Have adequate funds to survive any Covid curbs: MakeMyTrip CEO Magow

In an interview with Business Standard, MakeMyTrip CEO Rajesh Magow talks about the steps the company took to emerge stronger from the Covid setback will help them withstand any uncertainty

Rajesh Magow, co-founder & group CEO at MakeMyTrip, is unperturbed by uncertainty and fears of fresh curbs against the backdrop of the recent spurt of Covid cases in China. In an interview with Aryaman Gupta & Shivani Shinde, Magow says the firm is witnessing strong demand from tier 2 cities and and beyond. Edited excerpts: 

Covid-related concerns are back. Do you think the business is well equipped now to handle another bout of travel restrictions?

We are hoping that this current wave will lead to limited restrictions. Travel will continue as long as restrictions are limited. Festival travel is in full swing and it is still too early to see any significant impact of Covid.

When Covid first hit India, during the first wave, our revenue margins dipped 95 per cent in one quarter. However, it was not an existential threat. We saw two cycles of the downturn. Having said that, our balance sheet was strong. We already had $200 million on our balance sheet. We ended up raising another $200 million in February 2021 to build a more robust war chest. We are currently sitting on a $435-million pool and are well prepared from a funding perspective. We have learnt a lot in these past two years and we are well equipped to survive.

A significant drop in revenue may affect our path to profitability in the short term. However, this will be temporary in nature. A drop in revenue margins can be offset by cutting back on marketing expenses which will enable us to mitigate the damage.

As Covid makes a return, are you planning to shift focus away from expanding your business verticals?

Our focus right now is on growth and scaling our newly built business verticals. From a platform development perspective, there is going to be a pause. We have made all our investments and our business verticals are now gaining traction. We are assuming that the current Covid disruption is temporary and are looking to scale the business. 

Which are the new business verticals that you started to drive revenue as demand slipped?

After the first wave, a lot of efforts in the next few quarters went into bringing the situation under control. However, our leadership team was concurrently thinking about the way forward after the pandemic.

Before the pandemic, we had started investing in the corporate business segment. Our MyBiz platform for small and medium enterprises today has about 35,000 SMEs onboard and is gaining traction rapidly. Similarly, we have the Quest2Travel platform for large enterprises. There is a boost of 250 large clients, which are big corporate houses.

We also built a travel agents affiliate platform called myPartner, which currently has around 30,000 travel agents in order to fulfil B2B2C demand.

We also launched a platform called Trip Money, which is our mini fintech initiative. It has three verticals: Forex, insurance, and consumer lending, along with ‘buy now, pay later’ services.

On the ground transport front, we launched redRail as an independent app similar to redBus, which is a bus aggregator brand. Coupled with our intercity cab service, we wanted to transition our platform to a complete and comprehensive ground transport brand.

If you look at our offerings, we are a superapp. One of the parameters on which we evaluate our superapp performance is cross-selling. Today our cross-selling across platforms is 25-30 per cent. And the headroom is huge.

What sort of demand are you witnessing from tier 2 and tier 3 cities? Do you look at these regions as the next growth drivers?

Through the source lens, 36 per cent of the visits on our platform come from tier 2 and 3 cities. We see an opportunity here and are building on it. We already have vernacular support on our apps, in Hindi and Tamil, with a focus on catering to Bharat and addressing language barriers.

Given that Bharat travels using the railway, redRail has emerged as an opportunity for us to reach out to smaller cities. redBus was always a deeply penetrated segment, connecting tier 3 and 4 cities, as well. In addition, we are also pushing UDAN Yojna flights in a bid to get more traction. We are focused on getting more numbers from tier 2 and 3 cities.

What progress have you made in expanding the business on the international front?

Our first focus was the UAE market. Now we are gaining traction in Dubai, as well. Within one quarter, our product will be fully ready after which we will do a formal launch in Dubai. We are also aiming to launch our product in the Saudi Arabian market sometime next year, after tying up some loose ends.

In terms of business, India is our largest market, while countries like the UAE are still small initiatives. However, for RedBus, our bus service, the UAE contributes around 10-15 per cent. 

The government has recently clamped down on fake reviews on e-commerce sites. How do you see the regulatory environment turning out for online players? 

The government trying to understand online industries and the introduction of regulations has been going on for a while now, owing to the huge amount of engagement from industry fora and other bodies. Any new industry must go through this phase of active engagement with the government, in order to improve understanding at both ends. This is going to be a long-haul journey in terms of fine-tuning regulations when they come in and it is good that there is some work happening in this direction. 

What is your take on the CCI imposing a Rs 392 crore fine on MakeMyTrip?

From our point of view, there is full cooperation and we are going through the process. We will continue fighting the order on merit and our counsel have led us to believe that we have a strong case based on merit. We will go through the due legal process.