Finshots
Share this

Following MapmyIndia’s journey to its IPO

Following MapmyIndia’s journey to its IPO

It’s hard to take on a goliath in any industry. But imagine taking on somebody like Google Maps. It’s crazy, right? However, that’s exactly what Delhi-based MapmyIndia wants to do. It wants to fight tooth and nail with the American giant and it wants to do all this after having gone public. So in today’s Finshots, we see how the company got to this point.


Digital

The Story

“Every car and every (mobile) handset in India should have a MapmyIndia map loaded.” That was what Rakesh Verma, the founder of MapmyIndia said in an interview in 2009.

12 years on, that statement is at least half true.

If you visit a car dealership and ask them what in-built navigation app their cars use, you’ll probably hear the name MapmyIndia. It doesn’t matter whether it’s the Indian-owned Mahindra, the Chinese-owned British-origin Morris Garages (MG), or even the luxury Germany-based Mercedez Benz. The answer will likely remain the same.

What’s even more impressive?

With a decade’s headstart in the mapping space, MapymyIndia has cornered an 80% market share in the business-to-business (B2B) segment — helping other companies with their mapping requirements. And before we get to the heart of this story, a bit of background.

The year is 1993.

Coca-Cola had just resumed operations in India after acquiring Thums Up. Right about this time, the company had a dilemma — A cartographical one. They had to figure out how to divide territories for their bottlers. They wanted no overlaps and minimize disputes. They needed precise maps and MapmyIndia promised to offer such a solution.

In fact, it’s still how the company makes most of its money — by licensing its massive digital database of maps —covering over 98% of India’s road or 6.5 million kilometres. Companies like Coca-Cola use it to optimize their bottling operations. Telecom companies use their services to better allocate network towers. And those car manufacturers cough up a pretty penny just to make sure their customers don’t get lost while driving.

They also have deals with government agencies. For instance, they work with the Central Board of Direct Taxes, to help them understand the spatial distribution of taxpayers in the country. The income tax department can then use this information to understand how income is distributed across the country and perhaps even target potential tax evaders.

With these many revenue streams, you’d think that the company would be posting solid top-line figures each year. And while that is indeed true, it’s also a profitable entity. They made close to 60 crores in the previous financial year. And they’ve already posted close to 50 crores in the first half of FY2022. Remarkable numbers.

The only problem — This industry is extremely competitive. And considering the fact that 80% of its revenue comes from just 25 customers (out of the 2000 odd clients the company boasts), there’s a concentration risk here. A couple of big customers walking away could have a massive impact on the business. But what about Google Maps? Shouldn’t that be the biggest threat to the company?

Well, they are. But it’s more complicated than that.

There’s no doubting the fact that Google Maps owns the B2C segment. But MapmyIndia is trying to catch up. The company just released its app last year targeting Indian consumers. It promised to do everything that Google Maps does and some more. For instance, as the pandemic unravelled, the app promised to offer updates on Covid-19 containment zones as well . There’s also the fact that the government recently tweaked a rule affecting every company in the mapping industry — Both Indian and foreign.

The new rules allow private Indian companies to use high precision satellite imagery (below 1 meter) without all the bureaucratic red tape. In other words, the company can produce far more accurate maps and it’s already working with the Indian Space Research Organisation (ISRO) to get this wrapped up.

However, if a foreign-owned digital company wants to do the same thing, they’d have to partner with an Indian company. Meaning, if Google Maps wants to show you the location of that pizza place with pinpoint accuracy, it may have to start licensing the sub-1 metre mapping from someone like MapmyIndia. And while MapmyIndia may not entrench itself in the minds of customers like us yet, it could still earn money from consumer solutions — albeit indirectly.

Having said that, there are some massive challenges here as well. MapmyIndia is unlikely to become as ubiquitous as Google Maps, simply because they don’t have access to an operating system like Google. Google Maps is the default solution for all Android users and this status quo isn’t changing anytime soon.

There’s also the fact that reviews are mixed right now. Some people seem to think that MapmyIndia could in fact be a viable alternative to Google Maps. However, others find it buggy, cluttered and sub-optimal for daily use. But in any case, MapmyIndia clearly has a USP in the B2B space and if they can replicate some of this success in the B2C industry the company could go a long way.

PS: The IPO is open from the 9th to the 13th of December. The shares are priced in the range of ₹1,000–1,033 and it’s entirely an offer for sale. That means no fresh money will go into the company. But existing shareholders will have the opportunity to exit or trim their positions.

The company states that it has enough cash right now and doesn’t need the money to expand. However, you could look at this and say — If it has such great prospects, why are existing investors cutting their position?

Until then…

Share this on Twitter and WhatsApp.



Join 3,50,000+ subscribers

Just one article every day. Pinky promise 🙌
Be a part of our ever growing community. Join us on Twitter