PE players see more promise left in co: Justdial

VSS Mani, founder and managing director of Justdial, says private equity players who had invested in the company want to stay put despite the fact that the lock-in period expired on May 30.

"They are hoping for better valuations, they see much more promise left in the company, so they want to stick around," he told CNBC-TV18's Shereen Bhan.

Also Read: Justdial's officials sell 4,506 shares worth Rs 76.33 lakh

Q: What the private equity players intend doing now that the lock-in has expired on May 30? Have they reached out to you, told you whether they are staying on, exiting?

A: You must ask them this question..

Q: What have they told you?

A: They want to stay put.

Q: All four of them?

A: Yes, five of them actually almost a majority is going to hold on to the stock.

Q: They are hoping for better valuations?

A: They are hoping for better valuations, they see much more promise left in the company, so they want to stick around. Eventually when you sell a stock you have to put the money somewhere else so it is better to stay put.

Q: But speaking of promise and the markets are clearly betting big as far as JustDial is concerned and what is interesting now is that this is being seen as a Search Plus Transaction Play. However, speaking of the transaction side how quickly, how soon can we actually expect you to monetise the transaction side, the Search Plus side of the business?

A: We are not focusing on the monetisation side right now because this is a habit changing thing that we are doing, what is Search Plus Transaction. We are expecting the usage to evolve to Search Plus Transaction which we are seeing. There is evidence enough for that, so our focus is now to educate the vendors to participate in this platform and give a wow experience to our users who could now transact, for example if it is a restaurant and if you order food using JustDial interact, the food should be delivered at your doorstep in the quickest possible manner and then you are able to track also your food order, if you are a doctor your calendar is available there, you can even buy products.

We are actually going to empower the small players in the market for example there are large e-commerce players like Flipkart and there are others players who are in the brick and mortar space, 99 percent of the market as you know it still goes to them. There we want to empower them with an online interface and especially if we know that if we provide an interface to our users where they discover price for products, so if you want to buy mobile phone of a particular brand you can just come to JustDial, within 60 seconds you get to know the price and these are real price because these are vendors from your vicinity. So, that is something that we are providing as a platform to these vendors and there is fantastic response. So once all this takes off and that's when we look at monetisation.

Q: Give me a timeline by when do you believe that you would have put all these pieces into play and you will be would be able to focus then on monetisation and what could it add then as far as your topline and bottomline are concerned?

A: There is a lot of action happening now. By next month you would see this in full swing - this entire product and as far as monetisation is concerned to really say that a significant amount of revenue that could hit our balance sheet, I mean the P&L account should be next financial year, next financial year you should see some significant amount coming out of Search Plus.

Q: Quantify significant?

A: Very difficult because that will be a guesstimate right now.

Q: What is your best guesstimate and your worst guesstimate?

A: I don't know, maybe three to four years down the line this transaction bit should earn more than the search engine revenues, although the search engine is growing at a cool 27-28 percent Year on Year (YoY) and I hope that will do even better, so the base getting bigger the transaction plus and Search Plus should also contribute.

Q: So minus Search Plus what can be anticipated in terms of margins because you have been seeing some pretty healthy margin growth, do you envisage being able to squeeze out more doing much better from here and with the Search Plus ticking in, what happens to margins?

A: We want to gradually grow our margins; I mean we can definitely grow better than what we grew in the last couple of years but we are not obsessed about it; we are looking at 1.5 - 2 percent on the EBITDA margin, we are happy with that. More important is to invest in the business, invest in the core technology and also you need to spend some money on marketing and promotions to reach out to users.

Q: So what, 5-6 percent marketing, R&D all of that?

A: Yes, it should be around that kind of number; 6 percent of the top line.

Q: So once the Search Plus side really begins to kick in what can we really expect then in terms of margin accretion?

A: Well it could be huge. It is difficult to predict now. For example, if you don't know where, you come to Just Dial to find it. But what we are giving in the new platform is, you know where but I am giving you a convenient way to do it; I am giving you a place where you can even discover price. So your traditional way of discovering price was probably going to multiple malls or checking out with the third party internet site, but you don't intent to buy it online, you still want to buy it from a offline store, but now Justdial gives you a platform where you can actually discover the price from offline stores right here and if you want you can buy it online at Justdial or you can actually walk up to the store and buy it. You can imagine that is the entire market in this country. So our goal is to aggregate all these purchases and channelise through JD, so that's the idea.

Q: Does it excite you now that the market is looking at you so closely; people like DB have initiated coverage on Justdial, does it excite you?

A: Definitely exciting.

Q: Do you find it restrictive as well because exactly your every move is being watched now?

A: I don't really look at that way but I would definitely say that way we have to walk the talk. If there is an expectation we have to live upto the expectation but not the way they wanted us to be. There is no question of we trying to hurry it up, try to monetise it faster and things like because that\\'s never the goal. As you know we are a pretty old company, we took so many years to build and we took our own time because we only focused on our users and then came the monetization bit. So, the same would be the case for all our new products.

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PE players see more promise left in co: Justdial

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