 "Aneesha Menon, Executive Director and CFO of CarTrade,")
In the wake of its OLX India acquisition last year, the country’s leading auto portal CarTrade aims to continue its trend of profitable growth of 20 to 30 per cent in the coming quarters. Aneesha Menon, Executive Director and CFO of CarTrade, sheds light on the company's trajectory in maintaining leadership in the auto portal space, anticipated growth in the upcoming quarters, and the profitability post acquisitions in a video interview with Anjali Singh. Edited excerpts:
How does CarTrade plan to maintain its market leadership in the auto portal space?
We have a leadership position in key segments such as consumer auto portals, used car classifieds, and vehicle auctions. Our dominance in the consumer group is unparalleled, especially in the auto portal segment. We have strong brand recall value, as we have acquired several brands over the past 8 years such as CarWale, BikeWale, Adroit Auto, and Shriram Automall the most recent one being OLX which was completed last year. The acquisition of OLX has helped us add around 30 million monthly active users, taking the total monthly active users to 70 million.
Can you provide an estimate of the anticipated growth in the next few quarters?
While we never disclose our figures publicly, our historical growth has been in the range of 20 to 30 per cent, a trend we aim to continue. Our focus remains on profitable growth and our recent performance, including a 48 per cent revenue growth in December, resulting in a profit after tax of nearly 22 crore for the continuing operations. The two key factors for this are a fragmented customer base and a focus on organic traffic. The company's history reflects steady growth, devoid of seasonality or undue reliance on a single client or assignment. The platform's drawing in 70 million organic unique visitors monthly, with 90 per cent of traffic coming organically contributes to an extremely predictable and stable profit and loss.
How much revenue do the acquired entities contribute? How did profitability compare before and after the acquisitions?
The acquisition of OLX resulted in a 45 per cent increase in CarTrade's overall revenue for the third quarter. Currently, each of CarTrade's three business segments (CarTrade, Shriram Automall, and OLX) contributes roughly equally to total revenue, with OLX contributing approximately 31 per cent. Prior to the acquisition, CarTrade's quarterly profitability was 19 crore. The OLX acquisition added 10.47 crore, bringing the total segmental profit to 29.78 crores, marking a 54 per cent increase.
What is the extent of the debt incurred to finance your recent OLX acquisitions?
There is no debt in the company. We have been a zero-debt company. Also, during the IPO we had not raised any primary, it was a 100 per cent secondary (Offer for Sale). We were sitting with 1,100 crore of cash prior to the acquisition, which is what we utilised for this acquisition.
What types of investments are necessary for the growth of these acquisitions, and what is the funding strategy for their expansion?
All our existing businesses are profitable and do not need investments in terms of funding for working capital requirements. Also, all these businesses are asset-light and do not need heavy capex or other investments. It can be witnessed in the individual results - the only major cost in each of these businesses is the cost of people. Even in terms of investment in the future, we invest in product and tech, which is people investing in building tech for the future, which is already included in our P&L and not capitalised. Also, even post-OLX acquisition, we still hold 719 crore of cash in the bank.
Why did you shut down your OLX business?
We acquired OLX India in 2023, a major classifieds platform in the country. We were particularly interested in the OLX.in brand. However, the deal also included OLX Autos, a used car buying and selling business that was losing money. Due to our focus on profitable growth, we decided to shut down OLX Autos after a quick analysis. We found that the unit economics, meaning the cost to acquire a customer, were broken and couldn't be fixed easily. Additionally, the high competition in the used car market, with players offering subsidies and discounts, made it a race to the bottom that the company wasn't interested in participating in.
