The Market chases the Military

Vishal Thapar Apr 01, 2022

A Pune-based business start-up born out of the desire to alleviate a “pain point” of the military community has grown into a $110 Million (Rs 836 Crore) turnover company in seven years, in the process creating a new market segment which is set to balloon.

For Ravi Kumar, a son of a soldier, unpleasant childhood memories of uncomfortable cross-country train journeys in overcrowded compartments gave birth to udChalo, a business built around creating a new category of air travellers from the military.

Off duty, train-focussed mobility for the fauj has been a sore point for as long as one can remember, eating into hard-earned home leave after soldiering at some of the toughest outposts in the world. With the Railways offloading as many as 300,000 passengers every day, it was a dead end.

Kumar - an alumnus of the Army Institute of Technology who had worked with Tata and Dassault - realised there was an opportunity waiting to be tapped when his market research in 2012 revealed that 48,000 seats in scheduled domestic airliners were going abegging every day. Combined with the realisation that the lowest military incomes were higher than salaries of entry-level software engineers, indicating latent purchasing power, it made a sound business case for pushing aviation in the military. Thus was born udChalo, a consumer tech company that caters exclusively to the armed forces, para-militaries, veterans and their families - a 3-million-strong market.

16,00,000 & Counting

udChalo’s value proposition was air travel at the cost of a train ride. “When we began in 2015, there was a feeling amongst the bulk of the military – the below-officer class – that air travel is meant only for officers,” recalls Kumar, the start-up’s CEO, who convinced airlines about the viability of a ‘Defence Discounts’ for his clientele. “With a discount of at least 20 per cent over the fare, the cost of air travel matched that of train travel in an AC-3 Tier compartment,” he says. The reasonably-priced proposition of assured and comfortable travel which saved days of drudgery was lapped up by the new customer base.

To begin with, 90 per cent of customers who booked their flights through udChalo were first-time fliers. The number has now grown to 16,00,000 annually.

“Business is successful when it delivers both economic and emotional benefit to the customer,” infers Kumar, who went the extra yard in connecting with the customer and offering him value for his money. In this case, delivery of service by people who intimately know requirements, aspirations and problems of military personnel has provided added comfort to the customer.

The Last Mile Connect

The customised ‘Sarhad se Ghar Tak’ (From Border to Home) package combines last mile connectivity with the discounted air ticket. For Rs 4,500, a soldier is transported from Srinagar to Kohlapur or from Uri to Satara, and destinations across the country. A pick-up in a comfortable taxi is arranged from the airport, say Pune, to onward destinations.

Over 70 booking centres close to border outposts and places difficult to access, ranging from Drugmulla and Zangli in Kupwara to Missamari in Assam, provide direct outreach. These centres are run by veterans or war widows, creating greater resonance with the well-defined market segment.

The connect with the customer extends to call centres, which are mostly run by those handicapped on military duty or wives of military personnel. Nine call centre employees are quadriplegic. Paraplegics run the centres at Mohali and Pune, handling volumes of up to 50,000 calls.

The recent appointment of the military legend, Param Vir Chakra awardee Subedar Major Yogendra Singh Yadav as an adviser to the company makes him a powerful brand ambassador. “With him onboard we expect to gain meaningful insights into regular issues faced by defence personnel,” the CEO said.

To succeed in this unique market category, reliability is a given. The start-up took a hit of Rs 5 Crore in refunds following the Jet debacle in 2018-19.

The Growth Phase

But the approach has paid off. udChalo has recorded a compound annual growth rate (CAGR) of over 450 per cent in the last five years. The initial success has given it confidence to embark on a growth phase.

It has sold 30 million (3 Crore) mobile phones as part of a business strategy to create a market for high quality white goods not available through military canteens. This includes laptops, smart watches, motorcycles and cars. Tie-ups with market leaders like Samsung and Garmin enable udChalo to pass on the price advantage on account of bulk buying. E-commerce also creates its own economies. “We shall be offering 60 brands at the best rates soon,” says Kumar. Financial services and utility bill payments are also part of its portfolio of services.

The Next Big Thing

But the next big move is the foray into real estate. The military community will be offered affordable housing developed by reputed builders at a minimum 10 per cent discount over the market price.

The quick-footed start-up has once again identified gaps in the military’s in-house Army Welfare Housing Organisation and the Naval Housing Board, and is moving in to plug these with good offers. The focus is on five cities most preferred by personnel for hanging up their boots and smaller places which are preferred by jawans for retirement.

The beginning will be made in Pune, followed by Chandigarh, Delhi NCR, Bengaluru and Jaipur. The deals with developers will be underwritten and negotiated by udChalo. “This consumer segment can now avail the best discounts with some of the finest developers in the key cities,” promises Abhijit Das, the group head for the Real Estate vertical.

The mission statement of this business is to create value by “Making Life Simpler for our Soldiers”. In seven years, it has created a growing and loyal market segment and it’s still the only player. These are still early days for udChalo but for benchmarks, there’s USAA - ranked 87 on the list of Fortune 500 companies - with a similar business model in the US. That’s good inspiration, and at the moment, the only way to go seems up.