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Business News/ Companies / News/  How Airpay fought for survival and triumphed

How Airpay fought for survival and triumphed

Airpay has grown its revenue, and is also set to clock profits and strong margins for the second year in a row.

The business is now in a very interesting, aggressive, sweet spot, Kunal Jhunjhunwala, managing director, Airpay, said.

DUBAI : Before the outbreak of the pandemic, Kunal Jhunjhunwala was already battling an existential crisis. The nephew of late stock market investor Rakesh Jhunjhunwala and the founder of Airpay Payment Services Pvt. Ltd saw business slump, valuation halve, and his two co-founders depart.

Before the outbreak of the pandemic, Kunal Jhunjhunwala was already battling an existential crisis. The nephew of late stock market investor Rakesh Jhunjhunwala and the founder of Airpay Payment Services Pvt. Ltd saw business slump, valuation halve, and his two co-founders depart.

Cut to three-and-a-half years later, and Airpay has grown its revenue, and is also set to clock profits and strong margins for the second year in a row. The business is now in “a very interesting, aggressive, sweet spot," Jhunjhunwala, managing director, Airpay, said. The company is also firming up its international foray and planning to raise $30-50 million to fuel growth and enter the UAE, Tanzania, Saudi Arabia, and Qatar.

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Cut to three-and-a-half years later, and Airpay has grown its revenue, and is also set to clock profits and strong margins for the second year in a row. The business is now in “a very interesting, aggressive, sweet spot," Jhunjhunwala, managing director, Airpay, said. The company is also firming up its international foray and planning to raise $30-50 million to fuel growth and enter the UAE, Tanzania, Saudi Arabia, and Qatar.

Kunal founded Airpay in 2012 along with Rohan Deshpande, with a view to making payments easier. They subsequently brought Amit Kapoor on board as the third co-founder. Kunal and his family, including father Rajesh Jhunjhunwala, and the late Rakesh Jhunjhunwala, his uncle, own nearly 80% of the company.

Airpay raised 24 crore in a Series A round in 2017 from investors including venture capital firm Kalaari Capital. The VC firm holds a 15% stake in Airpay. The Series A round valued it at 70-80 crore. Deshpande and Kapoor moved on in late 2019, though they still retain some shares of the firm.

In early 2020, Airpay raised about 10 crore in a Series B round, but at a valuation that was less than half of the Series A. “We brought in money just to comfort everybody that the business was not disappearing or nose-diving," said Jhunjhunwala.

The co-founders’ departure coincided with a slump in business. According to VCCEdge, Airpay’s revenue slipped about 13% in the financial year through March 2019 and then plunged almost 60% in 2019-20. Losses widened. Revenue stayed flat the following year, when businesses worldwide struggled.

Airpay felt that its “strategic decisioning" was wrong, and changed tack. Revenue tripled in 2021-22, and it swung to a net profit of about 21 crore from a loss of about 85 crore the year before.

In 2022-23, Airpay’s revenue touched 125 crore, says Jhunjhunwala, who was previously product and technology head of Hungama.com. He is expecting steeper growth in 2023-24.

When the pandemic struck in 2020, Jhunjhunwala was shifting a part of operations to Kochi from Mumbai. Airpay opened its Kochi office with five people in February 2022, and now has 150 people there. “One, we got more skilled, more disciplined and committed people. Two, there was far less attrition risk," he says.

Next was expanding the scope of the business. “We are turning it into a more services-oriented platform, rather than focusing on just the transaction fee," said Jhunjhunwala.

Operations were reworked into three broad verticals—acquiring business; a financial distribution business for sales of financial products; and the payments platform.

Under acquiring business, Airpay provides software solutions for revenue collection and helps businesses digitize. It built Schoolpay, a basic fee collection tool, charging schools 2 per fee plus transaction fees. Clients include Army Public Schools and Aptech.

Under financial distribution business, Airpay enables the sales of financial products and provides last-mile connectivity. “We converted the kirana shop, currently selling toothpaste and chips, to selling insurance," he said. Currently, about 50% to 55% of the business comes from the “acquiring" vertical, 20-25% from financial distribution business, and the balance from the payments platform.

ABOUT THE AUTHOR

Dilasha Seth

" Dilasha Seth is a journalist reporting on macroeconomic policy for the last 11 years. She writes extensively on issues including international trade, macroeconomic data, fiscal policy, and taxation. At Mint, she reports on trade deals that India is signing besides key policy decisions of the Ministry of Finance. She closely tracked and covered the transition to the goods and services tax (GST) regime in 2017 and also writes on direct tax-related issues. In the past, she has worked with Business Standard and The Economic Times. She is based in Bangalore."
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