Kallat’s comments come after the company informed exchanges that certain lounge access programmes for Axis Bank and ICICI Bank had been discontinued, even though contracts with both clients remain active.
She made it clear that the company does not expect any backing from regulators in the matter. “We are a very small player in this market… and I don’t feel that any of the authority would be supportive for us, for obvious reasons, and that’s why we have actually not been to anyone, and we have not asked for any support,” Kallat said.Kallat sough to assure shareholders, saying, “There are around 70 plus lounges in India. However, these airport operators… are holding around 35 to 40% of the lounges only, and the other lounges are still operational, and these programmes are still live on Dreamfolks platform.”
Dreamfolks Services’ shares were trading around 3.7% down at noon on July 2.
These are edited excerpts of the interview.
Q. Tell us firstly what was the reason that these programmes were cancelled? What part of the contract is affected, and what does that do to the overall contract? AXIS and ICICI are two major banks; how much of your top line comes from these two clients?
A: We all are aware about what happened a couple of weeks back, when there was a press release which stated that these contracts are out of Dreamfolks programme. Now, at that point, all the contracts were in place. But there was pressure which was getting built up to the clients. It was a pressure tactics done mainly by these two major airport operators who have now started getting into the similar business.
Now, if the competition is in terms of the services or the technology or trying to build something different, that’s where the competition should be. But the pressure which has been built up is to tell the clients that if they do not sign up with them or do business with them directly, they would actually stop their card holder access to their airports. So this is a pressure which has been built up, and these are the reasons that you know why these clients had to move.
But our contracts are still in place. It is not that we were just managing the airport lounge programme. There are other services also, which Dreamfolks provides to these clients. There are around 70 plus lounges in India. However, these airport operators, who are trying to get into this business, are holding around 35 to 40% of the lounges only, and the other lounges are still operational, and these programmes are still live on Dreamfolks platform.
Q. How much of your revenues are impacted when you talk about these pressure tactics, which are coming on the clients. Is it only on the clients or on Dreamfolks as well?
A. Obviously, the innovation or the innovative companies are always under pressure. And yes, there is a pressure build up, not just on the clients, but the pressure is also built up on Dreamfolks as well. I do not want to specify clearly on the way it is, but if you actually look at it the negative PR, which has been built up from past few weeks, was for only reason, to ensure that it impacts our stock price, because we are a listed company, and obviously any negative PR is going to impact the stock.
So I would say that yes, it is not just a pressure tactics to the clients, but it is much more to Dreamfolks.
Q. Were you or Dreamfolks sent feelers from competition that there is an intention to acquire the company? What was your response to that if there was?
A. Yes, we were getting these feelers. But it is not the business that Dreamfolks has created. It is the industry what we have built, right? And the intention of Dreamfolks is, we do not want to stop ourselves just to be a market leader in India, but the vision is to be globally present. And that was one of the reasons that we did not want to be acquired or get associated with any of such acquisition and we wanted to be an independent company.
Q. So, in that case, what have you done to mitigate the pressure? Have you approached any authorities? There’s CCI. Are you looking at any official action in that case?
A. I do not want to talk about many things, but we are a very small player in this market, and I do not want to get into something which will further damage, because it has already created lot of damage to our business in terms of the way things are happening. So, I don’t feel that any of the authority would be supportive for us, for obvious reasons, and that’s why we have actually not been to anyone, and we have not asked for any support. But yes, as a company, we are not trying to go back in terms of trying to stop. We have already built a lot of other services. We are doing lot of other things in terms of the technology as well. And in these 13 years, the way we have actually built our relationship with all our clients and the trust what we have built, everyone understands that, and they all want to continue work with us. Airports is not just one of the area where we are trying to focus. There are other areas which we have already built. We are now into lifestyle as well, and in railways, highways. When I say lifestyle, we are into golf and there are new services like social.
Q. From the shareholders angle, what assurance do you have for them? Because while you’re saying airport is not the only business, it is one of the major businesses that you have, what assurance are you giving to the shareholders? How can you just submit to the fact that there is competition pressure? What if somebody comes into your other vertical and starts pressurising you there as well. What should shareholders do in this case?
A. I completely agree. So, in other areas, when I talk about outside airport industry, obviously there is no monopolistic player right now. At the airport there are monopolistic players. There are two large operators who are sitting and want to actually dictate their terms. That is one area where I would say that I could see a risk coming in. But other industries where we are going, it is not going to be managed by one single player. So I don’t see that there’s going to be a risk there. And as a listed company, I have to assure all my stakeholders who are having that trust in me, to believe in me, that we are going to build the way we have built the lounge industry.
Q: We spoke to you on June 20, when the press release came out. You denied its contents then. What has changed in the last 14 days? Why are you now acknowledging pressure on the business and lack of support from authorities?
A: So of course, that press release was very anonymous. It was never clear who had issued that statement. If you see it, none of our clients had made those statements. Whoever did, I would say, didn’t even have the guts to admit that they were behind it.Over the past two years, we’ve been facing pressure, and we’ve tried to maintain relationships. I thought we needed to work together—it is a business, after all—so I always tried to be diplomatic and cover it up. But I felt it was high time to come out and share the facts.
Before more press releases emerge—which is how these things typically unfold—I wanted to explain what is happening. Let me be clear: I don’t see this as competition. Fair competition should be professional—about technology and services—not about pressurising or threatening someone into doing business. That is why I decided to speak up now.
Q: Let’s clarify the situation. First, are there any more cancellations expected? What are your clients saying about your ongoing relationships? And second, you have said you are diversifying beyond airports, but scaling up will take time. What is your outlook on that?
A: As of now, there are no new cancellations. Even the recent ones happened with just a few hours’ notice, not a week or more.
Till now, we haven’t received any formal communication from clients about migrating away from our platform. The program is still ongoing. However, we have received messages from clients about being pressured by two operators.
Yes, lounges are our biggest revenue driver, and new services will take some time to scale. But let me tell you, 13 years ago, when we launched lounges, it also took time. Back then, consumer awareness about card benefits was low. Today, customers understand these benefits well, so I don’t expect it will take long to scale the new services.
We are working closely with our clients, who themselves don’t appreciate what is happening in the industry. Many are looking for alternatives, and I believe changes will happen soon.
Q: A follow-up on that—when cancellations or migrations happen, is there a standard notice period, like a week or 15 days? Also, if someone approaches you with an acquisition proposal—whether a competitor or another player—how would you respond?
A: As for acquisitions, I haven’t thought about it. Our vision is to grow globally. As a listed company, my priority is to continue building the trust and confidence we’ve established in the market.
Right now, acquisition is not on my agenda. We are focused on building the business. We have just created a new product, and though it is a silent period, you will see it in the market soon.
Q: You say you’re focused on trust and confidence. But you denied the issue earlier. Now you’ve done a U-turn, and since it’s a silent period, you can’t share next steps. Shareholders have seen significant value destruction. Should the Securities and Exchange Board of India (SEBI) step in? What is your message to shareholders?
A: First, I want to clarify—I’m not doing a U-turn or trying to cover up anything. When I last spoke, the contracts were still valid, and we had no communication about clients moving out.
We only received information about the migration on the evening of June 30. I have always followed compliance rules and been transparent. I am not here to give a wrong narrative—I am here to tell the truth.
I am not using media to appear right. I want to use this platform to explain what is happening with the business. And in time, you will see what we are building.
Q: But how did others get access to your contracts before the company did? And on what grounds were changes made or contracts ended?
A: The contracts are not terminated. They are still in place. For example, ICICI’s programme is still live on our platform.
Q: What clauses were invoked?
A: There are different set of cards which gets these benefits. Only some of these cards have been migrated to other platforms. Many cards are still running on ours.
So yes, there’s been a partial migration, not a complete withdrawal. That’s the change that has occurred.
Watch the interview in the accompanying video
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