Co-living operator Isthara sees multi-fold growth despite Pandemic

Founded by Gilbert Lourduraj and Vijayan Krishna Kumar in 2017, Isthara is India's leading premium co-living brand and LivTech pioneer that offers high-quality shared living spaces, smart food courts and cafeterias services. Though the co-living and student living segments have been impacted badly during this Covid pandemic, Isthara was not only able to withstand the downturn, but it also has grown manifold in the last two years. The company has immensely benefitted from the consolidation in this space apart from its innovative business solutions. In 2022, the company expects to double its bed capacity in the student living and co-living space. It also plans to grow its smart foot court segment manifold this year. In a conversation with the Bizz Buzz, Krishna Kumar, co-founder and CEO, Isthara, said that the company remains optimistic about its expansion plans for this year despite the new wave of the pandemic. He expects business to come back to normalcy soon post the third wave. The company, which has recently raised funds from marquee PE investors, will also look at raising funds in subsequent rounds

How was the overall experience of Isthara in dealing with this pandemic? What steps have to taken for making your business resilient?

During the Covid pandemic, this segment (co-living) got impacted a lot. But where Isthara stood out was the steps taken by us during this period. I will divide by answer in three parts. Firstly, when we talk about business, it's not that all businesses vanished. Sectors like ecommerce, manufacturing, banking, pharmaceutical; these actually grew in size. What got impacted was IT & ITeS and student segment. So, we did was, we quickly pivoted to look at the ancillary verticals.

Hospitals, nurses, internship doctors were actually growing. So, the entire market didn't decline. There were certain segments which declined and there were others which showed other aggressiveness. Although we were not operating at an optimum level, but we were not doing extremely bad during this period. Secondly, the market went through a much-needed correction. Pre-Covid, the market rates for co-living and student living were going through the roofs.

With the organised players coming into the play, the market went through a much-needed correction. Also, this led to the shift in the fixed-rental model where players like us would have to take the entire risk. Now, most of us have moved to revenue share model where the owner is also able to monetise based on occupancy. So, the demand pressure is not only on the operator, it is equally shared between the owner and the operator. This is very important trend which Covid has ignited.

Thirdly, the requirement of users has also changed. It is more towards hygiene, health safety, high speed internet, and many more. So, as a company, we are more focussed towards fulfilling these requirements of users.

How do you think the third wave is going to impact the business of Isthara?

It is going to be pretty hard on us. Beginning of next month or mid of next month, we think, it should start coming back.

Can you throw some light on how was Isthara's business growth during this period due to the steps taken up during the pandemic?

From Isthara's point of view, I must say that we are one of the brightest stars in the sky. We entered the Covid phase with 6,000 beds and today, we are around 24,000 beds. We grew 400 per cent due to various reasons. Firstly, we could consolidate the market. We are always a bottom-line driven company and very conservative.

We also entered into a new vertical and started smart food court by Isthara. During pre-pandemic, we were operating just two food courts using our technology. In the last two years, we focussed on the technology to be superefficient that would be ready for the market. As a result, we now operate 43 food courts across India.

During the current financial year, how was the occupancy so far? Has that improved?

Yes, the occupancy rate has been good for us. During the second wave of the pandemic, the occupancy level went down to single digit in student living. From that time till December, we were operating at more than 90 per cent in our student housing segment. As a matter of fact, we grew 60 per cent in our revenues in this segment.

In the co-living, we used to operate in more than 80 per cent occupancy rate. That demand has not come back and it is likely to take more time. Business is coming back to near normalcy in student housing and we think that this segment is going to come back very fast. Overall, we are very positive as the businesses are likely to come back very fast in this wave.

How much of revenue contribution is coming from student living? How are other segments performing in revenue term?

Around 25 per cent of our revenue is coming from food courts. About 50 per cent comes from student living and the rest comes from co-living.

What are your growth plans for the current year given that a new wave of the pandemic is sweeping the country?

We are making sure that there is absolutely no wastage of money in real estate. We want to ensure that funds are utilised for growth. As far as capacity expansion is concerned, we want to grow it to around 50,000 beds this year.

In the food court, we are operating around 12,000-15,000 seats. We want to double this capacity this year. We will also enter into new cities like Pune, Noida and Mumbai this year.

Isthara has recently raised funds from JM Financial PE and other investors. Will you look at further fund raising this year?

We are looking at raising funds in the future. As far as growth plans are concerned, we expect our growth plans to be very buoyant. We expect some significant discussion in this aspect. Investors draw a lot of comfort in our business model and our growth plans.