In an exclusive interview with ET, Steve Albrecht, a non-executive independent director on Oyo’s board said in terms of corporate governance, the company is at a ‘very professional’ level at this point and cost controls are better than ever.
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He also said in terms of financial performance, the company has been ahead of schedule in multiple quarters.
“Initially it was growth at any cost, but now it is profitable growth. Oyo’s growth is ahead of schedule. This year, the company will grow its storefronts by 25%,” said Albrecht.
The former president of the American Accounting Association and the Association of Certified Fraud Examiners, Albrecht has consulted with numerous companies and major financial institutions, the UN and FBI.
“I would say corporate governance at Oyo is as good or as better as other public companies. Oyo has the right committees in place now. They weren’t all there when I started out. There is a risk committee to stay on top of the major risks that the company faces that includes cyber fraud and other strategic risks,” said Albrecht.
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“There is also a stakeholder interest committee. The cost controls are better than ever. Oyo has brought down its operating costs and labour costs dramatically. It has become a much more efficient lean, mean machine,” he added.In July, Oyo told its employees that the company posted an adjusted operating profit — earnings before interest, tax, depreciation and amortisation — of Rs 175 crore in the first quarter of the ongoing financial year. This was a 25-fold increase compared with the Rs 7 crore adjusted Ebitda, its first, the company reported a year earlier in an addendum to its IPO filing with the market regulator. Oyo had previously defined adjusted Ebitda as Ebitda adjusted for transformation expenses made on assets of its hotel partners.
Albrecht said from an operating perspective, cash is king, and Ebitda is very important for a startup or even a 150 year old company.
“If you don’t manage your cash and you’re not cash positive, you’re going to end up in trouble. But, being net income positive is very important from a shareholder perspective,” he said.
“If I am a person analysing financial statements, I want to see growth in revenues, positive gross margins, cost controls and good cash flow and net income,” he added.
Albrecht said when he joined Oyo’s board, he hoped the company would be where it is sooner, but then Covid-19 hit. He said Oyo managed the pandemic ‘very well.’
“I am on an airline board and a hospitality board and these two industries were hit the hardest. Covid set Oyo back from its very original plan. But, it managed Covid very well and its growth is ahead of schedule now. The total available market is huge. The potential is amazing. I am very enthused about this company,” he added.