Prosus N.V. (PRX.AS) Earnings Call Transcript & Summary

Great. Thank you very much. Hello, everyone, and thank you for joining us again for our third in the series of our deep dive series. And this one, we're going to deep dive into what we are doing here in India. And with me on the call today, I have my friend, Ashu Sharma, who leads up our investments in India. Ashu, how are you doing?

All good, Eoin. Thank you. I'm super excited for this.

Great. Thanks a million, for joining us today. So why don't you kick us off? You have a quick presentation for us. We'll go through that, and then we'll go straight into questions. We can take it from there. Ashu, over to you.

Thank you, Eoin, and thank you, everyone, for joining us today for the India edition of Prosus Mini Series. I'm Ashu, I'm based out of Bangalore in India. I've have been investing for 15 years now, starting with Qualcomm Ventures, Norwest and then for the last 9 years with Prosus in India. In the last 15 years, I would have seen around 2,000 or 3,000, maybe more, companies. I have invested directly in 60, of which 30-plus with Prosus. And I truly believe that we are still in day 1 as far as India tech start-up ecosystem goes. There is a big, big runway ahead, and I'm super excited to share with you why I think so. That's in the first section. In the second section of my presentation, we will quickly go through the evolution of Prosus in India and where we sit today. And in the last section, I will talk through a couple of specific sectors, which we are truly excited about. So let's dive in right away. Cool. So this is not news to any of you. I'm sure you track this all the time. India is one of the world's fastest-growing large, meaningful economy. And by large, meaningful, I mean a country with more than $1 trillion in GDP. As we sit today, India has the 5th largest GDP across all countries in the world. Next year, we are slated to overtake and get to #4; and by 2030, on to #3. Why is it exciting for us as an investor and as a buyer of companies? I think this additional few trillion dollars of GDP that will get added to India over the next few years will conservatively translate 1:1 into a few trillion dollars of market cap as well. And the companies that we invest in or the companies that we buy, therefore, especially in India, especially in India, have the chance not to just accrete market share from incumbents because they have a better product, they have a better service, they have a better team, but also, at the same time, ride on the consumption growth in India. This is an interesting chart. This is slightly anecdotal, so bear with me. When you look at China's GDP per capita growth, you will see specifically after China reached $2,500 in GDP per capita, there's a few years of accelerated growth when we talk about the discretionary spend in China. So discretionary spend in China after China reached $2,500 GDP per capita grew at 20%, higher than GDP growth for a few years. Why is that? Because at $2,500, your basic needs are taken care of. Any additional income that you make on top of that, you spend more of it towards discretionary spend, towards consumption. And I think that's very exciting for us because India is hitting $2,500 now and should accrete this over the next few years. And that extra income that people will make, they are more inclined or the propensity for them to spend towards discretionary spends will be much higher. Look at the table on the right-hand side. This consumption growth in India could lead to an increase in ownership of cars per household. 7.5% households in India own a car today; while in China, 35%. Is there a company, therefore, that we could invest in or buy that could ride on this increase in penetration of cars per household in India and so on in various different sectors? So again, India is in a very interesting inflection point. From here, the discretionary spend per household will increase. Our job as an investor and buyer of companies is to ensure that we have representation in almost all of the sectors where this consumption is going to grow the fastest. This is a little bit about the macro. Let's talk about the micro, which is the start-up ecosystem in India itself. And I believe that the -- when it comes to start-up ecosystem, when it comes to origination of new companies, when it comes to number of unicorns, India is punching above its weight. India is #3 in terms of number of unicorns that a country has behind U.S. and China. India is #3 in terms of new companies that are being formed, while India is #5 in terms of GDP as we discussed. And therefore, India is truly punching above its weight. Why is that? I think, one, the talent depth is really, really strong. We have 17 million-odd engineers in India who code, could develop. A bunch of them are coming out from old school IT jobs and are getting excited to start afresh. Now why starting afresh easier today? And I want to take you a little bit into the history. Pre-1991, India was a closed economy. Everything that was to own was owned by the government. After 1991, liberalization happened. And we've got strategic capital from outside. We've got technology from the outside. But the first beneficiaries of that were people who either had their own money or had access to bank debt because they were running an asset-heavy business. So you needed to have some assets for banks to give you a debt and build a business. I think what's happened in the last 15 years is very interesting. India has moved from that to an ideas economy. All that you need to bring to the table today is an idea, and there is enough VC funding. And that VC funding, as you will see, is only growing from $3.8 billion last fund, and this just select few funds, there's many, many more, to $6.5 billion. So that VC fund is only growing, and it supports the ideas-first economy. And I think that's why -- that's another reason to be long on India's start-up ecosystem. The raw material required to create successful companies in terms of talent, ideas and capital is all available today. And this is a chart -- I mean, I'm pretty sure you know almost all of this, so I won't spend much time. But when it comes to government support or regulation, the net direction of travel for regulation or support is trending in the right direction. If UPI was not around, it would have been very difficult to build digital online e-commerce companies in India because the credit card penetration is very small. And in absence of UPI-like means of payments, it would have been extremely difficult to consummate a transaction online. Similarly, in absence of Aadhar, it would have been very difficult to do remote KYC. And therefore, if you are a business that's dependent on KYC, for you to be able to scale pan-India in a short period of time would not have been possible. So that's a little bit about why we like India and why in general investors like India. So I think let's come to kind of what Prosus has done in India, what our portfolio looks like and what is our right to win. This is just a comparison of where we sit today versus when we started. We formally started in India in late, very late 2016 and probably early 2017. That is when we opened an office, we hired people on the ground. I was the first one to be hired. And compared to that time, I'm very excited and very happy to share with you that we are in a much, much stronger position. The brand is extremely strong. The performance and track record of these 7, 8 years is there. And this is looking pretty promising, the performance. We also have enough in the pipeline in terms of companies getting ready to get listed and therefore, unlocking value for us and our shareholders. And there's various different vectors on which I think we think we are doing very well. And I'll just share some more. But I think where we sit today, I'm hesitant, but I'm also happy to share that I think in India, Prosus would be one of the top few tech investors of strong brand, a strong reputation and strong performance. Quickly, there has been 3 areas of focus for us. Largely, a large part of our investment have gone into e-commerce and marketplaces. This, as most of you will know, something that comes organically to us. We have similar companies across the world. If you look at food delivery, we have iFood, Delivery Hero and so on and so forth. In e-commerce, we have enough companies in Europe. In classifieds, we have enough companies in Europe. And so most of our investment in India has gone there. We think we know -- we have a more nuanced knowledge about this sector, and therefore, we can pick rightly. Some bit of capital has gone into financial services. Within this, we have PayU, which is completely owned asset, and I'll talk more about PayU in one of the later slides, but we also have Vastu and Mintifi. And then the third bucket, which is a smaller bucket in terms of total dollars deployed, is AI and software. And the idea with these investments largely is to have them enable our core, which is e-commerce marketplaces and our financial services portfolio do better because of a close collaboration with them. And while this looks like a largish portfolio of 30-odd companies, I think we are already seeing some very, very promising outcomes from this. Swiggy, as some of you may know, is one of the 2 leading food delivery brands in India. It's also one of the leading quick commerce grocery brand in India. Swiggy has $4-odd billion of gross order value. Meesho is India's leading online horizontal marketplace. Meesho today, in terms of orders per day, is bigger than Flipkart and is bigger than Amazon also. And just for context, Amazon is Amazon, everyone knows. They have all the capital, all the technology, all the human resource in the world. Flipkart is also backed by Walmart, so again, all the capital and very large company. And Meesho is a much, much leaner team, has used much less capital and today, as I said, in terms of orders per day, larger than both of them. So we're very excited about this one. PayU is India's largest payment aggregator by revenue. Urban Company. And I'm excited about this one also for the reason that Urban Company probably is the world's largest home services marketplace in terms of revenue. I'm not sure if there's any other home services marketplace in the world, which is larger than Urban Company in terms of revenue. And so this is clearly one example of a category which works very well in India, very India-nuanced business. And then, of course, Rapido. Rapido is pretty much like Meesho. It has 2 main competitors, Ola and Uber. Uber, all of you know, and Ola is India's -- one of the India's leading mobility company. Rapido has come from behind, used much less capital and with a much leaner team today does more number of rides per day than both Ola and Uber. So we're extremely excited about how the portfolio is shaping up. The combined value of these 5 companies is $21 billion. The IRR at this point for this set is around 18%. And I will come back and tell you in the next few slides why we truly believe that this is -- this IRR is only going to go up from here. But why are we able to pick these companies? These are all interesting companies. And I think these are the 5 reasons why. And let me start with the brand reason. We have a strong brand. We have a strong track record. That helps in our kind of business because the optics, therefore, of being associated with Prosus is very positive for someone. And the reason is simple. Look, Prosus is a strong brand, they pick the right kind of companies, so if you are a Prosus portfolio, you are hopefully a right company. But you can see, hey, there's many funds in India or many funds across the world who can say that my brand is equally strong. So why it is special? And I agree. I think this is table stake. It is the other 4 areas where we excel and where we differentiate and separate ourselves from other buyers of companies and buyers of stock. I think the multistage approach comes next. There is very few funds outside of Prosus and there's very few investors and buyers of companies outside of Prosus who can straddle late and early-stage investments at the same time. And the advantage of that in India is that in India, the risk/reward dislocation moves around. In 2017, when I joined, the risk-reward is more favorable in late stage. So we did a bunch of interesting investments, Swiggy, Meesho, et cetera, et cetera. In 2021, the risk-reward was poor in late stage because everyone was excited and it moved to early stage. That's when we moved to early stage and we did SpotDraft, and we did Spendflo and we did Ema and so on and so forth. So this ability to move around helps us pick better, helps us optimize our risk-reward better for our shareholders. But more importantly, I think what we bring beyond capital to our portfolio is what truly differentiates and separates us versus others. And those are the 3 buckets. What we bring is not just investment, we're not just an investor, we bring an operator mindset. Beyond capital, we provide a bouquet of opportunities, a bouquet of services to our portfolio companies such that their trajectory can meaningfully change from what it would have been in absence of Prosus coming on their cap table. I'll give you a few quick examples. This is the first example let me give. I think AI, everyone knows is very, very important for almost all companies. Everyone is trying to use it. But at the same time, it's an extremely complex area and extremely fast changing and fast evolving. What was a dream 1 month ago is a reality now. And so how does Prosus help its portfolio companies with AI? Within our portfolio, we have 1,000-odd data scientists who are working on different problems, different use cases, different products. We bubble those ideas up, the success stories up and then disseminate them across our other portfolio companies. But that's easy. Everyone can do that. I think what's more exciting is that beyond that, we have a 30-member in-house AI team sitting in Amsterdam, who helps these portfolio companies. With what? One, this team talks to many, many more companies across the world. And so beyond portfolio, they can figure out the best practices, the best products, the best tools, the best developers and they help our portfolio companies with that knowledge. But not just that, they also help portfolio companies when they get stuck with a project, when they need consulting kind of advice. But not just that, this team also develops products which are then used by our portfolio companies, and Toqan is just one example of that. So this, again, puts us in a very different space compared to our competitors. The second example of this is our ability to bring people together from all across the globe in various different forums for them to talk to each other, interact, exchange ideas and learn from each other. There's a couple of examples I'll give on the left-hand side. We brought a bunch of our global CEOs to Stanford for a week last year. And these CEOs learned first from Academia on mental models, on management models, on business strategies, pricing strategies, M&A, even wellness, how should a CEO take care of their mental and physical wellness. But then parallelly, they got a chance to interact with CEOs from all across the world and learn from each other as well. We are doing something later on in India in this year called Luminate, which again -- where again, we will bring CEOs from all across the world, put them together for 2 days in India around the theme of emerging markets meet artificial intelligence. So very thematic, very focused, slightly different from what we did in Stanford. But again, our ability to bring all these people from across the world and put them together is unique because a lot of people do this, but they do this on a local basis. So a fund in India will do this for India entrepreneurs and so on. So I think that's the second important way in which we differentiate ourselves. And thirdly, we are very intentional about ensuring commercial connectivity within our portfolio. So we're not just sort of, hey, like I bring all of you together, have a chat, maybe have a drink, have some food, and that's it. No, no. If there is no commercial connectivity happening or coming out of this interaction, then it's not of much use. And there's many, many examples where we have ensured or we have enabled commercial connectivity in our portfolio. I'll just take one, which is on the left-hand side, PharmEasy and Swiggy. Swiggy, as I told you, is one of our portfolio companies, does 10-minute delivery of grocery in India. PharmEasy is one of our other portfolio companies that does delivery of pharma -- pharmaceuticals to your home. Swiggy wanted to add pharma capability to its quick commerce platform, but pharma supply chain, as you know, is very different from FMCG supply chain. And therefore, Swiggy wanted to develop that capability. PharmEasy really helped them. We put both of them together in a room. They figured out a way to collaborate and now PharmEasy has become the backbone of Swiggy's pharma delivery business. And so, what I will say in the end in this section is that we are differentiated. We are not dumb capital. We bring much more to the table beyond capital because capital truly is a commodity today. And just because you have money will not ensure that you have a right to win. We have already discussed this. Because of the differentiation, we are able to partner with some of the leading companies in India in the tech space. It also translates into superior returns, I would say. We have invested all of $4 billion in India since 2017. We are sitting at $8 billion, the value of that investment. But please note, out of 30 companies, Swiggy is the only one where value unlock has happened. There is many, many others which are ready to list. And as soon as they list, this value unlock will increase, and you will see this $8 billion number hopefully go further up from here. Quickly on 2 focus areas. One, of course, this is slightly more interesting than the other one, less obvious than the other one, which is India is not one India. India is many India. India is extremely heterogeneous. The way I buy versus the way someone in Tier 2 India buys versus the way someone in Tier 3 India buys is completely different. And therefore, their expectation of product, of service, of price is also different. And therefore, while India A or the top tier of Indian demographic has been served well so far with companies like Swiggy, Meesho, et cetera, et cetera, there is India 2, India 3, which is still to be served. So we are focusing on India 2, India 3. And India 2, India 3, because of the heterogeneity allows for new product and new companies to develop and service them. So that -- what will the next 300 million or next 500 million Indians like in a product and can we find that product and offer it to them is something that we are focusing on. And this is the more obvious one. But I think India has a strong -- there's a strong product market fit with India. As an emerging market economy, our resources are limited. And let's take one example. Let's take healthcare, right? Number of beds per capita, number of nurses per capita, number of doctors per capita, India is much, much lower than where the Western world is. And so if I have to bridge this gap, for the supply -- between the supply and demand of quality health care, I have to do it with technology. I cannot open as many hospitals. I cannot train as many doctors. And I think artificial intelligence meets healthcare is definitely one area beyond, of course, all the B2B options that we have, which would be -- which would find a much stronger product market fit in India than elsewhere. So India next and AI are 2 key focus areas beyond our sort of bread and butter other sectors that we look at for the next few years. With that, I think I will stop now, and I'm happy to take any questions or provide any clarifications, but this has so far been very exciting, very interesting. Thank you so much.

Brilliant, Ashu. Super interesting. Thank you very much. I've got a couple of questions. I got many questions. But operator, can you give us the instructions, please, on how to ask the question before I jump in.

[Operator Instructions] and I'll also hand back to you, Eoin.

Great. Thanks very much, and thanks again, Ashu. So I got just a couple of questions. The last one -- the first one is really on Slide 19, which I always find to be incredible just by virtue of the -- well, the size of India and then the size of the actual addressable market that will increase over time. What are the kind of the main drivers that ignite the consumer in India to become addressable?

Yes, absolutely. Eoin, thank you. I think 2 things. Eoin, one, as we increase GDP and then translates to an increase in GDP per capita, as I shared, when you look at analogs across the world, the propensity to consume goes higher because your basic needs of food and shelter are taken care of. And so now I can buy a better car, I can buy better clothes, I can buy premium foods and so on. And that already, Eoin, we've seen. In India, high-income households were only 1 million a few years back. At this time, that number has gone tenfolds. And so if you look at the top strata of Indian society, they are as big as U.K. already and spending power is as much as U.K. also. So that's one U.K. in India. Below that, there is probably like a Southeast Asia, and then there is, of course, the sort of the not-haves. But I think that movement of people from low income to middle income and from middle income to high income automatically increases consumption. And secondly, as I said, as GDP per capita increases beyond basic needs, people tend to spend much more on categories which were not core and center for them, and that again, increases consumption in return.

Great. Thanks. One of the things that really resonated with me was when you talk about our ability as Prosus to move between stages of investments, right? Because one of the things we hear often in IR when we talk about India is, well, that market is quite hot at the moment. And it has been hot at times and less so at the other times. But you talk about moving between late stage and early stage, is that something that just only we can do or is that something that every fund can do? And then just -- that's one. And then the second question would be, how do you get that sense? Like when do you know it's too hot to move to from late stage to early stage? Well, how do you [indiscernible] what you do there? It's a secret sauce, I suppose.

I think on the first one, Eoin, it's very few funds can do because look how funds operate, right? They go raise money from an LP behind a mandate. So if I am Fund X, I will say, "Hey, I'm Ashutosh, I have -- I was a founder of a SaaS company in the past, successful SaaS company, I know SaaS very well, so why don't you give me some money and I'll invest in SaaS in early stage." So my mandate is a sector and a stage. And the documentation is such that you can't move beyond your mandate. So therefore, not a lot of funds can do that. Now having said that, there is multistage funds. So but not too many. So that differentiates us, puts us in a bucket. And within that bucket, because what I said, there's very few -- I don't know of a single one who brings in this operating mindset to investing and that completely separates us into a completely different bucket. And that's how we win. On the second question, I think it's a little bit of it is science, but most of it is art. Science is very simple. You keep a tab on multiples. And look, I mean, as soon as multiples start going beyond 10-year mean or 10-year median and say, okay, this is expensive. Now of course, you can't be so data-driven also because sometimes multiple rerating is having, so you have to apply logic. But like some examples are when a completely no-name fund start showing up India, making a trip every quarter, meeting a few people, giving a few term sheets, then you say, okay, this is too hot already when people come in randomly and starts sort of giving money across. So I think there's a little bit of an art to that, so picking that. And then, of course, the basic -- the core of it is that science around multiples, I would say.

So it's also helpful in that regard to have the team on the ground with their feet on the pulse, right?

Yes.

All right. I could talk you ear off all evening, but let's go to the phones. I guess it's the virtual phones. Do we use phones anymore, Ashu? So -- all right, so let's go to Will from BNP. Will, just remember to unmute your line. Will Packer. All right, while we're waiting for Will to come on...

Yes, there was a lag, apologies. It's probably BNP IT systems. So 2 questions from me. So firstly, if we look at both -- or I suppose, Internet ex India, it's kind of overwhelmingly dominated in terms of economic returns by Big Tech in the U.S. and Big Tech in China. Could you just help articulate a little bit how Big Tech fits into the Indian ecosystem? For example, we saw that Meta and Google took stakes in a Reliance Jio asset. Why would they do that? Obviously, I'm not intimately familiar with the Indian market. So kind of sketching out the role of Big Tech in the ecosystem and the government protections for the incumbents would be quite helpful. And then the second question would be Tencent, which obviously is part of the Prosus ecosystem, has been a little bit a source of tension in India. So -- and other tech players, Free Fire was banned from Sea Limited because Tencent had a seat on the Board is my understanding. TikTok has been banned in India. Is there any implications for Prosus or is it sufficiently disconnected from Tencent that it's largely irrelevant?

Sure. Thanks, Will, for the questions. I think on the first one, it's a very pertinent question to ask. Just to be extremely transparent: YouTube of India is YouTube, WhatsApp of India is WhatsApp, Facebook of India is Facebook. So Big Tech has a strong role to play, in my view, in products which are global in their appeal. And India nuances play a literal role in such products. So absent local nuances, I think Big Tech is big in India. As soon as you go beyond that to a business where local nuances and local execution is very important, I think that's where local entrepreneurs shine. I'll give you a few examples. Food delivery. It's not as if Uber Eats didn't try in India. Uber Eats tried for a long, long time. But the 2 winners today are Swiggy and another local Indian company. Look at mobility. Uber has been around for many, many, many years, but it's 1/3 the market. Despite all the capital, all the technology; and Rapido, our other portfolio company equally big, but using much less capital. Third example, horizontal e-commerce. Flipkart, backed by Walmart, Amazon is Amazon. But Meesho, another one of our portfolio company, equally big in terms of orders per day using much less capital. What I'm saying is that as soon as local nuances, local execution becomes important to a business, the right to win for Big Tech becomes limited in India. And therefore, government is -- so far has been completely fine. Please come, play, but you know what, there's other requirements just beyond capital and technology that people in India will have a chance to compete with. And so it's a level-playing field in that way. So outside of that, I think local entrepreneurs shine. As for Tencent, I think the way people internalize this is that, look, Prosus is a holdco, there is many things that flow into that holdco and one is Tencent. And with that, I think there is no problem.

Very good. Okay. Great. We'll go to Monique now. Monique, don't forget to unmute your line. Monique from Citi.

I had a couple, please. The first was at the last set of results, you had mentioned 3 Indian companies that you'd look to IPO in the next 18 months, those being Meesho, PayU and Bluestone. Just wondering why Rapido, that we're hearing more about it, isn't that mix? Is it to do with sector multiples? Is it stage of growth, et cetera? And then the second question I had was on sort of sharing of data and using different data for data training purposes, particularly given Ashutosh's points around local nuances. So for instance, how useful would, say iFood's data set be for training for Swiggy, for instance? Or are the local nuances so big that, that sort of utilization across the portfolio companies isn't that helpful?

Sure. Thanks, Monique for the questions. I think on the first point, look, the decision to list is driven by many different aspects. Now you're right, Rapido in terms of size and scale is a reasonably advanced mature company. But I think there is -- the company still feels that there is many, many experiments that they want to run within this sector, which will help them position differently and being private allows them that flexibility to run those experiments over a period of time. And therefore, look, I'm on the Board and my fiduciary responsibility, I can't divulge what's being discussed on the Board, but I would say, I would leave it at that. That look, there's a lot of stuff in the pipe on the product side that they want to build upon before they even start thinking of listing. Listing is not on their mind. So that's one. On the data bit, I think all data has 2 aspects. One is a sector aspect and then there is a geography aspect. So I'm not saying -- by the way, I'm not claiming that Swiggy is using iFood data. I mean none of that is happening. But if that were to use -- if that were to happen, to the extent that they are both in the same sector, I think, would be helpful. But of course, on top of that, someone will have to layer local data for it to be absolutely meaningful for a local player. And again, just to be absolutely clear, I'm not claiming that any data exchange is happening today. But in a hypothetical situation where we were to build, let's say, I don't know, let's make something up. Let's say, a food LLM, right, or food delivery LLM, right? If you were to build something like that, that out of the box will it be useful in India or Indian LLM be useful in U.S. or not, I don't think so. But there's basic product capability will come, but I think more accuracy will come once you overlay local data on top of it.

That's great. And I think also outside of the data, the data trains the models to understand human activity. So while the data sets might be different in different geographies, the means by which the model identifies human activity and conversion remains kind of potentially the same across. So that's why, over time, if there was, what we call, the -- you said LLM, but we've talked about the large commerce model potentially across Prosus, that's a really interesting opportunity for us as well.

And I just wanted to add one other point with respect to Rapido. I think I missed it, for Monique's benefit. I think the other advantage, Monique, of being Prosus is that we truly are patient capital and so there is no pressure on any of these companies on our side to get listed. We truly want them to come out whenever they come out to become public to be their best form ever. And we are happy to wait until that time.

I think it's quite interesting. I've been part of a lot of companies like this, like holding companies like this, and there's -- and I've seen a lot of companies that are private and waiting to go at. And it's almost as though you're -- it's the matriculation of a child through their journey outside of the house. There's a spectrum of how much benefit they get from being in the house. And as they grow, that benefit declines and being out of the house then offers more opportunity from them. And I think a lot of that is quite similar to start-ups. Let's go to Robert from Kepler.

I would like to ask a question about the B2B technology ecosystem in India. Currently, your India Ventures portfolio seems a little bit more tilted towards consumer Internet, but B2B is increasing. Yes, it also seems that over recent years, Prosus has started to see more opportunities in B2B tech, in particular, of course, AI. So my question is quite big picture. How do you look at the B2B tech ecosystem in India? How is it evolving? What are some opportunities that you are seeing? Yes, you already touched upon AI. I've also heard efficiencies. And maybe you can also mention some challenges, some areas of improvement value-added? And my second question is about Meesho, a private company that you have invested in. Yes, from what I understand, it seems to have quite a unique setup for an e-commerce company. So my questions about Meesho are, firstly, what triggered you to invest in Meesho in the past? And secondly, building on that question, yes, what do you believe has been intrinsic to Meesho's success? I think you also here mentioned the price, the efficiencies of Meesho.

Yes. Thanks, Robert, for both the questions. I think on the B2B tech ecosystem, I would say this started almost like 10 years back in India. The first 2 companies which became really big were Zoho and Freshworks. Zoho is still sort of a very large private company, Freshworks is listed in NASDAQ. And I think after that, a lot of us realized that there is 2 advantages that India has when it comes to B2B tech. One is the talent pool that we already discussed. There's a deep tech talent pool. There's a lot of engineers. And these engineers are getting trained in Big Tech as was one of the questions that came previously. And they're raring to come out, start something of their own. They're excited. They're looking at a lot of successes around them. So one, the raw material to create a product like that is available. The second thing is the India cost advantage. The cost arbitrage is really high in India. And that plays in 2 places. One, in the product -- in the development of product itself to develop a product of similar quality in India is much cheaper compared to U.S. Second, it also shows up in selling, in sales, in go-to-market. If a product is to be sold remotely, the GTM is remote, then India has a distinct cost advantage in that situation because people in India can sit here and sell in U.S., sell in Europe. And I think those are the 2 reasons why B2B tech ecosystem has grown very nicely in India. Beyond the first 2 companies, we have many, many companies now: Innovaccer, Postman, BrowserStack, Icertis and so on and so forth, which are massive, massive companies. And so that is making even sort of a larger number of people get excited about the space, and that excites us too. For us, though, e-commerce and marketplace still remains the core of what we do because we feel we are differentiated there. We know something which others may not know, and therefore, we can diligence better, we know better. But to your point, it is very exciting for those 2 reasons. I think Meesho is, again a very, very special company, extremely special company. Just to share some numbers. They have 200 million annual transacting users on the platform. And I'm assuming this is 200 million households. So in a country of 500 million, 600 million households, 1/3 is already buying on Meesho. Meesho last year was the most downloaded commerce app across the world. Meesho is extremely profitable. I can't share the number, but it throws cash every quarter. Mind you, parallelly, Flipkart and Amazon, both loss-making, much larger companies [indiscernible]. So it's truly special. Now coming to why it is and why we invested, I think we -- as I told you, this thesis of what India next wants, or what the next 100 million, 200 million people in India want is very different from the top 50, 100 people. We've been working on this for a long time. The India next wants price over convenience. They want a better price. They're okay to wait 7 days. Look at Eoin. I think if you order something on Amazon, he probably wants it this evening, maybe in 2 hours, right? But -- and that's true for me. But India next wants price. We want convenience over price, India next want price and these guys were solving for that. And they were built from day 1 in that way. The DNA of the company is to wake up every morning and figure out how can I give INR 1 better price to my customer. And that just flows across the spectrum, across how the management thinks, across how the team thinks, across how the team is structured and even on product and technology. I think in our portfolio, they were the furthest ahead when it comes to adoption of AI. They have reduced their cost to service a customer through AI, but they've reduced that cost to 10% of what it was before. And so I think it's the DNA and the mindset and it's the proposition which turned on its head. It's a price first, and that's what we're going to solve for, and that's going to be our wedge, and that's how we're going to delight our customer that separates them from much, much larger incumbents that they compete against.

Yes, that struck out to me when the Head of Meesho spoke to us at Stanford. He'd always say, how can we save the next rupee? You could tell that, that was permeated all the way through the culture. All right. Let's go to Silvia from Deutsche. Silvia?

You showed a slide about the ecosystem when you shared the example of how you helped Swiggy and PharmEasy collaborate to add pharmacy products on Swiggy, which was very interesting and sounds differentiating compared to your competitor, Zomato, that I think does not deliver pharmacies, correct? So can you call out any more examples of collaboration among your investment companies in India, just to give us a bit more color? And then second question in terms of verticals. Can you tell us about how much of your time is spent looking at investments that complement existing verticals versus in potentially new adjacent verticals that complement the ecosystem? And since you mentioned healthcare, B2B as being potentially an interesting area for AI investments, can you also tell us about sectors that perhaps you considered, but then concluded the opportunity might not be as attractive?

Sure. Thanks, Silvia. Yes, I think there's many, many examples I can share. Let me share a couple. Let's start with PayU. PayU, as you know, is an owned payment aggregator that we have and not just 1, but probably 4 or 5 of our portfolio companies use PayU as a payment aggregator. So that's a very, very strong commercial connect, as I was talking about. But let's take another example with respect to PayU. PayU also has a credit arm, and Meesho wants to do Buy Now, Pay Later. And there is many, many other companies that Meesho could work with. But today, PayU is an extremely important partner for Meesho on the Buy Now, Pay Later product that Meesho is planning to launch. In fact, PayU already works with Meesho on their seller credit product -- reseller credit product, right? So that's something to do with PayU. And I'll give you another soft example, right? It's not a hard example. We have invested in a company called Ema. The CEO of that company is a gentleman called Surojit. Meesho was looking for independent directors, right? And one of the independent director persona they had was someone who was AI first because they really wanted to embrace AI in a big way. So they said, not just in the team, but even in our Board of Directors, we want someone who was AI first. And they were looking around. And we said, "Hey, look, we have Surojit. He's a rock-star. He runs an AI company, which is reasonably successful. Do you want to talk to him?" They both talked with it, liked Surojit so much that he got him on his Board. So one of our portfolio CEO is on the Board of Director of one of our portfolio company. So even like soft connects like that, I think we are able to kind of make. So that's one on the connection, Silvia. On ecosystem, I think for us, as I said, it's very important to continue to show this differentiation versus every other pool of capital. As you know very well, capital in today's world is commodity. After 2020, we have printed so much cash that cash is not a problem. I think you have to bring something else to a portfolio company for you to be differentiated. And therefore, I would say a lot of my time, most of my time goes into thinking of areas around our portfolio companies, around the sectors that we like, how to enable that, how to make them grow much faster, be much more profitable. And so it could be through an investment in some company, it could be through affecting an M&A., it could be through bringing AI capabilities and so on and so forth. So that's for my time. On areas that we have decided that probably the opportunity is not large, I would say there is -- the beauty of being in India is that everything you touch is growing fast. Even if you touch a cement company, that also is growing probably 20% year-on-year. So I'm not saying we're doing cement. But I'm just saying that it's hard to take that. As the lens I take is what do we bring to the table. If this is a company which is growing fast, doing very well, yes, maybe it's a good investment for someone, but not for me. So for that reason, I will not do probably something which is completely offline because there's nothing that I bring to the table. I will not do something which is completely infrastructure like toll roads or dams and stuff. And by the way, people are making a lot of money in those sectors, right? I'll probably not do something which is, yes, they use some technology, but technology is not a disruptor there. I would do only stuff where technology plays a meaningful role because we truly believe that technology is that lever, which is exponential in nature, and we only want to work on exponential stuff.

Great. Thanks, Ashu. All right, we have 2 left. Let's go to Michael from Avior.

I have a question specifically on PayU. So with PayU being the largest payment aggregator in revenue in India, we understand they still need to build out the credit business to generate significant profits. You spoke briefly on the credit arm just a little bit earlier now. But could you please elaborate a bit more on what your thoughts of credit in India and PayU's plans to grow the credit business?

Sure. Michael, I think credit is a big opportunity in India. Let me start there. As I said upfront, if India has to add $4 billion (sic) [ trillion ], $3 trillion of GDP, the raw material to that is credit. In absence of credit, this cannot happen. So in my calculation, at least $1 trillion worth of more credit needs to flow into the economy to generate that $3 trillion, $4 trillion of additional GDP. And so credit is very, very exciting in India at this time. There's companies that are -- look at Bajaj Finance, $40 billion, $50 billion only credit. So macro looks very attractive. As for PayU credit, as you said, it is an important piece. And the advantage that PayU has with building that is that they have some information through their payments -- anonymized, of course, through their payments business that will help them underwrite someone better. And I think that's something that we are working on in improving that underwriting algorithm and take it to a place where it becomes best of the best, not just in India, but all across the world. And that's the time when we sort of try scaling that business much, much, much faster. So I think as we speak, we are already working with a bunch of partners, Meesho is one, Swiggy is other one, Vastu is other one in our portfolio. There's many others that we are working with. And I think as we work and collect more data with all of these partners, the underwriting algorithm will improve. And at some point in time, of course, in the near future, we will get to a place where Bajaj Finance is, for example. Bajaj Finance, by the way, that's a poster child of credit in India, $50 billion company. And so yes, there is proprietary stuff through these partnerships that PayU has that will help them get there, and that's what we're working on.

Great. So you heard it here, PayU is going to be a $50 billion company. Fingers-crossed, exactly. All right. I think we have time for just one more, and that's Nadim from SBG.

Just 2 from my side. Just a follow-up to Robert's question. No, we don't see many examples of e-commerce players globally in frontier and emerging markets who can follow a value strategy with low average order values and be profitable. So I just would like to understand what you think in Meesho's case was a defining characteristic to get the unit costs right? And then lastly, just a very broad one. I think it was a couple of months ago, Minister Vaishnaw sort of suggested that India is trying to catch up in artificial intelligence and looking to build its own foundational model. I mean just any thoughts on how that might change the landscape in terms of the tech universe in India?

Sure. Thanks, Nadim. I think the first one, if I were to -- of course, I touched upon a bunch of other aspects like the team structure, the DNA of the team, the way the management thinks, it's always -- almost always price first. So -- and look, it's -- I just want to emphasize, it's hard to build that. Everyone loves growth, right? If I were to be in a role and someone, hey, grow 20%, 30%, I would love to be in that role versus in a role, hey, tomorrow wake up and tell me how you will reduce INR 1 from cost of delivery? It's not glamorous, but that's how the team is built. That's what they love. So that's one. If I was to think of one business model insight, Nadim, it is that in a business like this, try to make as much of your cost as possible variable costs. In a low-margin business, you cannot have fixed cost because as soon as you have fixed cost, your margin goes low, your costs remain the same, you will again [indiscernible]. So that's a big problem. If you have variable cost, your cost shrink with your margin. And I think that's the one business model insight. Never marry a low-margin business with fixed cost, marry a low-margin business with variable cost. I think that's one business model. On AI, it's very hazardous, Nadim, to make any guesses at this time. We were all thinking that an agent that can shop on our behalf, oh my God, this is Nirvana, this is amazing, this is lovely. I don't know probably it takes 2 years to get there, but we will get there. It's beautiful. And come [indiscernible], come operator, they're already shopping on our behalf. So like it'd be very hazardous for me to guess. But truly, fundamentally, I think if we can, through government support or otherwise, build a local model, I think it will be just like UPI or just like Aadhar or just like other digital public infrastructure will definitely give a shot in the arm to local companies because there is, as I said, importantly, there is local nuances that have to be embedded in these models. These could be something as simple as language nuances. In India, we speak 25 languages. Almost all of our portfolio companies have apps in so many languages, right? And we are collecting data in those languages. Now that data is today not being reflected in the model that's being developed in the West, right? Can I just use all of this vernacular data and create something specific for India? It will definitely be helpful for sure. That much I can say. In how much time it's done and what happens on the other side, it's very hard to guess today. This world is moving so fast.

All right. I think that's a great way to end it. This world is moving so fast. Ashu, this was fun. I appreciate your time. Hopefully, to all this was very helpful. Please follow up with IR if you have any questions. And remember, we will see you on the Capital Markets Day in June 25 in London for even more information. So thank you very much, and thank you, Ashu.

Thank you so much, Eoin. This was very exciting. Please feel free to reach out if you have any questions. If you are in India sometime, I'm happy to host you at the office. We are in Bangalore, remember.

Great. All right.

Thank you so much. Take care. Bye-bye.