Hospitality company OYO Hotels and Homes focus on profitability and sustainable growth is not because of any pressure from its key investor SoftBank, the company said. OYO, which undertook the restructuring exercise in January that included employee layoffs and exit from some cities in India to revisit and focus on its strong growth areas to drive further growth, also added multiple additions to its board in past few months for the same including Aditya Ghosh, Betsy Atkins, and SoftBank’s Gerry Lopez as it moves towards IPO and profitability. “We arrived at (restructuring) saying that we have a strong balance sheet but let’s look at what are the right metrics to drive and the right way to build a business in 2020 and how do you grow from here,” Rohit Kapoor, CEO, India and South Asia, OYO Hotels and Homes told Financial Express Online in an interview.
“So I want to dispel this thing that this is coming from any pressure from any investor. We are a board governed company and have a strong management team. We have as normal discussions with SoftBank as with any other investor on the board where we talk about the plan for next year, they have their points of views, you have your points of views etc.,” he said.
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While OYO was expanding even before the restructuring exercise and investing in growing markets such as India, China, Europe etc, the need to revisit the entire business was to ensure such areas are further strengthened. “We took stock of the business and the view saying that what parts of the business are clearly sustainable and what we can do them solidly from different metrics standpoint including profitability,” he said. The company had reportedly laid off around 600 employees in China and around 1,200 in India while exiting 200 cities as part of the entire exercise.
OYO had recently announced its audited FY19 results according to which the SoftBank-backed company was able to cut its losses in India from 24 per cent to 14 per cent of the revenue. The global FY18 loss was $52 million signalling an increase of 544 per cent while India loss was $50 million in FY18 and $83 million in FY19. “So the trajectory is there,” said Kapoor with respect to the company’s future profitability. Out of $951 million revenue for FY19, India contributed $604 million while the rest came from international markets primarily China.
