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Info Edge (India) Ltd.
BSE Code   532777
ISIN Demat   INE663F01024
Book Value   347.81
Dividend Yield %  0.14
Market Cap   561028.70
P/E   228.18
EPS   19.09
Face Value 10  
Year End: March 2016


overview incorporated m 1995 and publicly listed in 2006, today, Info  Edge ('the Company') is clearly a stalwart in the Indian internet based business space. The Company has gathered rich experience in its business domain having first nurtured and developed India's leading online recruitment business - extending its offerings in the 'online classified' space by developing strong brands like (online real estate), (online matrimony) and (online education information services); and today having a wide portfolio of offerings in the technology driven space that creates value by solving specific problems for customers including policybazaar. com (online insurance) and (online restaurant classifieds and food delivery business) and few others.

While developing and diversifying its business portfolio, Info Edge continues to focus on certain fundamental business ethos.

FIRST, there is focus on optimising working capital cycles, maximising margins and operating leverage, and stressing on capital efficiency to build business models that provide strong cash accretion. Consequently, even after adopting a high investment led business path especially in the last few years, as of March 31, 2016, the Company has 55% (Rs. 10.96 billion) of its assets in cash and cash equivalents (FD in Banks, Investment in Debt MF & FMP), while 86% of its liabilities are in terms of equity, only 14% is current liabilities and provisions and negligible debt.

SECOND, there is emphasis on creating brands that are market leaders. Most strategic decisions and investments are tuned to establish leadership in the market for all the Company brands that are directly in the Company's business portfolio or indirectly held through investments into investee companies. While the internet based business landscape provides several opportunities, it is also very competitive and establishing market leadership is the core to creating long term value propositions. Info Edge believes that in the long run only market leaders survive to reap benefits of the value a particular service space offers to its participating companies. Today, in its own portfolio - naukri, 99acres and shiksha, and amongst investee companies - zomato, policy bazaar, meritnation, mydala and canvera - are clear market leaders in terms of traffic share.

THIRD, while creating unparalleled customer experience, through the digital medium, is at the core of each of the businesses, Info Edge also recognises the need for proper off-line support to strengthen each of the brands. This includes activities like promotions through other channels, sales and distribution, customer service, logistics and delivery support. In fact, today, Info Edge has 64 company branch offices across 44 cities in India. Around 2,866 or 68% of the Company's entire workforce is involved in activities focused on sales and service.

FOURTH, the Company continues to emphasise on 'continuous innovation' as its core mantra to create market differentiation in a competitive market place. In the internet based business space most competitors also have a large focus on innovation but many lay emphasis on particular aspects of innovation that rely mainly on the product. Through its experience and knowledge developed over the years, Info Edge has evolved a holistic approach to innovation that extends from methodologies to understand customer trends, forecast developments in technology, develop cutting edge products that address well targeted customer needs, enhance and create brand recognition and identify solutions for the future.

Executing such a business philosophy involves striking a fine balance between optimising the brsent and investing in the future. To fulfil this, Info Edge continues to focus on executional excellence concentrating on operational efficiencies and cost management, while making investments in people and technology for future growth. Adopting a strategy development and execution path based on these principles, in Financial Year (FY) 2016, as the digital business space started coming of age in India, Info Edge competed and overcame strong challenges in the market and further cemented its leadership position across its brands.



In FY2015, one had observed that the critical inflection point had been breached for internet and mobile usage in India. The rapid growth of penetration of digital connectivity continued in India during FY2016. According to findings in the 'Internet in India 2015' Report released by the Internet and Mobile Association of India (IAMAI) and IMRB International, in October 2015, 317 million Indian users accessed Internet. Of this, urban India accounts for 209 million users out of an overall urban population of 414 million people, while rural India accounts for 108 million users out of an overall population of 922 million people. This is approximately around 25% of the country's population.

According to the report, India's internet base would grow by 49% in 2015 is expected to reach 402 million by December 2015, making it the world's second-largest Internet user base overtaking the US. China has the largest Internet user base, with over 600 million users. The report estimates that by June 2016, India will have 426 million users. The rapid pace of penetration is an interesting story - It took 10 years for India to get to the first 10 million users and another decade to hit the first 100 million. The next 100 million has been added in four years —between 2010 and 2014. The next 100 is added in 2015 alone, and one expects this pace of penetration to continue for a few more years. However, while the initial phase of growth relied almost completely on English as the language medium, the next phase will require more localised content even at times in the local regional languages.

chart A traces the growth of internet users in India since 2012.

A major transformation in internet usage in India and one that has brought about the rapid penetration was the move away from static connection platforms to mobile ones using hand held devices. This change has been dramatic, and the trend continued in FY2016. The mobile internet user base reached 306 million by December 2015, and is expected to touch 371 million users by June 2016, a rise of 21% in six months. Urban mobile Internet users are expected to constitute about 71% of this number, with 262 million users, while rural India is expected to have 109 million mobile internet users by June 2016. It has also been observed that the share of mobile Internet spend in the average monthly bill of users rose to 64% in 2015 from 54% in 2014. However, the average monthly bill fell nearly 18% to about Rs. 360, which is attributed to the fact that the consumers engaged more through data for connectivity and minimized their money spent on voice. chart B plots the rapid rise in mobile internet usage in India.

Since the middle of 2014, it seemed that the Indian Internet ecosystem had finally come of age and the global investment community started paying heed to India's emergence as a significant internet based economy. Initially, the investment drive came from large international firms such as Tiger Global from New York, Softbank from Japan, and Alibaba from China. Taking cue from them, the Indian investors followed suit and by the second quarter

of 2015 investment activities hit a major high with most entrebrneurs turning to internet based businesses and being supported whole heartedly by the investment community. The focus was on building business models that solved any problem using the medium of the internet, and fund raising, which was historically very difficult in India, became a very simple process. In a sense, 'irrational exuberance' set in and valuation expectations from entrebrneurs became staggeringly high. This phase is very common to any such sunrise industry that gets acceptance of global investor. However, the euphoria has not lasted for long, which is good for serious players in the industry. It has taken a few quarters for investors to recalibrate their strategies and re-focus on business fundamentals. By the beginning of 2016, the most important adjustment that has happened in the industry has been a moderation of expectations both from entrebrneurs and investors. The 'irrational exuberance' has died down but the immense potential for value creation in the sector remains to be tapped.

India still has a large number of basic, interesting, and uniquely Indian problems yet to be solved. And, technology, specifically mobile and Internet, offers immense scope to be leveraged to solve hitherto hard-to-solve problems like making payments easier, aggregating unorganised markets or verticals, or using data analytics to make services and products more targeted. The number of active smartphone and Internet users have increased more rapidly than most expected. Still, the majority of the Indian population of 1.25 billion doesn't have access to basic and reliable Internet. With Internet giants like Google and Facebook, as well as local players like Reliance launching different initiatives to bring the next billion online, the market scope can become significantly larger.

An important point to note is that in India, the regulatory barriers in this industry are almost non­existent, internet content is still mostly in English and the Government has not been able to control digital media proliferation. While this is good for the consumer, Indian players who operate in this space has to deal with global players like Amazon, Google or Alibaba as just another competitor. This is very different from the way the internet industry has grown in China. In fact, the Chinese have built their businesses without much global competition

- that half-trillion dollar market cap came much easier, after much government protection. There are significant regulatory, political and language barriers for non-Chinese internet firms to win in China.

Given that the nature of Internet businesses is largely a winner-take-all in any niche, Info Edge has always focused on establishing leadership in whichever market it operates. Global examples show that the market share that Google ended up with in search, Gmail in email, Facebook in social networking, Twitter in microblogging, YouTube in video are all well above 80%. So, having carefully identified a niche, one has to either end up the leader with 80% of it, or a distant number 2 with 8% of it or a non-player with 0.8% of it. This is where the chips largely tend to fall - though there are a few exceptions.

Consequently, even after having established a leadership position in its main business domains, Info Edge lays continuous emphasis on promoting innovation and makes investments in branding, people, product development and processes to

maintain their leadership position and defend markets. The focus is on building businesses that have defensibility, sustainable competitive advantage, and an ability to make healthy profits in the long term. The Company has been leveraging its experience in the Indian market over a period of time to understand and apbrciate the nuances of problems in India and developing solutions and business models that are uniquely Indian. Some of these models have been replicated in niche global markets as well like with naukrigulf and by zomato. Now that the Indian internet market has become large enough for global players to make a meaningful entry, domestic leaders like Info Edge have to strike a fine balance between maximising profits today and making investments to protect its leadership position in the long run. In terms of financial results, this also means that high quality execution will lead to revenue and profit growth but operating margins will in all probability be lower than what one saw in the earlier phase of growth of successful Indian internet companies.


The global macroeconomic landscape is currently going through a rough and uncertain terrain characterised by weak growth of world output. Even in these trying and uncertain circumstances, India's growth story has remained largely positive on the strength of domestic demand. India's economy accelerated in the March quarter of FY 2016 to grow at 7.9%, buoyed by improved agricultural performance and growth in consumption. In fact, private final consumption expenditure in real terms grew by 7.4% in FY 2016 against 6.2% in FY 2015.

chart c shows the positive trend in real Gross Value Added (GVA) growth over the last 4 years including sectoral performance. GVA adjusted for taxes on products including import duties and subsidies gives GDP.

The good news is that high job creating industrial sector grew 7.4% in FY2016 compared to 5.9% in FY2015, and the services sector continued to grow by a respectable 8.9% in FY2016. Additionally, for India, the other macroeconomic parameters like inflation, fiscal deficit and current account balance have exhibited distinct signs of improvement. Wholesale price inflation has been in negative territory for more than a year and the all-important consumer prices inflation has declined to nearly half of what it was a few years ago. As chart D shows, compared to 10.9% CPI inflation in 2013, the level was down to 5.9% in 2015. With inflation under control, the Reserve Bank of India (RBI) has eased monetary policy and reduced the benchmark repo rate in three instalments by a total of 100 basis points. Consequently, lending rates have reduced marginally. The base rate for scheduled commercial banks, which was 10.25% in 2013-14 has reduced to 9.7% by the end of Q3, 2015-16. Having said so, interest rates need to come down further to really bolster investments.

While there is much to cheer, there are also certain concern areas. Weak growth in advanced and emerging economies has taken its toll on India's exports. In fact, exports reduced by 5.2% in real terms over FY2016. Thankfully, imports have also declined, principally on account of reduced prices of crude oil for which the country is heavily dependent on imports and, hence, the trade and current account deficits continue to be moderate. Savings and investment rates are showing hardly any signs of revival. The rupee has debrciated vis-a-vis the US dollar, like most other currencies in the world, although less so in magnitude. At the same time, it has apbrciated against a number of other major currencies.

Overall, consumer and business confidence based on macro trends are positive as one goes into FY2017




Info Edge's businesses have evolved over time and the enterprise structure has moulded to support these developments. Today, the Company has a group of brands managed and nurtured by its own organisational team. The performance of these entities have a direct impact on the stand-alone results of the Company. The brands that constitute the stand-alone entity is given in Box 1.

Each of these businesses are at different stages of their product life cycle and hence have their distinct impact on financial performance. The Company's established flagship brand is It is a clear leader in the Indian online recruitment business space and continues to generate healthy cash for the Company. The online real estate classifieds brand - - has started to grow and reached a materially significant size in terms of revenues. With heavy investments coming into the sector, the brand had to operate in a fiercely competitive market till the middle of FY2016. since then, with some corrections in valuations, the overheated activities in the segment has died down but competition remains strong. This is where most of the Company's investments have been made in FY2016 and it is well positioned to break through and establish strong market leadership. Till the break-out is achieved, one expects most cash burn for the standalone entity to happen around this brand. The other businesses - online matrimonial classified under and online educational classifieds under - are still smaller businesses. Although they are gaining traction, the focus has been to consolidate these brands and steadily establish their market brsence.

From a reporting perspective, considering the changing trend in scale of operations in some of

the service verticals, the management has started monitoring the performance of each of these verticals on regular basis with effect from quarter ended June 30, 2015 and therefore these have been considered as reportable segments under Accounting standard 17 on segment Reporting. The reportable segments, at a consolidated level, rebrsent "Recruitment solutions", "99acres". "Online Restaurant Discovery" and the "Others" segment which comprises primarily Jeevansathi and shiksha service verticals since they individually do not meet the qualifying criteria for reportable segment at a consolidate level as per the said Accounting standard. chart E Gives the relative shares of these segments in Company's total consolidated revenues for FY2016.

In addition to these businesses, recognizing the basic entrebrneurial instinct driven characteristics of the online business space, Info Edge has utilised cash generated from core business to provide capital to investee companies as equity contribution. These companies are typically spearheaded by a team of individuals who formulated the basic business idea and initiated its execution. Here, Info Edge plays a more supervisory role as the incubator and developer of an external business concept. Although there are extensive sharing of experience and support in continuously realigning business plans, final decisions and transactions are maintained on 'arms-length' basis.

The investee company portfolio and Info Edge's exposure to these businesses are given in Table 1. It is important to understand that for Info Edge, these investments are expected to generate returns over a period of time from the value accretion of their shares. Essentially, the focus is on enhancing their business valuations, which goes through various phases of growth and requires further periodic capital infusion. The Company consciously evaluates the impact of such infusion on Info Edge's own financial position and takes strategic positions on partnering other investors and also at times diluting its own stake. Consequently, it must be noted and as reflected in table 1, that Info Edge has only a proportion of interests in the total valuation of an investee company as reflected in the percentage holding on fully diluted basis

Amongst investee companies - zomato and policybazaar - have reached meaningful scale of operations. However, Info Edge now has a small stake in policybazaar, so developments in this business has lower material significance to Info Edge. During FY2016, the Company invested a total of about Rs. 2,302 million into the portfolio of investee companies including Rs. 1,554 million into Zomato in April 2015 and Rs. 250 million into Applect that runs during May 2015. The Company also added three new companies to its portfolio - Mint Bird, Rare Media and Green Leaves - for an investment of Rs. 198 million in total.

In order to further streamline its strategy of investing into investee companies with partners, the Company has created a layer of step down subsidiaries where the investments held in the parent company have been transferred. The specific transactions are:

• transferred its investment in eTechaces Marketing & Consulting private Limited (EMCpL) to its subsidiary Makesense Technologies Limited (MTL)

• transferred its entire shareholding of Canvera Digital Technologies private Limited to its subsidiary smartweb Internet services Limited .

• transferred its entire shareholding of Happily unmarried Marketing private Limited to its wholly owned subsidiary startup Investments (Holding) Limited at book value.

• transferred part of its share holding of Applect Learning systems private Limited to its wholly owned subsidiary startup Investments (Holding) Limited at book value.

• transferred part of its share holding of Kinobeo software private Limited to its wholly owned subsidiary startup Investments (Holding) Limited at book value.

• transferred 1000 brference shares of smartweb Internet services Limited to its wholly owned subsidiary startup Investments (Holding) Limited at book value.

It is important to note, that the investments into these investee companies are subject to various shareholder agreements with the entrebrneurs initiating these ventures and the co-investors as one progresses with different rounds of funding. Consequently, there may be further agreements which have/ may have clauses like seniority of investor, EsOps criteria, or performance based dilution that may make the actual proportion of Info Edge's share in the valuation of any investee company lower than what is stated as shareholding/economic interest today.

The Board of Directors declared a financial dividend of 30% during FY2016. This includes an interim dividend of Rs. 1 per share declared in November 2015 and Rs. 2 per share declared in March 2016.

The transfer of half of investments in eTechaces Marketing and Consulting private Limited (EMCpL) to its subsidiary Makesense Technologies Limited (MTL) for a consideration of Rs. 513.39 Mn resulted in a profit of Rs. 341.60 Mn, which has been adjusted under exceptional items in FY2016. The transfer of several investments into wholly owned subsidiaries were undertaken in FY2016 to bring in greater flexibility in structuring investments into these businesses. Consequently, other current assets on the balance sheet, increased from Rs. 610 million in FY2015 to Rs. 1,748 million in FY2016.

In the next section, the businesses under the standalone operations is explained in detail.



The recruitment solutions business is built around and comprises the following portals: : This is the Company's flagship brand and India's largest online jobsite. : This is primarily an off-line headhunting business that derives revenues from successfully positioning a person with a company. : This is a jobsite that focuses on the middle-eastern market. This site focuses on entry-level jobs.

• Fast Forward- Candidate services: A fraction of the individuals who visit our site opt for value added services like getting their resume written professionally amongst other services.

Recruitment solutions, which is the Company's core business continued to deliver strong results in terms of growth in revenues and profits as indicated in Box 3.

It has two major sources of revenue:

(i) from recruiters, which accounts for around 90% of revenues. The different elements include job listing / response management; employer branding / visibility, and others, such as resume short listing and screening, career site management and campus recruitment, and non-recruitment advertising other than for jobs; and

(ii) from job seekers, which relate to all job seeker advisory services

The key to naukri's success has been its ability to establish and enforce its leadership position in the market. Leveraging its dominant position the brand benefits from the virtuous cycle where it gets the most clients because it has the most jobs listed — this is possible because it has the most traffic which, in turn, is due to getting the most response that, then, further acquires more clients.

Chart F plots the traffic share for naukri since 2010 for non-mobile internet, and one can see the steady growth, from levels around 50% in FY2011 to the levels above 70% seen in FY2016. Chart G plots more recent data of traffic share for mobile internet. Here, too, naukri has a dominant share of over 70%. This emphasises the brand's clear leadership position in the Indian market. The primary usage parameters also highlight the continuous growth of

• Number of resumes in's database increased by 12% — from around 41 million at the end of FY2015 to around 46 million at the end of FY2016.

• Number of unique customers grew by 7.7% — from 57,000 at the end of FY2015 to 61,000 at the end of FY2016.

• Average Realisation per customer has increased by 14.8% from around Rs. 61,000 in FY2015 to Rs. 70,000 in FY2016

Naukri's business is being pursued on a four-pronged strategic thrust.

First, is the focus on introduction of new products for recruiters. This includes career site manager, response management tools and applicant tracking system; employee referral tool and recruiter profile. The career site manager has gained reasonable traction in the market. The career site and response management product is targeted to power value added offerings to recruiters and companies. It was sold to over 1,600 recruiters (including corporates) in FY2016. On this front, additional capabilities and features are being added and certain variants are also being launched. The proposition of recruiter being able to create profiles that can be followed by users has also gained good market acceptance. In terms of products, the Company has been developing a referral portal for companies, where employees can submit direct or social media referrals and track their status.

Second, is to develop mobile based applications to support and supplement the existing naukri offerings. There is already ios and android based apps and an html5 based mobile site, which is being continuously upgraded to satisfy the highly dynamic market demand. As is the industry trend, increasingly share of traffic for naukri is emanating from mobile applications. In quarter 4 of FY2016 around 56% of traffic to naukri initiated from mobile platforms. Chart H plots the growing influence in mobile based traffic origination for naukri since Q1FY2015 - in a span of 8 quarters the share has doubled from 28% to 56%.

Third, is to improve utility for customers by significantly enhancing the search engine within the model. This is being pursued by focusing on using semantic searching mechanisms to make the experience better and faster for job seekers and recruiters. The function is being augmented by using sophisticated analytics tools that mainly focus on optimising results based on searches done by recruiters.

Fourth, the offerings are supplemented by a responsive customer service. The differentiating factor being promoted here is the emphasis on a solution based approach.  is supported primarily by offerings that complete the Company's full service suite in the recruitment space: Quadrangle,  and

• Quadrangle, offers off-line placement services to middle and senior management, with revenues based on a success fee model. It complements the online recruitment business. The business continues to perform creditably with little incremental investments.  The site targets at hiring fresh students from campuses. Today, much of this hiring is done offline, and the focus on this business is to convert the existing offline activities to online and build on the potential of online campus hiring. This is at a nascent stage of development.  is working on replicating the naukri model in the Middle East. While the initial focus was on the Indian diaspora, today, people from several nationalities use the site. While in the last 2 years there has been reasonable gains in markets like Dubai, Abu Dhabi, and Oman, in FY2016 the business was adversely affected by the slowdown in the middle-east and especially the fall in oil prices.

Fast Forward- Candidate services: A fraction of the individuals who visit our site opt for value added services like getting their resume written professionally amongst other services. derives its revenues from property listings, builders' and brokers' branding and visibility through micro-sites, home page links and banners servicing real estate developers, builders and brokers. Box 4 gives the financial performance highlights of

The usage parameters highlight some traction in revenue generating traffic in a very difficult business environment:

• Number of listings on increased by 20.8% — from around 3.4 million at the end of FY2015 to 4.1 million during FY2016.

• Number of paid listings grew by 15.5% — from 2.5 million during FY2015 to 2.8 million during FY2016.

Given the fact that real estate was the largest category for advertisements in the print media, the potential for online real estate classifieds as a business is immense. However, the pace of transformation from the print space to online has been slow. Even then, estimates suggest that the online real estate market in FY2016 was around Rs. 3.2 billion. In FY2015, the sector was flooded with new players and large investments from overseas funds. In a sense, there was a rush to get a piece of the market pie, which had scope of hyper growth.

This intensity of competition resulted in the need for excessive investments from most major players in the sector to maintain material share of traffic and hence business. There were lot of innovations in terms of products and competition peaked by the January 2015. Info Edge had to go with the market trends and make large investments - although the Company always maintained better capital efficiency in their investments when compared to many new entrants.

These investments were largely in people in augmenting the product and associated teams. The Company remains focused on developing a superior product platform that enhances customer experience and provides an edge in the market. The other area where spends increased was on brand building and marketing.

The euphoria in the market place died down since the second half of FY2016 with some of the businesses being pulled up by investors for unwarranted cash burn, and the market dynamics has become much more stable since then. Chart I tracks the traffic share of various brands in the segment and it is noteworthy that since June 2015 competition has started to decline and a few players have started garnering most of the share.

Today, with a share of around 50% of traffic, 99acres is the clear leader amongst six major players. Couple of the global search engines are also indirect competitors in this space. Interestingly, 99acres has successfully gained traffic share at a time when they focused on cost rationalisation and reducing EBITDA losses. In fact, EBITDA losses has reduced from around Rs. 347 Mn in Q1, FY2016 to Rs. 114 Mn in Q4, FY2016. While the business is still working on restructuring cost components, it should be noted most of the cuts are on the marketing and brand building while the focus on enhancing customer experience and quality of product remains a prime focus. While the Company has established leadership in traffic share, it should be noted that the business environment continues to be difficult. In fact, the Real Estate market remains sluggish and demand for new homes especially in markets like Noida, Gurgaon, Hyderabad continue to be weak. Mumbai and Bangalore are slightly better but everywhere unfinished projects and inventory overhang continues. And, the offerings have to become more and more tailor made for particular needs of each of the city markets in India.

In terms of product, the focus remains on creating market differential by attending to specific needs of customers. For this, there is stress on quality of information on the site with greater emphasis on photos and videos and detection and reduction of spam. There is an effort to enhance the new projects platform experience with new offerings for builders and introduction of features like comparison with similar projects, payment plans and construction status updates. Efforts are also on to create an efficient listing verification to improve quality of data on the site. A value added proposition being introduced into the site is the lead management system, which will support in lead optimisation and help in monetisation.

Given the trend in rapid proliferation of mobile internet, for 99 acres too there is a mobile app on ios and android platform. Features of this app is being continuously upgraded. This is in addition to the mobile site. Comscore data for mobile sources of internet suggests that between December 2015 and March 2016, 99acres maintained leadership  in mobile with traffic share ranging from 45% to 60%. In fact by Q4, FY2016 the share of mobile as a source of sessions increased to 52%.


While jeevansathi offers a platform for free listing, searching and exbrssing interest for marriage, its revenues are generated from payments to get contact information and certain value added services. Box 5 gives the financial highlights of the business.

Even after securing much better top-line the increase in losses was due to certain investments made to further invigorate the brand. It is important to note that the revenue growth has really kicked in during the last quarter of FY2016, so the investments are showing early signs of paying dividend.

The usage data does point to a growth in the brand.

• profile listings increased from 6.8 million at the end of FY2015 to 7.6 million at the end of FY2016 — an increase of 11.8%

• Average number of profiles acquired daily increased by 20.4% from 1,814 in FY2015 to 2,184 in FY2016.

The Indian online matrimonial market, estimated to be around Rs. 5.5-6 billion in FY2016, is a highly fragmented market in terms of brferences for geographies and communities. In addition the institutional structure for marriages are such in India that typically the site is used by those disconnected from mother communities and youngsters wanting greater choice. Often the users are parents. In this backdrop, product offerings need to be tailor made to address specific local or community based needs and therefor requires in depth local knowledge and strong ability to customise.

With leadership position in certain north Indian markets and amongst some specific communities. Jeevansathi is one of the three leading players in the market. Due to the reasons described in the earlier paragraph, breaking into and penetrating competitor's markets is difficult and growth in today's state of the industry will be gradual unless some quantum investment is made in the brand or product.

under these conditions, being an established player in the market, jeevansathi's has a clear two pronged strategic focus. On the one hand, it is to specific communities to grow revenues. Here, there is opportunity in identifying needs of communities not already being catered to effectively and providing them specific solutions. Also, within its target group to stress on ways to increase profile acquisitions. On the other hand, emphasis is being laid to convert the community already on the site to increase their use of paid services. A corollary to this endeavour is to convert free users to paid users.

In addition, providing a better experience on mobile gives scope to take on competition and establish greater brsence in the market as the mobile experience across the brands is in a way new. The Company has made a lot of effort in creating a word class experience for users on the mobile platform through its mobile site and ios and android based app. In the last quarter of FY2016, 79% of the  sessions of jeevansathi originated from the mobile platform.  

Education –

Within the online education classifieds space, shiksha has been strategically positioned as a website which helps students decide undergraduate and post graduate options, by providing useful information on careers, exams, colleges and courses.

This is the newest business in Info Edge's stand­alone portfolio. The business has been carefully nurtured and developed with the Company's focus on understanding markets and developing appropriate products with optimal use of capital and focus on developing slow and steady leadership over a period of time.

Interestingly, the business has slowly moved towards profitability and generated a surplus in Q4, FY2016. While this is a step in the right direction, given the scope of growth in the industry and the interest amongst new entrants, there will be need to make investments to strengthen the brand's leadership positioning.

Like real estate, education has very high spends in the print media. In 2015, the total market was estimated to be around Rs. 3.8 billion (TAM data) and online spends are still very small compared to this. There is considerable opportunity in transforming existing users of other mediums to use the internet for education sector classified. Recognising the business scope, there is gradually a build-up of new entrants into this space.

The business model focuses on providing a platform for branding and advertising solution for colleges and universities (uG, pG, post pG) where both Indian and foreign entities advertise. The platform is a great point of connect for international institutions as a large number of Indian students go overseas for higher education. Revenues are also generated through lead generation for institutions in terms of potential student or applicants details bought by colleges and their agents. There are also full counselling services provided for international university partners. prospective students have free access to all information on the site (some post registration).

In terms of strategy, the business is focusing on creating differentiated and useful content with improved information on colleges and courses for different streams. There is also an effort to create more user generated content (Q&A with community/experts/campus reps, college reviews) and introduce more interactive student tools. Growth is also being fostered with establishing a stronger mobile experience. To do this, the Company is focusing on full feature mobile sites for domestic and study abroad and a full version App (Android) with personalized experience. The efforts are being supplemented by a strong emphasis on key account development through innovative branding and student engagement solutions, applications for International clients and deeper key account management by sales team. There have also been efforts to target courses beyond B Tech, MBA and study Abroad to grow the user base


In addition to promoting businesses internally, Info Edge recognises that ideation and the spirit of enterprise are key elements for success in developing online businesses. Thus, the Company has made investments in early stage start-up ventures. The objectives are: (i) to support the growth of these entrebrneurial driven activities, (ii) gain from enhanced value creation, wherever this occurs, and (iii) bring such enterprises into the Info Edge fold, if such opportunities arise in future and in appropriate situations. Most of these companies are in the incubation/ early stage phase.

Table 1 lists the investment status on each of these businesses.

Among these investments, two are starting to gain considerable traction — Zomato Media private Limited and Etechaches Marketing and Consulting private Limited that runs


This is the online restaurant discovery and food ordering business. It has clear leadership in India and uAE, which is considered its home market. Today, directly or through acquisitions, it has a brsence in 23 countries including India, uK, Canada, Czech Republic, slovakia, poland, portugal, uAE, NZ, south Africa, Turkey, philippines, Indonesia, Italy, Brazil, Ireland, Qatar, sri Lanka, Chile, Australia, us, Lebanon and Malaysia.

The business recorded around 71 million sessions in March, 2016 across web and mobile of which around 70% sessions through mobile (web and app). Today, it has a database of 1.1 mn restaurants across the world.

The business model focuses on the following:

• Advertising

Banner ads on web and mobile apps relevant to a user's search of restaurants in an area Events, sponsored spots in collections and corporate tie ups

• Digitise restaurant menus, provide relevant information [including map coordinates, pictures etc) Regular up-dation through feet on street beats

• Generate ratings and reviews and enable picture uploads from users

• Provide a 'wow' user experience search capabilities by location, cuisine, dish names convenience through a high quality mobile app

• Food ordering on the web and mobile app

Online food ordering launched in India and uAE  (Dubai & Abu Dhabi) in FY 15-16  Delivery done by restaurant or by Zomato's   logistics partner Grab and Delhivery

2 mn plus orders processed in FY 2016  • Table reservations [Zomato Book) active in 8 cities  globally

At the beginning of FY2016 when the investment market was good and zomato was able to raise a large amount of capital, it had decided to go after a lot of big opportunities available in terms of geographies. Zomato expanded by launching in a few new countries and also made a few acquisitions. However, market conditions shifted in the middle of FY2016 and there was a lot of competition in home markets of India and uAE. The intense competition has made zomato re-align its business to generate sustainable profits over the longer term.

Info Edge recognises that ideation and the spirit of enterprise are key elements for success in developing online businesses. Thus, the Company has made investments in early stage start-up ventures.

The realignment included becoming prudent in terms of where capital was being deployed where management time was being spent. Consequently, the focus shifted on a select 14 countries reducing exposure in regions where there was a lot of high burn and high risk. Also, as a cost reduction measure, today, every market apart from these 14 countries is being managed out of India remotely. As a result of these initiatives, the brand has managed to cut costs drastically - the operating burn rate, which had peaked at us$9 million per month during the first quarter of FY2016, had reduced to around us$1.6 million in May 2016. In the second half of FY2016, zomato managed to double its revenues while actually bringing down costs and exposure to high risk, high burn areas.

There was a successful launch of the online ordering delivery business in India and uAE and the business is almost a year old. The India delivery business is currently about 20% of revenues in India and the service is profitable. Zomato continues to work on rationalising its cost and is well positioned to launch on a structured growth path.


policybazaar is India's financial online supermarket. It provides online price comparison of financial products; mainly for insurance, and is expanding fast into other financial products (paisabazaar). It is a clear value add to individuals and Financial Institutions and a leader in its category with estimated 90% share of Insurance comparison and 40% of online Insurance transactions. It has potential to penetrate a large untapped and growing market as fraction (less than 4%) of the Indian population is insured.

Info Edge has invested Rs. 325 million in Etechaces private Limited, but with other partners investing further, Info Edge's interests in the business has reduced to 10% stake. The investee company operates an online insurance aggregator website — — which helps customers understand their insurance needs and select schemes that best suit their requirements. Other financial products like home loans, car loans and personal loans are also being added for inter-se comparison of financial products prior to purchase. The business has been partially affected due to regulatory issues. Even so, it is growing; and it is also laying emphasis on distance marketing and advertising.


Info Edge has invested an additional Rs. 249 million in FY2016 taking its investments to Rs. 968 million for around 59% stake in Applect Learning systems private Limited. Applect has launched a site called, which is delivering kindergarten to Class 12 (K-12) study material. The site is managed by an experienced team that specialises in content development and assessment modules in the education space, and has a strong commitment to delivery. It provides:

• Supplementary online learning platform for K12 and Entrance Exams

- proprietary content

- Freemium model

- Direct to consumer

• Provides free solutions mainly for

- mathematics and science for K12 of popular national Indian curriculum's viz. CBsE and ICsE and some state Boards

- free solutions restricted to popular text books and user generated content

• Paid product for online assessment and teaching solutions

- provides resources to kids for self study after school

Option for live online tuition classes

• Expanding offline centres

• Test brp product for engineering and medical entrance examinations

During FY2016, it received over three million visitors every month and it has over 10 million registered users. The services have been augmented by a mobile app and offline model. In FY2016, around 55-60% of the traffic came from mobile platforms


It produces printed wedding albums for professional photographers. The business model is about building the brand with the consumer but monetise through the professional photographer. The products and services include: (i) printed products (albums) sold to the photographer (main source of revenue); (ii) design of printed products and websites (service business that supports the product business); (iii) web solutions to help professional photographer build their website (saas); and (iv) lead generation through photographer classifieds (new offering that could explore a monetisation possibility).

The business is about leveraging the Company's long drawn expertise in digital imaging and printing. From a revenue perspective, the photographers pay to order printed albums or photographs. Additional sources of monetization are possible through the micro site.

It has a sales brsence is more than 200 cities. An important new launch in FY2016 was that every printed book can now be downloaded to a mobile devices using Canvera's app and from the app shared on Facebook, WhatsApp. There is also a photographer's directory, basis city and location.


It is a deals and couponing site with large sales team which sources deals. They also power deals on the mobile, partnering with telecom operators. The business is making all efforts to evolve into a merchant marketing platform on web and mobile, with majority of its revenues from mobile. It has about 50 mn visitors and 5 mn transacting customers every month.


Today this is the business which is mainly offline in Infoedge's portfolio. It sells innovative fun products through retail outlets with an Indian and whacky touch. The introduction of these products on the online platform is gaining traction. It has also launched a grooming range for men called 'ustraa'

Table 4 gives the financial performance of each of these companies. investments being made on mobile based applications, which is a breakthrough technology in this business.

strategic risks

Competition Risk: All the portals face competition directly on the online space and the offline.


The Company has a well-structured and robust risk management mechanism, which includes a combrhensive register that lists the identified risks, its impact and the mitigation strategy. Broadly, there are some overriding risks that are listed below:

operational risks

• Data Security: Technical failure and breakdowns in servers could lead to interruptions of our websites and result in corruption of all data and/or security breaches. The Company has initiated a pilot project to establish a secondary site in India as a brcautionary measure.

Obsolescence: Being a technology driven company, it always faces the risk of an innovation or product development that can make one or more of Info Edge's propositions redundant. The Company remains alert with technology developments to overcome this risk. A case in point is the

Info Edge continuously tracks competition in every one of its businesses and stays brpared for the challenges.

• Dependency Risk: The Company relies heavily on the recruitment business in India for its profits and cash flows. Info Edge has been consciously diversifying into other businesses to de-risk itself from this dependency. Already, the other businesses have started contributing around 22.5% of its total revenues — up from 19%.

Investment Risk: The Company has an active exposure of investments worth Rs. 7,200 million into start-ups, directly and through subsidiaries. There is a probability that this entire investment might not generate returns and absorb more cash in the incubation/ early phase. These are calculated risks, which is part of the Company's growth strategy. Also the reported equity holdings in the investee companies may not translate into an equivalent economic interest on account of terms of investment including senior rights given to an investor or a group of investors or esop dilution.


• Tax Issues: the Company has had a few income tax and service tax cases against it, which, if lost, may impact future cash flows. However, none of these is material.

• ERP: In order to promote efficiencies, the Company has promoted ERp across its activities. Any errors in billing or financial reports in the ERp system could affect the Company's billing and statutory reporting.


• Attrition: Being a knowledge driven business, significant increase in people attrition may affect the course of the business. The Company is focusing on making workflows as process-driven as possible.

• Content Liability: Most of the portals rely on information being posted by users. Fraudulent postings/profiles on the website, spamming by some of the users may damage the Company's reputation and make it vulnerable to claims, e.g. defamation and invasion of privacy. Filters are in place to contain the quantity and quality of uploads and downloads.

• IPR Protection: The Company has been protecting its trademarks against infringement/passing off by third parties who use them in a trademark sense. Even so, it is exposed to risks of third parties trying to use our marks. There are also risks attached with the litigation process. Also, litigation is a time & resource intensive activity and may be on-going.


Info Edge has proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition, and those transactions are authorised, recorded and reported correctly.

The internal control is supplemented by an extensive programme of internal audits, review by management and the Audit Committee, and documented policies, guidelines and procedures. The internal control is designed to ensure that financial and other records are reliable for brparing financial information and other data, and for maintaining accountability of assets.


With the positive sentiments in the macro-economic front in India, the job market will remain robust in FY2016. There is some concern with IT companies announcing a cut down on hiring in the near future. However, the size of hiring requirements of the IT sector is so high that a reduction at the margins will not affect's business much. Also with a focus on more efficient hiring methods, these companies might increasingly use more of naukri's hiring platform. The Company's investments specifically in product development will continue to help maintain and strengthen the leadership position.

With market hysteria dying down in the online real estate space, investment requirements into 99Acres. com, especially from a marketing perspective are expected to reduce. By continuing to invest in various areas like verified listings, better user interface and designs, improving products and features on the site, the mobile platform, the platform for new projects, and analytics, 99acres is expected to firmly establish its leadership position in the market. This can be effectively leveraged once the real estate market in India picks up. Amongst the investment companies, cash burn is expected to reduce significantly at zomato while revenues are expected to pick up. This will realign the business model toward better performance on fundamental paramters.

Overall, the Company is expected to deliver good growth in revenues across brands, profitability of the brands are expected to improve, but at the aggregate level the Company will have to keep on investing in products and people to maintain leadership in a market, which is fast getting exposed/prone to competition from global players.


statements in this Management Discussion and Analysis describing the Company's objectives, projections, estimates and expectations may be 'forward looking statements' within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those exbrssed or implied. Important developments that could affect the Company's operations include a downtrend in the Indian online sector, advertising spends, new disruptive technologies or business models, significant changes in political and economic environment in India, exchange rate fluctuations, tax laws, litigation, labour relations and interest costs

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