 "Global liquidity a concern but not problem if fundamentals are strong: Rajiv Bansal")
In his first interaction with media after assuming charge as the chief financial officer (CFO) of Ola close to three months ago, Rajiv Bansal shares what prompted him to join the home-grown taxi-aggregator. He says he wanted to be part of another growth story after spending almost 17 years at Infosys. In an interview with Bibhu Ranjan Mishra and Alnoor Peermohamed, Bansal said the company has strong business fundamentals which will help it disrupt mobility in future. Edited excerpts
Was it a tough decision to leave Infosys to join Ola?
The fact is that it was not just a job change but a career change. Infosys gave me global platform and a lot of recognition. Leaving that is not easy. When you change your career line or change your job, you look at next five years' potential. I think we Indians fail to figure out when to quit. I have seen the company (Infosys) growing from $150 million in revenues in 1999 to $9 billion now. So, I have been part of one growth story, and I would want to be part of another, greater growth story. In the next five years, if this is successful, then I would be more than satisfied to say that I have been part of two growth stories in the country.
I would not like to compare because these are two different industries. I am what I am today because of Infosys, and I would always remember that. I would not say whether this opportunity is going to be bigger than Infosys or not. Infosys has a great opportunity to be a dominant player in the world of technology. Similarly, Ola has a great opportunity to change the way people look at mobility in this country and we want to be at the forefront of that. The opportunity to grow here is tremendous. My priority would be to help create another institution called Ola which I would want to be bigger than Infosys.
How do you intend to achieve a balance between growth and profitability?
As long as you have a great business case, you will time yourself as to when you need to balance growth and profitability. Right now in this case, being big, trying to capture market share is very, very important. But is this model something we're sure of making money with? Yes. Today you have a million rides. If you go up to 50 million rides and 100 million rides, you know your cost of operation will come down dramatically. It's finally a technology platform. So our cost of operations is going to come down dramatically as our business grows bigger. It's not difficult to generate money, but to grow we have to invest in the market.
How well capitalised is Ola at this point? When are you going for the next round of fundraising?
Between October and December (last year), we raised around $500 million. So we are well-funded and well-capitalised right now. But as I said, there is a huge market opportunity. We would want investors who understand our vision and what a game changing model this can be. We are not looking at investors from the financial perspective only, but someone who can help you in this journey. It's not that we need to raise capital immediately but it's an ongoing process.
Is there always a pressure from the investors?
Investors are investors; whether it's a public company or private company. They want you to deliver on the promise you make, they want to understand the strategy you are pursuing, why you are pursuing it, and how you want to execute it. And they want results. In public company, people are looking at it from a quarter on quarter perspective. That's why I sometimes find that large public companies can't really be as innovative as smaller companies can be. Private equity players would typically look at window of four to five years; they don't come and ask you on daily basis. It allows you to be more agile, more nimble, being able to react to market situations much faster and be a leader in creating market disruptions.
Recently, a global investor downgraded the value of its investments in one large Indian e-commerce company. Does this bring fear of overvaluation?
What is the right value is a multi-million dollar question which nobody has an answer to, whether it is a public company or private one. Valuation gets created when you put your business together; you look at what the customers want and how you deliver. Valuations keep going up and down, it's always cyclical. But do you lose too much of sleep thinking over it? No. It's like an investment. When an investor is putting money, he does a mark-to-market.
If I do mark-to-market based on a certain valuation, it does not mean that the valuation has come down. That's the way I would look at it. What happens if tomorrow the valuation goes up? But having said that, yes, the global liquidity is an issue. There is a slump and that's the reason it's very important to have the fundamentals strong. Investors finally will have to invest money, but in this kind of market scenario they become more choosy and the diligence goes up. So you will see smaller players finding it difficult to raise capital because even if they grow initially, they don't know how to make it a scalable model.
Was it a tough decision to leave Infosys to join Ola?
The fact is that it was not just a job change but a career change. Infosys gave me global platform and a lot of recognition. Leaving that is not easy. When you change your career line or change your job, you look at next five years' potential. I think we Indians fail to figure out when to quit. I have seen the company (Infosys) growing from $150 million in revenues in 1999 to $9 billion now. So, I have been part of one growth story, and I would want to be part of another, greater growth story. In the next five years, if this is successful, then I would be more than satisfied to say that I have been part of two growth stories in the country.
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How different is Ola from Infosys?
I would not like to compare because these are two different industries. I am what I am today because of Infosys, and I would always remember that. I would not say whether this opportunity is going to be bigger than Infosys or not. Infosys has a great opportunity to be a dominant player in the world of technology. Similarly, Ola has a great opportunity to change the way people look at mobility in this country and we want to be at the forefront of that. The opportunity to grow here is tremendous. My priority would be to help create another institution called Ola which I would want to be bigger than Infosys.
How do you intend to achieve a balance between growth and profitability?
As long as you have a great business case, you will time yourself as to when you need to balance growth and profitability. Right now in this case, being big, trying to capture market share is very, very important. But is this model something we're sure of making money with? Yes. Today you have a million rides. If you go up to 50 million rides and 100 million rides, you know your cost of operation will come down dramatically. It's finally a technology platform. So our cost of operations is going to come down dramatically as our business grows bigger. It's not difficult to generate money, but to grow we have to invest in the market.
How well capitalised is Ola at this point? When are you going for the next round of fundraising?
Between October and December (last year), we raised around $500 million. So we are well-funded and well-capitalised right now. But as I said, there is a huge market opportunity. We would want investors who understand our vision and what a game changing model this can be. We are not looking at investors from the financial perspective only, but someone who can help you in this journey. It's not that we need to raise capital immediately but it's an ongoing process.
Is there always a pressure from the investors?
Investors are investors; whether it's a public company or private company. They want you to deliver on the promise you make, they want to understand the strategy you are pursuing, why you are pursuing it, and how you want to execute it. And they want results. In public company, people are looking at it from a quarter on quarter perspective. That's why I sometimes find that large public companies can't really be as innovative as smaller companies can be. Private equity players would typically look at window of four to five years; they don't come and ask you on daily basis. It allows you to be more agile, more nimble, being able to react to market situations much faster and be a leader in creating market disruptions.
Recently, a global investor downgraded the value of its investments in one large Indian e-commerce company. Does this bring fear of overvaluation?
What is the right value is a multi-million dollar question which nobody has an answer to, whether it is a public company or private one. Valuation gets created when you put your business together; you look at what the customers want and how you deliver. Valuations keep going up and down, it's always cyclical. But do you lose too much of sleep thinking over it? No. It's like an investment. When an investor is putting money, he does a mark-to-market.
If I do mark-to-market based on a certain valuation, it does not mean that the valuation has come down. That's the way I would look at it. What happens if tomorrow the valuation goes up? But having said that, yes, the global liquidity is an issue. There is a slump and that's the reason it's very important to have the fundamentals strong. Investors finally will have to invest money, but in this kind of market scenario they become more choosy and the diligence goes up. So you will see smaller players finding it difficult to raise capital because even if they grow initially, they don't know how to make it a scalable model.