PolicyBazaar, BankBazaar rein in costs to turn profitable in the coming financial year

BENGALURU: Two of the biggest players in the financial products marketplace sector, PolicyBazaar (along with sister company PaisaBazaar) and BankBazaar have been reining in costs this financial year after both companies saw big, and almost similar, losses in 2015-16. The two competitors, whose businesses started around 2008, are also hoping to see profits in the coming financial year.

Etechaces Marketing and Consulting, which owns insurance marketplace PolicyBazaar and loans and credit cards marketplace Paisa Bazaar, saw a 30% increase in total revenue to Rs 109 crore but losses jumped by 75% to Rs 110 crore in 2015-16, according to data from Tofler.

A&A Dukaan Financial Services, A&A Dukaan Financial Services, the parent company of BankBazaar, saw a sharper increase in both topline and the bottomline. Revenues moved up 82% to Rs 71 crore while losses swelled by 135% to Rs 108 crore as it looked to catch up with the larger rival.

For Etechaces, it was the year of biggest losses in the company's history since 2008, according to CEO Yashish Dahiya. "2015-16 was a year we invested heavily on experimentation to figure out what works and doesn't work," he said. He said the Tiger Global and Temasek-backed company's spends on marketing and branding have come down by 15% over the past year, while employee cost is down by 810%. Dahiya pointed out that the company is set to break even this financial year, and will start making profits from the next financial year.


"We will close 2016-17 with revenue of Rs 180 crore, of which we have already got Rs 125 crore. Our costs was Rs 200 crore in 2015-16 and is now down to Rs 180 crore," Dahiya said, adding that the company has a target to make net profit of Rs 60 crore for 2017-18 and Rs 100 crore in profit the year after. He also said that the company has IPO plans for 2018.

Also on the cards in the coming months is a fundraise of Rs 330 crore.“The main purpose for raising capital is balance sheet strength. We want to take our balance sheet from about Rs 250 crore to about Rs 600 crore and build it up to about Rs 800-1,000 crore in the next two years. Being in the financial services sector, balance sheet strength is very important from the credibility perspective," Dahiya said.

BankBazaar CEO Adhil Shetty says the costs have been a function of customer acquisition and advertising. The company spent Rs 80 crore on advertising in 2015-16, almost double the number from the previous year. The figure is almost similar to Etechaces advertising spend of Rs 86 crore in the same period.

"Up to March 2015, everyone was looking at rapid growth. Post 2015, we are concerned about unit economics. We also made an effort to control our marketing spends," said Shetty, adding that BankBazaar is now spending on digital marketing than broadcast advertisements.

"We make money on every transaction. In the next financial year, we can hit Ebitda (operating) profitability," Shetty said.

The company, which raised Rs 375 crore from Amazon and Eight Roads Ventures in 2015, bringing its total funding to Rs 500 crore, says it has no plans to raise any funds this year.