Today when some India’s largest internet companies like Ola, Flipkart are raising huge amounts in funding Justdial India’s largest local search company has suspended plans to raise Rs.1000 crores. Alternatively, it plans to buy back share, this is uncommon for an internet company.
On October, JustDial said that it was planning to collect capital to find acquisition to start an e-commerce business. It has now determined that the estimates of internet companies are too high and that it would be better if they wait for the market to set before making an acquisition.
Despitethe fact, this Mumbai based company has started pilots for delivering products. This is all part of JustDial’s plan to commence a hyper-local e-commerce business, a far stretch fromits main job of being an online listing.
Just Dial’s fundraising plans have been suspended because they explored their M&A chances nowand their Board gave them a strong resolution to raise the capital.JustDial’s founder and Chief Executive VSS Mani says that when they realised that this market is right now like a bubble with frothy valuations and that as of now there are hardly any worthy companies.
JustDial’s share prices have notably fallen from the Rs1700 levels since the fundraising plan was declared in October,a buyback would help bring it up.
JustDial hasRs.815 crore worth of cash on its books. Nevertheless, buyback is infrequent.An analyst at a domestic brokerage said that he has not seen a single buyback in less than two years in IT services and internet space till date.
In an evaluative stage for its hyper-local businessJust Dial’s “SearchPlus”, which is expected to launch by August, has commenced delivering products from local groceries, restaurants and pharmacies at a pin code in Mumbai. It will later extend across larger cities.
JustDial plans to expend up to Rs.100 crores on marketing and advertising for the launch of ‘Search Plus”. Its mobile application has been deferred and websites are being renewed.
Just Dial also has pilots for popular services such as plumbing, carpentry and electrical works on its radar.
Mani who took JustDial public on June 2013 said,even the biggest players in the search business today must give the next level to value adds.Customers are making progress and wish to do things as quickly as possible.