All metrics in place and signs good for Myntra to prosper

Mukesh Bansal in an interview to CNBC-TV18 lays down his mantra for Myntra. He says Myntra will be the first profitable e-commerce company in India.

All the metrics are in place and the signs are good, says Bansal adding that so far the strategic choice was to focus on growth than profitability but going forward the focus will be on profits.

He also says, he is done with active operating roles and would like to focus on healthcare services (fitness) and financial sector going ahead.

Below is the transcript of the interview.

Q: Let me ask you about what you have left behind. The last conversation that we had that you were fairly confident of being able to move to the path of profitability. Are you on track because if I were to look at the FY15 numbers estimates suggests they reported loss of Rs 740 crore and revenue of Rs 758 crore. So, losses have been piling on, are you on track to be able to get to the road to profitability?
A: In Myntra we have covered huge ground in terms of profitability. We are the only large scale e-Commerce firm in India which at unit level is profitable. It happened in October. So, good progress on that front. Our own brands are starting to achieve some scale Roadster, All About You, HRX etc which are contributing to positive growth margin. Q: How much of the private brands make up as far as total revenues are concerned? A: Myntra will be the first profitable company in all of e-Commerce in India. It may still take another 12-18 months but not that far off. Most of our ratios are steadily improving.

Q: So far it has been a revenue game but you believe that the bottom line story is going to look different in 2017 not just for Myntra but for the industry?
A: Myntra may be first one to get there but overall industry some of the smaller niche players will also start to see profitability in 2017-18. We have achieved the scale. I think it is imperative that there is a very credible path to profitability.

Q: Even if I were to look at the Flipkart story, the losses continue to mount even as far as Flipkart is concerned. Which is why people then don't believe this credible road to profitability theory.
A: Almost all the metrics I look at specially compare year over year, they are all improving steadily. Our burn as a percentage of revenue is steadily going down. So, that is a good sign of progress. Our gross profit percentage per order is improving. I feel very confident that for Flipkart also the profitability is not that far out. It may still take few years.

Q: Few years means three years, five years, seven years?
A: I will give two to three years and more importantly if the market was not growing as fast as it is if we chose to, we could be significantly more profitable relatively this year but then we would have to give up on growth. It is still very early stages.

Q: So you are saying the strategic choice will continue to drive growth even at the cost of profitability at least for now?
A: Maybe let us say two years ago 100 percent focus was on growth and on profitability. I would say last 12-18 months it has become at least half-half. So, we are going forward here and going forward probably this probably will be more on profitability and little less on growth.

Q: Are you done with e-commerce and fashion or is that likely to be something that you would want to go back to?
A: Absolutely done from the active operating role. So, I continue to be involved in Myntra and Flipkart as both shareholder and advisor. But I have done my bit in terms of operating in e-commerce business.

Q: So, not fashion, not e-commerce. What else would you be looking at?
A: I am looking at a number of different industries. I have spent some time looking to healthcare, looked at education, financial services and I am just actually quite pleasantly surprised both with the size of this industry, how fast this is growing, how many problems are unsolved and how big a role technology can play. Exactly which problem to work on I will take next few months to figure that out. In fact healthcare along with fitness and sports, these are little bit not quite same but related.

Q: So, would it be a niche segment within the healthcare space that you would consider?
A: Having been part of Flipkart for a while I will go for anything which has scale.

Q: How many Bansal brothers jokes have you heard so far?
A: Good things they were stopped now. People are used to it.

Q: So, people have finally reconciled with your idea that they are not brothers?
A: That and you are seeing a lot of young entrepreneurs are coming in now. So, top of the funnel for entrepreneurial pipeline is phenomenally big and hopefully there are not too many Bansals in that.

Source: TechGig.com