Early this week, Altanta-headquartered Ebix proposed to acquire Yatra Online for $336 million in what seemed to be an unsolicited deal.
Robin Raina, Chairman of the company, talks about what Ebix plans to do with Yatra if the deal fructifies and road ahead for his organisation.
Q. What synergy is Yatra expected to bring to the platform?
The goal is rather simple. We want to be the number one company in travel. We already have around $2.5 billion GMV in travel. With Yatra, we would have $4 billion GMV. We are building upon international brands for travel and also for financial exchanges like insurance. This is a good fit into that ecosystem.
Travel doesn't happen in isolation. When somebody travels abroad, they also have to buy foreign exchange, besides airlines tickets and hotel tickets. They also look for cab services, visa, health insurance, etc. We provide all those services.
Q. Currently in the OTA space, MakeMyTrip, Yatra and GoIbibo cater to a minuscule travel market. Still a majority of the sector is driven offline. Will you look at acquiring more offline companies as well?
We don't want to buy any offline player, but at the same time, we already have 120,000 franchisee across India. Most of the consumers can't use internet in India and tend to go to a travel agent. We have appointed 120,000 agents across the country. These are typical outlets across the country but are fully digital. So when a consumer walks in, they are in every nook and corner of the country.
We call it Phygital revolution, combining of physical location with a digital technology.
We are very strong in that business and one big advantage is that we don't have to spend a single penny on advertising. We don't go and do what a MakeMyTrip does or other players do -- putting in heavy money in advertising. We are in every nook and corner and people walk to us.
Q. With such aggressive plans, what sort of a brand building exposure are you planning? What sort of a budget has been allocated for that?
Don't think I agree with the basic premise that you have to just keep throwing big dollars in advertising. You throw dollars as long as you make money. We already run a travel brand in India and we are highly profitable and we don't spend money. If we are going to spend money, we are going to make sure that we make margins.
The problem with the industry is not that they are overspending on television or newspaper ads. The problem is that they are subsidising.
I think that the selling price has to be more than the cost price. But that doesn't seem to be an understanding of some of these guys.
We will be launching our own ad campaign and we are very aggressive on that front.
Q. What is the budget for this advertising campaign you referred to?
We won't be able to give you the numbers since we are a public company. However, at the same time, let me put it in a way that it will be a sensible budget. It will be part of our cost. It is going to be a 360-degree campaign. It will be for some of the products such as travel and cabs.
Q. Early this week, Ebix gave Yatra a week's time to open their books for due diligence. Has that started to happen as of now?
We gave them time till March 18 to back come to us and allow us right of due diligence. That is all we have asked them to do which means, they will only give us the right, if they like our offer otherwise they won't give that. So your question is have they done it or have they not done it. Look that is highly confidential at this stage, the reason is rather simple. The two companies have an NDA between them. When they officially do it, they will disclose it. It is typically upto the company to disclose it.
I think they should respond positively. It is a good offer. Yatra's board will recognise that it is in their interest.
Q. What happens to around Yatra's over 2,500 employees if the deal fructifies?
It is very basic. Why only Yatra's 2,500 employees? I also have close to 2,700 employees. When you combine them, it will be 5,200. There will be change but it will be on both sides. We want to choose the best people for the best job. Our goal is to create a profitable enterprise. It won't be a one sided thing.
Which sectors will you be looking for acquisitions?
There are a number of things that can happen. We might already be committed to a number of acquisitions that makes sense for us. There are sectors outside what we do right now which are very attractive to us because we believe that they should be part of our financial ecosystem. I wouldn't be able to give you a specific sector right now because that will be giving too much right now. We are also planning an IPO and it could be either later this year or beginning of the next year. If we go for an IPO, we are going to raise a lot more new money and we are going to use it to put it back into the Indian market. We are trying to create a brand which is centered out of India but can grow across the world.