continue to grow at almost 1.5 to 2x of GDP growth for the
00:47foreseeable future. So in that backdrop, we think it makes more sense for us to continue
00:53to scale up. And by adding the business of Globe Travels, we've done exactly that. This
01:00will add about 750 crores approximately of gross bookings to our business. We'll add
01:06about 360 customers to our current about 850 customers. And it's going to be fairly synergistic
01:13as well because Globe has two main businesses. One is business travel and the other is MICE,
01:20which is the meetings, incentives and conferences business. This business, especially the MICE
01:25business is a highly profitable business. We've organically also incubated this business
01:30about six months ago. So the combination of what we've done organically plus the acquisition
01:35of Globe will make us one of the largest players in the MICE category in India. And as you
01:42would most probably know, MICE is a highly profitable segment. And it's also a segment
01:47that's growing at more than double digits. So with that backdrop, we think the combination
01:51of Globe along with Yatra's own business travel will create a very strong market leader in
01:57the country when it comes to business travel and MICE.
01:59All right. And, you know, with this kind of acquisition, you've mentioned your press release
02:04that you'll be targeting newer geographies, you know, to increase your market penetration.
02:08And also, you know, you will add new capabilities to your existing line of business. So, you
02:14know, give us some more details as to what kind of geographies you're looking to tap
02:18into and what will these new capabilities be like?
02:22Sure. So historically, our business has been more focused on northern parts of India and
02:26western parts of India, whereas Globe comes in with a strong presence in the eastern market.
02:32With the footprint that we will get through Globe, we'll be able to now expand more aggressively
02:38into eastern India. Globe also has a good footprint in southern part of India. So that's
02:43another market that we will use the Globe platform for, for growing aggressively into
02:47these markets. When it comes to adding more products and services, as I said, you know,
02:52we've already incubated MICE on our own, but the combination of Globe along with our current
02:57organic efforts will make us the market, one of the market leaders in this category.
03:02So that gives us extra leverage to be able to go and pitch to our customers.
03:05It gives us a better leverage with the suppliers. So on the whole, I think it expands the
03:10product portfolio and the strength of both the teams quite significantly.
03:14So that's something that we are quite excited about, that, you know, the MICE business we
03:18feel is an area where we'll be able to grow quite rapidly over the course of the coming
03:2312 months with high margins.
03:25Right. And, you know, in terms of the revenue, overall Globe travels contributed roughly
03:30250 crore to the consolidated revenues of, you know, Ramakrishna Forgings.
03:35And this has grown to 250 crores from just 160 crores in FY12.
03:40So if we, if we calculate the revenue CAGR, it's roughly 4%.
03:44So I want to understand that in terms of, you know, how will you plan to leverage this
03:49particular acquisition in terms of revenue growth and what are the kind of revenue growth
03:54you will expect going forward?
03:57Sure. So if I look at that CAGR, I think the CAGR, maybe while the numbers are right, the
04:02CAGR has a COVID period as well in the middle.
04:04So if you strip that out, the CAGR goes up significantly.
04:07Plus, also, it's a relatively small business in the overall sphere of Ramakrishna Forging.
04:13Right. So they are more of a manufacturing company.
04:16And this is a subsidiary that they've had for a number of years.
04:19For us, this is very core business to what we do.
04:22We've already got a large customer base to which we can cross sell the kind of products
04:26and services, especially the MICE business that Globe brings to the table.
04:30So on the back of that, we see significant growth coming in from there.
04:34Secondly, Globe today has fairly limited amount of technology adoption.
04:38Yatra is the market leader in terms of business travel technology.
04:42So we'll be able to leverage our technology into the existing customers of Globe as well.
04:47So we feel on the back of that, we should be looking at Globe growing in the 15 to 20
04:52percent range for the years to come.
04:55All right. So 15 to 20 percent is the growth target for this particular acquisition.
05:01All right. Let's now talk about how Q1 FY25 has shaped up.
05:07You know, you've seen some kind of pressure when it comes to Q1.
05:10Revenue was down by 9 percent.
05:12Adjusted air ticketing margin was also impacted by roughly around 24 percent.
05:17Even hotel room bookings were impacted.
05:19And even EBITDA was impacted.
05:21So this was just Q1.
05:23Now, this might be on the back of elections as well.
05:26So I want to understand what are the kind of trends that you're now observing in Q2.
05:31And overall FY25, what is the kind of revenue growth that you're expecting as even in terms
05:37of margins as well as bottom line?
05:40Sure. So if I look at Q1 and, you know, we spoke about this on our latest call as well.
05:44We have two parts to our business.
05:46One is the consumer part of the business on the Yatra.com and the other is the business
05:50travel arm, which is Yatra for Business.
05:53The impact was more severe on the B2C part of the business on account of just the overall
05:59macro industry that we are looking at, you know, the supplier consolidation that we've
06:03seen. So that's impacted more the B2C part.
06:06The corporate part continues to grow at a very healthy pace.
06:09We've also scaled back some of our investment on the B2C part because we had this
06:13acquisition which was in the works and the acquisition more than offsets the decline or
06:18the drop that we see on account of B2C.
06:21So this is overall a part of a broader strategic direction that we've chosen as a
06:25company to double down on the B2B part of our business and the corporate travel part of
06:30our business. It's about 50-50 of our mix right now, 50 percent comes from corporate
06:36travel and 50 comes from B2C.
06:37Our endeavor over the course of the next three years is get to a stage where about 70
06:42percent of our business will come from the corporate travel arm and about 30 percent
06:46will come from B2C.
06:48The reason we are making this shift and strategic change in direction, and we've been
06:52doing this for the last now three to four years, is we feel that the corporate travel part
06:56is a much more stickier part of the business.
06:58It allows for much greater leverage of technology.
07:02We can cross sell other products like expense, mice, right?
07:05Those are the things that we've been talking about, expense management solutions, mice
07:09products. So we feel that's a more synergistic and a more stickier business.
07:13So that's the direction that we've taken as a company.
07:16So our efforts will be to continue to focus on that aspect and drive further growth over
07:21there. Coming to your question on where we see, you know, current trends, current trends
07:27we see, you know, on the B2C side, more of a baselining of where we were last quarter.
07:32So last quarter became the baseline.
07:34And from there, now we are looking at gradual growth on the B2C side.
07:37The corporate part continues to grow quite healthy.
07:41All right. And in terms of margins, because, you know, you said that from that 70 percent
07:46of, you know, having B2C, the mix will become 50-50 percent.
07:52And because, you know, B2B is more margin accretive, I believe, your margins have hovered
07:56around three to four percent in the last year.
07:59So then where will the blended margins be at?
08:02So we would expect margins to continue to improve on account of this change in mix.
08:06That's one of the key initiatives that we've undertaken.
08:09Our sense would be that, you know, we would expect at least a 25 to 30 percent improvement
08:14in margins happening on a consistent basis.
08:16So you'll see that play out every quarter, starting from the third quarter of the year.
08:22All right. So then by the year end, we can expect margins to be in the high single digit
08:26then?
08:27That's right.
08:27All right. OK.
08:29You know, the next question is in terms of, you know, the MICE part that you mentioned,
08:34which means meetings, initiatives, conferences and exhibitions.
08:37You've recently organically also started that for corporates.
08:40So I want to understand how is that working for you?
08:43And what are the kind of growth levers there?
08:46So I think that team is off to a fantastic and a flying start.
08:49So that's one of the initiatives that have taken off really well.
08:54The advantage of that is that historically we've got a large customer base, but we never
08:58had the operating skill sets of this business.
09:01It is a fairly specialized business, given the nature of events that we are trying to
09:05address. We are talking about large events, talking about thousands of people going and
09:10having to manage these kinds of group movements and building some technology to enable
09:14that. And given that we've got the customer base already in place, it's been, you know,
09:20really good for us to be able to have the team, which is now focused on the execution.
09:24So they're able to cross sell this really well to our existing customer base.
09:28And now with the combination with Globe, it gives us tremendous amount of market power
09:33as well.
09:34Right. And, you know, in terms of your debt, you know, it has significantly reduced from
09:38that 170 crore to just 21 crore now.
09:42By when do you expect to become, you know, net debt free?
09:45One thing. And secondly, the second question is in terms of the competition that you're
09:51already facing from the unorganized sector, what are the trends that you're observing
09:54there? Sure.
09:56So in terms of the debt, you know, we are now at about 20, as you said, 20 odd crores of
10:00working capital facilities.
10:01These are just working capital facilities which are there in the ordinary course of
10:04business. I think we will hover around these levels only.
10:08A little bit of working capital facilities will continue to be there and be used to
10:13maintain relationships.
10:14And for that, I don't see any change in the foreseeable future.
10:18In terms of the competition from the unorganized sector, I think that competition has
10:22always been there. But what we are witnessing is a huge shift in demand pattern on the
10:27side of consumers, especially the large business enterprises first started adopting
10:31technology. We've now seen this wave come into the mid-tier market as well.
10:36More and more mid-scale companies also want to adopt technology to streamline their
10:40procurement processes for travel and other business services.
10:43So we are definitely witnessing a significant trend over there and benefiting from it.
10:49So while competition is there, I think this change in consumer behavior on the
10:54enterprise side of companies wanting to digitize their business processes, this is an
10:59irrevocable one. So this change will continue to gain more and more momentum as we
11:03move forward. All right.
11:06Hope you've had a productive last half hour when we've spoken with both of these
11:11managements. But with that, completely out of time on this edition of this mid-show.
11:15From myself, Anushi, Mahima as well and everyone who puts the show together, thanks so
11:20much for watching. Stay tuned to NDTV Profit, more action on the other side.