I am delighted to report another year of healthy performance marked with implementationof several critical initiatives that shall enable us to embark on the next level ofgrowth.
It was two decades ago that we started with an idea that was way ahead of its time a telephonic-based search platform facilitating small and medium businesses (SMBs)to expand their business while empowering users to get instant access to localinformation.
Leveraging the prowess of some of the best minds in the industry and putting ininnumerable man-hours of dedicated efforts today we have taken this idea to analtogether different level. Providing advanced search plus features and a gamut ofvalue-added services our business listing customer base and user base have grownmultifold.
2016 has been yet another difficult year for the global economy manifested by severalunpredictable outcomes. While rising crude prices improved sentiments the Brexitphenomenon and the USA presidential elections added to the global anxiety. Marketvolatility weak trade and policy uncertainties across key nations dragged down theoverall growth momentum. However with positive developments (reviving manufacturingreducing inventory drags improving scenario among emerging markets and developingeconomies stabilising interest rates and firming oil prices) towards the end of theyear the global economy is likely to rebound with growth pegged at 3.5% in 2017.
Back at home things were much different as India continued to remain resilient toglobal gloom while retaining its tag of the fastest growing major economy. With reducingbottlenecks a trend of declining inflation and interest rates increasing forex reservesand expected implementation of Goods and Services
Tax (GST) the country's outlook remains positive. The recently concluded stateassembly elections in favour of the present Central Government is also a positive sign forstable governance and shall facilitate in passing important bills.
The crucial initiative of demonetisation undertaken by the government though creatinga brief period of lull has facilitated in channelising massive amounts of idle funds backto the economy and at the same time paved the path for digitalising the country. I believethe country's march towards mass scale digitisation along with declining internet tariffsshall have trickle-down effect on our business.
What makes me very optimistic of our business is the fact that internet-drivenecosystem is expected to drive the next phase of evolution in India. With internet-basedcontent rising and tariff rates declining the internet penetration in India that isabysmally low especially in non-urban areas is rapidly growing. Availability of low-costsmartphones is further catalysing this momentum. Under the given scenario internet usersin the country are likely to grow exponentially from 330 million users in 2015 to 730million users by 2020. Interestingly it is estimated that 75% of the new internet usergrowth will come from rural areas while 75% of the new users would prefer using contentin local language. Besides with the declining tariffs rates 4G roll-out and reliableinternet services the mobile data traffic in the country is likely to grow by 7.4x overthe next five years leading to 2021 a CAGR of 49%. (Source: NASSCOM CISCO)
Presently an astounding 68% of Indian small and medium businesses (SMBs) arecompletely offline while only 2% are actively selling or promoting their business online.It is expected that the rising internet penetration along with increasing adoption fromSMBs their contribution to GDP would grow by 10 percentage points by 2020. Furtherdigital SMBs would be able to cater as much as 51% customer beyond city boundariescompared to a mere 29% for offline counterparts enabling them to grow profits twicefaster.
Performance and key developments FY 2016-17
The total revenues during the year increased 7.8% from Rs. 7476.85 mn in FY 2015-16 toRs. 8056.73 mn in FY 2016-17. Operating revenue during the year increased 7.6% from Rs.6676.56 mn in FY 2015-16 to Rs. 7186.10 mn in FY 2016-17. Operating EBITDAadjusted for non-cash and one-time expenses and PAT margins for the year stood at 17.5%and 15.1% respectively compared to 25.6% and 19.1% respectively in the previous year.The decline in margins was primarily attributable to the fact that the Company is steadilyincreasing focus towards the Tier II and III cities where the average ticket size ofcampaigns is comparatively lower than that in top 11 Indian cities. In addition to thiswe have also undertaken expansion plans by adding employees in sales and technologydepartments and spending a sum of Rs. 321.14 mn towards mass media advertising. While theincreased manpower shall enable us to enhance SMB listings through deeper penetrationacross the small cities and towns the advertising shall facilitate in brand promotion andenhancing confidence in our brand.
The result of this was partly witnessed during the year as our business listings grewby 9.5% to 17.9 mn and paid campaigns by 18% to 435360. Another encouraging sign was thegrowth in traffic our overall traffic measured through unique visitors grew by 8.8% to79.9 mn in FY 2016-17 (Average Quarterly unique visitors^) with mobile platform nowcontributing 56.1%. For quarter ended March 31 2017 unique visitors stood at 86.8 mnwitnessing a growth of 21.6% YoY compared to quarter ended March 31 2016.
We have also focussed on making our search engine platform more interactive andengaging by providing options for ratings and reviews with a unique feature of gettingnotification in case of rating or review by friends.
For encouraging more people to rate we initiated the Rate and Win' contestwhereby lucky individuals were given attractive gifts on a daily weekly basis. Thisresulted in the number of ratings and reviews on our search engine increasing by 16.2%from 60.6 mn in FY 2015-16 to 70.5 mn in FY 2016-17.
This is indicative that we are moving in the right direction and a proper execution ofthese strategies shall have greater impact on our business in the coming years.
Being a proactive organisation we understand that going forward businesses with onlinepresence will have competitive advantage over their offline counterparts and grow morerapidly. This industry reality would make it extremely vital for SMBs to have an onlinepresence along with a robust online strategy to remain relevant.
To capitalise on this opportunity we have developed a 5-pillar internet strategy thatshall facilitate us in evolving ourselves to assist SMBs in smoothly transitioning towardsthis shift.
Our first step towards this was to focus on sustaining our position as India's leadinglocal search engine by improving offerings to become a robust online marketplace whereevery SMBs are attracted to get listed. To make this possible we worked towards makingour platform much more engaging holistic and loaded with value-added services to enhancetraffic.
Further to tap users having low-end smartphone with limited memory we developed anultra-light and efficient app Justdial Lite. This app provides a range of offerings underone platform and consumes minimal data thereby eliminating the need to download multipleapps and functioning well even on low speed internet connection.
In addition to this a country-wide advertisement campaign featuring Megastar AmitabhBachchan was launched to communicate the strengths of the Company and regain consumer andSMB trust. We even undertook the important initiative of educating the SMBs about thedramatic change in ecosystem from voice to internet whereby consumers no longer call forqueries; instead they rely on online data and reviews and ratings. This was vital to makeSMBs understand the inherent benefits of the online model in terms of better understandingconsumer behaviour analytics reaching out to wider target audience and influencingconsumer behaviour.
Secondly as the business and consumer community converges towards onlinewebsite/mobile site plays a crucial role in divulging business information and creatingthe first impression. To address this we have strengthened competencies to assist SMBs ininstantaneously creating personalised sites having all relevant information along withfacility to transact online. Having value-added features such as being responsivemobile-friendly search engine optimised and dynamic transactional capabilities thesewebsites facilitate in enhancing brand goodwill and enhancing consumer confidence.
Thirdly with rising proportion of consumers transacting online and resorting todigital means of payment it is essential to offer consumers an easy mode of digitalpayment. While most SMBs do not have the required technology or support to accept digitalpayment we assist in facilitating this shift through our JD Pay platform which empowersthe SMBs to accept digital payments instantaneously. This eliminates the chances ofconsumers unable to transact due to lack of payment facility. Besides JD Pay provides theadded benefit of saving user details enabling consumers to make payments in one click onsubsequent transactions.
Fourthly with spending behaviour (especially online) increasingly getting impacted byonline ratings and reviews it is essential for SMBs to serve customers in a manner togain ratings and reviews to influence consumer spending behaviour. Our offering JD Ratingtool facilitates SMBs to leverage the advantage of ratings and reviews to grow theirbusiness.
Finally with online community increasing at a rapid pace and online marketing gainingprominence like never before it is essential to have social media presence. For this wehave launched an engaging platform JD Social which encourages users to connect with eachother view each other's ratings and reviews and gain access to curated content. Thisallows SMBs to reach out to wider audience and improve their brand goodwill.
I believe these five pillars of our internet-strategy shall facilitate us in bringingback our focus on core business and lead to growth of our business. Apart from this werationalised our non-core staff automated several processes and took initiatives toimprove productivity of employees across functions.
Message to the shareholders
I take this opportunity to thank all our stakeholders for their continued trust andsupport. We have brought together all the right pieces right people right productright services and right strategy and now it is just an excellent execution that shallfacilitate us in bouncing back strongly. I am confident that the excellence of oursolutions would not only create excitement amongst the working age population it shallalso captivate the tech-driven millennial who are our future users and customers.Moreover with a robust debt-free balance sheet a net worth of Rs. 9051.82 mncash and investment position of Rs. 10172.23 mn as on March 31 2017 we continue to bein a strong financial position. I would also like to thank all our employees who haveworked diligently towards developing robust solutions spreading our market reachsupporting our operations year after year for making Just Dial a household name.
Managing Director and Chief Executive Officer