CCI Fines MakeMyTrip and OYO for Anti-Competitive Conduct

MakeMyTrip and OYO Startup News

The Competition Commission of India (CCI) has fined MakeMyTrip and Oyo for anti-competitive conduct in hotel room listings. The CCI has fined both companies 5% of their annual turnover for a period of 3 years; Oyo was fined Rs 168.88 cr, while Make My Trip was fined Rs 223.48 cr.

The decision comes after complaints from budget hotel chains that the companies’ vertical integration agreement was creating dominance in the online hotel booking market, and that MakeMyTrip was deep discounting and enforcing terms that prevented rooms from being cheaper on other platforms. 

In a statement, Oyo indicated that the platform would appeal the ruling, saying "OYO believes that our business practices and conduct comply with all applicable laws & will take all necessary steps to explain our position in the appropriate forums."

A MakeMyTrip spokesperson also said the company would explore an appeal, saying that the platform was compliant with Indian laws. The spokesperson went on to say that "The CCI’s order is appealable before the National Company Appellate Tribunal within 60 days. We’ll determine our future action as per of our legal counsels advice .” 

The Federation of Hotel & Restaurant Associations of India (FHRAI) has welcomed the order. In a statement, FHRAI president Pradeep Shetty said, "This is by far one of the biggest wins for the hospitality industry against the dominance of the aggregators." 

Shetty added, "Oyo especially is responsible for the systemic depredation of the budget segment hotel business and its market as a means to achieve a notional billion-dollar valuation. This is a serious concern for our country’s hospitality ecosystem.” 

In addition to paying penalties, “MMT Go is directed to modify the agreements with hotels/chain hotels, to remove/abandon the price and room availability parity obligations imposed by it on its chain hotel partners w.r.t. other OTAs,” the order said. This essentially means that MMT cannot force hotels chains it has partnered with to offer higher prices or identical on other platforms. 

Also Read: LeadSquared's Revenue Hits Rs 200 Cr in FY22, Losses Jump 5.4X

The commission also ordered that hotel listings be offered on a transparent basis on the platform. The order will be appealed by both firms, but they should consider a defense based on their shrinking market shares in the segment. Anecdotal evidence indicates a strong push by many of their 'partner' hotels chains to not accepting such bookings made on these platforms as far as possible.

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LeadSquared's Revenue Hits Rs 200 Cr in FY22, Losses Jump 5.4X

LeadSquared Startup News

LeadSquared, a software as service (SaaS) platform, has become a unicorn after it raised $153 million through a Series C financing round with WestBridge Capital and existing investors in June 2022. The company's admission into the $1 billion or more valuation club came on the heels of a two-fold increase in its size in FY22.

LeadSquared has continued to grow, and its revenue from operations increased to 193.5 crores for FY22, up from the previous figure of 99.5 million in FY21, according to its financial statements that were filed at the Registrar of Companies (RoC).

LeadSquared offers complete marketing, sales, as well as automation for onboarding to its clients. According to Fintrackr's analysis, the sale of these solutions is the sole source of operating income for the business in FY22. The company also earned Rs 7.1 million in FY22, mostly by selling its financial assets.

In terms of cost, Employee benefits are the most significant expense for the business accounting for approximately half of the total expenses and grew 2.3X to approximately Rs 142.2 crores in FY22.

As a SaaS business, the expense of technical services is significant, soaring 2.4X to around Rs 58 crore in FY22. Promotion and advertising costs and business support costs also increased by 2.6X in both 2.4X to approximately 9.76 crores and the equivalent of Rs 16.21 crore, respectively, during the previous fiscal year.

The company also spent an additional 1321 rupees 13.21 crore for professional and legal fees, which increased its total costs to 2.3X to 262.3 crores in FY22.

With all the major cost centres expanding faster than revenue growth in FY22, the company's losses also increased 5.4X to around 62 crores in the final fiscal year, up from 11.3 crores in FY 21. 11.3 million in FY21.

On a per-unit basis, LeadSquared spent Rs 1.36 for a single rupee. With a dramatic rise in its costs and its EBITDA ROI and margin, this business decreased to -28.58 percent and -42.73 percent for the fiscal year that ended March 2022.

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LeadSquared said it has more than 2000 customers in its most recent fundraising. Apart from Bengaluru, the company has offices throughout New Jersey, the Philippines, South Africa, Australia, and Indonesia. In examining the company's revenue and profits, it can be seen that it has a 38X the revenue multiplier for its value, an amount that is sure to rise with growth in the coming years too. Nilesh Patel, CEO of LeadSquared, has recently stated that the company plans to earn the amount of $200 million (Rs 1600 crore) in revenues over the coming three to four years.

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