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MMYT MakeMyTrip

Filed: 13 Jul 21, 5:21pm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 20-F

 

(Mark One)

REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934

or

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2021

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

or

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission file number 001-34837

 

MakeMyTrip Limited

(Exact Name of Registrant as specified in its charter)

 

 

Not Applicable

 

Mauritius

(Translation of Registrant’s Name Into English)

 

(Jurisdiction of Incorporation or Organization)

 

19th Floor, Building No. 5

DLF Cyber City

Gurugram, India, 122002

(Address of Principal Executive Offices)

Mohit Kabra

Group Chief Financial Officer

19th Floor, Building No. 5

DLF Cyber City

Gurugram, India, 122002

(91-124) 439-5000

groupcfo@go-mmt.com

(Name, Telephone, E-mail and/or facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Ordinary Shares, par value $0.0005 per share

MMYT

Nasdaq Global Market

(Title of Class)

(Trading Symbol)

(Name of Exchange On Which Registered)

 

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report.

 

Class

Number of Shares Outstanding as of March 31, 2021

Ordinary shares, $0.0005 par value per share (“ordinary shares”)

65,065,075 shares outstanding

Class B convertible ordinary shares, par value $0.0005 per share (“Class B Shares”)

39,667,911 shares outstanding

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes              No  

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes              No  

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

 


 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes              No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes              No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  

Accelerated filer  

Non-accelerated filer  

 

 

Emerging growth company  

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Yes              No  

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

US GAAP  

International Financial Reporting Standards as issued

Other  

 

by the International Accounting Standards Board  

 

If “Other” has been checked in the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17              Item 18  

If this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

Yes              No  

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court:

Yes              No  

 

 

 

 

 


 

 

  TABLE OF CONTENTS

 

 

PAGE

PART I

 

 

 

ITEM  1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

6

 

 

ITEM  2. OFFER STATISTICS AND EXPECTED TIMETABLE

6

 

 

ITEM 3. KEY INFORMATION

6

 

 

ITEM 4. INFORMATION ON THE COMPANY

39

 

 

ITEM 4A. UNRESOLVED STAFF COMMENTS

63

 

 

ITEM  5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

64

 

 

ITEM  6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

101

 

 

ITEM  7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

115

 

 

ITEM 8. FINANCIAL INFORMATION

118

 

 

ITEM 9. THE OFFER AND LISTING

129

 

 

ITEM 10. ADDITIONAL INFORMATION

129

 

 

ITEM  11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

153

 

 

ITEM  12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

154

 

 

PART II

 

 

 

ITEM  13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

155

 

 

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

155

 

 

ITEM 15. CONTROLS AND PROCEDURES

155

 

 

ITEM  16A. AUDIT COMMITTEE FINANCIAL EXPERT

158

 

 

ITEM 16B. CODE OF ETHICS

158

 

 

ITEM  16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

159

 

 

ITEM  16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

159

 

 

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

159

 

 

ITEM  16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

160

 

 

ITEM 16G. CORPORATE GOVERNANCE

160

 

 

ITEM 16H. MINE SAFETY DISCLOSURE

160

 

 

PART III

 

 

 

ITEM 17. FINANCIAL STATEMENTS

161

 

 

ITEM 18. FINANCIAL STATEMENTS

161

 

 

ITEM 19. EXHIBITS

161

 

 

SIGNATURES

162

 

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

F-1

 

 

 

 

 

 

 


 

 

CONVENTIONS USED IN THIS ANNUAL REPORT

In this Annual Report, we refer to information regarding the travel service industry and our competitors from market research reports, analyst reports and other publicly available sources, including the Directorate General of Civil Aviation, the Indian governmental regulatory body for civil aviation, or the DGCA, App Annie and World Economic Forum.

We conduct our business principally through our Indian subsidiaries, MakeMyTrip (India) Private Limited, or MMT India, and Ibibo Group Private Limited, or Ibibo India, a wholly-owned subsidiary of Ibibo Group Holdings (Singapore) Pte. Ltd. (together with its subsidiaries, including Ibibo India, the “ibibo Group”), which we acquired from MIH Internet SEA Pte. Ltd., or MIH Internet, on January 31, 2017. Our other key operating subsidiaries include ITC Bangkok Co., Ltd., Thailand, the main operating entity of the group of companies known as the ITC Group; Luxury Tours & Travel Pte Ltd, Singapore, or Luxury Tours; Luxury Tours (Malaysia) Sdn. Bhd., or Luxury Tours (Malaysia); MakeMyTrip Inc., or MMT USA; Bitla Software Private Limited, or Bitla; and Quest2Travel.com India Private Limited, or Quest2Travel. In this Annual Report, unless otherwise stated or unless the context otherwise requires, references to “we,” “us,” “our,” “our company” or “our group” are to MakeMyTrip Limited and its subsidiaries collectively, and references to “our holding company” are to MakeMyTrip Limited on a standalone basis.

References to the number of “transactions” for air ticketing, bus, train and hotels and packages in this Annual Report refers to transactions net of cancelations.  

In this Annual Report, references to “US,” the “United States” or “USA” are to the United States of America, its territories and its possessions, references to “India” are to the Republic of India, references to “Colombia” are to the Republic of Colombia, references to “Indonesia” are to the Republic of Indonesia, references to “Mauritius” are to the Republic of Mauritius, references to “Peru” are to the Republic of Peru, references to “Singapore” are to the Republic of Singapore, references to “Malaysia” are to the Federation of Malaysia and references to “Thailand” are to the Kingdom of Thailand. References to “$,” “dollars” or “US dollars” are to the legal currency of the United States and references to “Rs.,” “Rupees” or “Indian Rupees” are to the legal currency of India.

Solely for the convenience of the reader, this Annual Report contains translations of certain Indian Rupee amounts into US dollars at specified rates. Except as otherwise stated in this Annual Report, all translations from Indian Rupees to US dollars are based on the noon buying rate of Rs. 73.14 per $1.00 in the City of New York for cable transfers of Indian Rupees, as certified for customs purposes by the Federal Reserve Bank of New York on March 31, 2021. No representation is made that the Indian Rupee amounts referred to in this Annual Report could have been or could be converted into US dollars at such rates or any other rates. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding.

Unless otherwise indicated, the consolidated statement of profit or loss and other comprehensive income and related notes for fiscal years 2019, 2020 and 2021 and consolidated statement of financial position as of March 31, 2020 and 2021 included elsewhere in this Annual Report have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. References to a particular “fiscal year” are to our fiscal year ended March 31 of that year. Our fiscal quarters end on June 30, September 30, December 31 and March 31. References to a year other than a “fiscal” year are to the calendar year ended December 31. Our financial and operating results for fiscal year 2017 include the financial and operating results of the ibibo Group for the two months ended March 31, 2017 following the completion of our acquisition of the ibibo Group on January 31, 2017 and for the full year in fiscal years 2018, 2019, 2020 and 2021.

2


 

CERTAIN KEY PERFORMANCE INDICATORS AND NON-IFRS MEASURES

We refer to certain non-IFRS measures in various places within this Annual Report, including “Adjusted Operating Profit (Loss),” “Adjusted Net Profit (Loss),” and “Adjusted Diluted Earnings (Loss) per Share”. We also refer to certain key performance indicators within this Annual Report including “Adjusted Margin” and “Adjusted Margin %”.

For a description of the components and calculation of “Adjusted Operating Profit (Loss),” Adjusted Net Profit (Loss),” and “Adjusted Diluted Earnings (Loss) per Share” and a reconciliation of these non-IFRS measures to the most directly comparable IFRS measures, see “Item 5. Operating and Financial Review and Prospects — Certain Key Performance Indicators and Non-IFRS Measures” elsewhere in this Annual Report. We believe that our current calculations of Adjusted Operating Profit (Loss), Adjusted Net Profit (Loss) and Adjusted Diluted Earnings (Loss) per Share represent a balanced approach to adjusting for the impact of certain discrete, unusual or non-cash items and other items such as customer inducement costs in the nature of customer incentives, customer acquisition costs and loyalty program costs which are useful in measuring our operating results and provide useful information to investors and analysts.

We evaluate our financial performance in each of our reportable segments based on our key performance indicator, Adjusted Margin, a segment profitability measure, which represents IFRS revenue after adding back customer inducement costs in the nature of customer incentives, customer acquisition costs and loyalty program costs which are reported as a reduction of revenue, and deducting the cost of acquisition of services primarily relating to sales to customers where the company acts as the principal. In fiscal years 2019 and in part of fiscal year 2020, we referred to Adjusted Margin as “Adjusted Revenue”. We believe Adjusted Margin is a more accurate representation reflecting the margins in the business. In fiscal year 2018 and earlier years, this segment profitability measure was referred to as Revenue less Service Cost and calculated as revenue as per IFRS to which certain customer inducement costs recorded as a reduction of revenue are added back, and cost for the acquisition of relevant services and products for sale to customers are deducted. Similarly, in fiscal year 2019, we changed our key performance indicator “Net Revenue Margin” to “Adjusted Revenue Margin”, and at the end of fiscal year 2020, we changed the name of this non-IFRS measure from “Adjusted Revenue Margin” to “Adjusted Margin %”. Net Revenue Margin was calculated as Revenue less Service Cost as a percentage of gross bookings and Adjusted Margin % (previously referred to as Adjusted Revenue Margin) is calculated as Adjusted Margin (previously referred to as Adjusted Revenue) as a percentage of gross bookings. The impact of these changes from Revenue less Service Cost to Adjusted Margin and from Net Revenue Margin to Adjusted Margin % on the comparative numbers for the previous years is not material and accordingly, the Adjusted Margin and Adjusted Margin % information for the years ended March 31, 2017 and 2018 in this Annual Report is our previously reported Revenue less Service Cost and Net Revenue Margin information for such years and have not been adjusted. The presentation of these segment profitability measures and key performance indicators is not meant to be considered in isolation or as a substitute for our consolidated financial results prepared in accordance with IFRS as issued by the IASB. Our Adjusted Margin and Adjusted Margin % may not be comparable to similarly titled measures reported by other companies due to potential differences in the method of calculation.

Our Consolidated Statement of Profit or Loss and Other Comprehensive Income reports customer inducement costs as a reduction of revenue in the respective revenue lines. Our revenues are recognized on a “net” basis when we are acting as an agent and on a “gross” basis when we are acting as a principal. See “Item 5. Operating and Financial Review and Prospects — Our Revenue, Service Cost and Other Revenue and Expenses — Revenue.” Income from packages, including income on airline tickets sold to customers as a part of tours and packages is accounted for on a gross basis as the Company controls the services before they are transferred to travelers. Revenue from the packages business which is accounted for on a “gross” basis represents the total amount paid by customers for these travel services and products, while our cost of procuring the relevant services and products for sale to our customers in this business is classified as service cost. We believe that Adjusted Margin reflects the value addition of the travel services that we provide to customers in our packages business where we are the principal and is similar to the revenue on a “net” basis for our air ticketing, hotels, and bus ticketing business where we act as an agent.

We believe that our current calculations of Adjusted Operating Profit (Loss), Adjusted Net Profit (Loss), Adjusted Margin % and Adjusted Diluted Earnings (Loss) per Share represent a balanced approach to adjusting for the impact of certain discrete, unusual or non-cash items and other items such as customer inducement costs in the nature of customer incentives, customer acquisition costs and loyalty program costs which are useful in measuring our operating results and provide useful information to investors and analysts. We believe that investors and analysts in our industry use these non-IFRS measures and key performance indicators to compare our company and our performance to that of our global peers.

3


 

The IFRS measures most directly comparable to “Adjusted Operating Profit (Loss),” “Adjusted Net Profit (Loss)” and “Adjusted Diluted Earnings (Loss) per Share” are results from operating activities, profit (loss) for the year and diluted earnings (loss) per share, respectively. Each item is more fully explained in “Item 5. Operating and Financial Review and Prospects.” We believe that adjustments to these IFRS measures are representative of operating results of the Company and provide useful information to investors and analysts. A limitation of using Adjusted Operating Profit (Loss), Adjusted Net Profit (Loss) and Adjusted Diluted Earnings (Loss) per Share instead of results from operating profit (loss), net profit (loss) and diluted earnings (loss) per share calculated in accordance with IFRS as issued by the IASB is that these non-IFRS measures exclude a recurring cost, for example, share-based compensation. Management compensates for this limitation by providing specific information on the IFRS amounts excluded from Adjusted Operating Profit (Loss), Adjusted Net Profit (Loss) and Adjusted Diluted Earnings (Loss) per Share. The presentation of these non-IFRS measures is not meant to be considered in isolation or as a substitute for our consolidated financial results prepared in accordance with IFRS as issued by the IASB. For further information and a reconciliation of these non-IFRS measures to the most directly comparable IFRS measures, see “Item 5. Operating and Financial Review and Prospects — Certain Key Performance Indicators and Non-IFRS Measures” elsewhere in this Annual Report.

4


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements that relate to our current expectations and views of future events. These forward-looking statements are contained principally in the sections entitled “Item 3. Key Information,” “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects.” These statements relate to events that involve known and unknown risks, uncertainties and other factors, including those listed under “Item 3. Key Information — D. Risk Factors,” which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, these forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions.

These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors set forth in “Item 3. Key Information — D. Risk Factors,” and the following:

 

the impact of the COVID-19 (as defined herein) pandemic on our business, the travel industry and the economy of India and elsewhere generally;

 

our ability to maintain and expand our supplier relationships;

 

our reliance on technology;

 

our ability to expand our business, implement our strategy and effectively manage our growth;

 

our ability to successfully implement our growth strategy;

 

our ability to attract, train and retain executives and other qualified employees;

 

the potential for disruptive competition in the Indian travel industry;

 

risks associated with online commerce security;

 

political and economic stability in and around India, Thailand, and other key travel destinations in Asia, Europe and Latin America; and

 

the effect of the material weakness that our management had previously identified in our internal control over financial reporting and our ability to implement and maintain effective internal control over financial reporting.

The forward-looking statements made in this Annual Report relate only to events or information as of the date on which the statements are made in this Annual Report. Our actual results, performance, or achievement may differ materially from those expressed in, or implied by, these forward-looking statements. Accordingly, we can give no assurances that any of the events anticipated by these forward-looking statements will transpire or occur or, if any of the foregoing factors or other risks and uncertainties described elsewhere in this Annual Report were to occur, what impact they would have on these forward-looking statements, including our results of operations or financial condition. In view of these uncertainties, you are cautioned not to place undue reliance on these forward-looking statements.

Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

 

5


 

 

PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.

KEY INFORMATION

A. Selected Consolidated Financial Data

The following selected consolidated statement of profit or loss and other comprehensive income data for fiscal years 2019, 2020 and 2021 and the selected consolidated statement of financial position data as of March 31, 2020 and 2021 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report.

6


 

The selected consolidated statement of profit or loss and other comprehensive income data for fiscal years 2017 and 2018 and the selected consolidated statement of financial position data as of March 31, 2017, 2018 and 2019 have been derived from our audited consolidated financial statements not included in this Annual Report. Our financial and operating results for fiscal year 2017 include the financial and operating results of the ibibo Group for the two months ended March 31, 2017 following the completion of our acquisition of the ibibo Group on January 31, 2017, and for the full year in fiscal years 2018, 2019, 2020 and 2021. The financial data set forth below should be read in conjunction with, and is qualified by reference to, “Item 5. Operating and Financial Review and Prospects” and the consolidated financial statements and notes thereto included elsewhere in this Annual Report. Our consolidated financial statements are prepared and presented in accordance with IFRS as issued by the IASB. Our historical results do not necessarily indicate results expected for any future period.

 

 

 

Fiscal Year Ended March 31,

 

 

 

2017

 

 

2018

 

 

2019

 

 

2020

 

 

2021

 

 

 

(in thousands, except per share data and share count)

 

Consolidated Statement of Profit

   or Loss and Other

   Comprehensive Income

   Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Air ticketing

 

$

118,514

 

 

$

167,391

 

 

$

166,714

 

 

$

174,361

 

 

$

57,013

 

Hotels and packages

 

 

314,254

 

 

 

439,963

 

 

 

237,524

 

 

 

235,814

 

 

 

67,976

 

Bus ticketing(1)

 

 

5,615

 

 

 

50,932

 

 

 

53,745

 

 

 

65,009

 

 

 

24,895

 

Other revenue

 

 

9,233

 

 

 

16,970

 

 

 

28,028

 

 

 

36,345

 

 

 

13,556

 

Total revenue

 

 

447,616

 

 

 

675,256

 

 

 

486,011

 

 

 

511,529

 

 

 

163,440

 

Other income

 

 

363

 

 

 

435

 

 

 

220

 

 

 

1,063

 

 

 

3,672

 

Service cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Procurement cost of hotels

   and packages services

 

 

(173,919

)

 

 

(169,347

)

 

 

(160,824

)

 

 

(141,404

)

 

 

(19,146

)

Other cost of providing

   services

 

 

 

 

 

(6,530

)

 

 

(12,588

)

 

 

(12,916

)

 

 

(3,162

)

Personnel expenses

 

 

(73,736

)

 

 

(114,157

)

 

 

(113,567

)

 

 

(129,836

)

 

 

(105,661

)

Marketing and sales promotion

   expenses

 

 

(224,424

)

 

 

(451,818

)

 

 

(192,080

)

 

 

(166,603

)

 

 

(22,741

)

Other operating expenses

 

 

(81,585

)

 

 

(120,566

)

 

 

(133,295

)

 

 

(185,401

)

 

 

(51,075

)

Depreciation, amortization

   and impairment

 

 

(20,077

)

 

 

(32,712

)

 

 

(26,817

)

 

 

(33,682

)

 

 

(33,010

)

Impairment of goodwill

 

 

(9,625

)

 

 

 

 

 

 

 

 

(272,160

)

 

 

 

Results from operating

   activities

 

 

(135,387

)

 

 

(219,439

)

 

 

(152,940

)

 

 

(429,410

)

 

 

(67,683

)

Net finance income (costs)

 

 

26,979

 

 

 

1,288

 

 

 

(4,870

)

 

 

(18,071

)

 

 

7,302

 

Impairment in respect of an

   equity-accounted investee

 

 

 

 

 

 

 

 

(9,926

)

 

 

 

 

 

 

Share of loss of equity-

   accounted investees

 

 

(1,702

)

 

 

(1,998

)

 

 

(887

)

 

 

(65

)

 

 

(168

)

Loss before tax

 

 

(110,110

)

 

 

(220,149

)

 

 

(168,623

)

 

 

(447,546

)

 

 

(60,549

)

Income tax benefit (expense)

 

 

(193

)

 

 

(91

)

 

 

740

 

 

 

29

 

 

 

4,507

 

Loss for the year

 

$

(110,303

)

 

$

(220,240

)

 

$

(167,883

)

 

$

(447,517

)

 

$

(56,042

)

Loss per share (including

   Class B Shares):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(2.09

)

 

$

(2.18

)

 

$

(1.61

)

 

$

(4.26

)

 

$

(0.52

)

Diluted

 

$

(2.09

)

 

$

(2.18

)

 

$

(1.61

)

 

$

(4.26

)

 

$

(0.52

)

Weighted average number of

   shares outstanding (including

   Class B Shares):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

52,607,986

 

 

 

100,394,080

 

 

 

103,989,421

 

 

 

105,190,507

 

 

 

106,797,245

 

Diluted

 

 

52,607,986

 

 

 

100,394,080

 

 

 

103,989,421

 

 

 

105,190,507

 

 

 

106,797,245

 

 

(1)

Until March 31, 2018, for internal reporting purposes, our “Bus Ticketing” revenue was included under the “Other” segment. Effective April 1, 2018, we changed the composition of our operating segments which resulted in “Bus Ticketing” being reported as a separate segment. Following this change in the composition

7


 

of our reportable segments, we restated the corresponding items of segment information for fiscal years 2017 and 2018.

 

The following table sets forth a summary of our consolidated statement of financial position as of March 31, 2017, 2018, 2019, 2020 and 2021:

 

 

 

As of March 31,

 

 

 

2017

 

 

2018

 

 

2019

 

 

2020

 

 

 

 

2021

 

 

 

(in thousands)

 

 

 

 

Consolidated Statement of Financial

   Position Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other receivables, net

 

$

37,284

 

 

$

58,315

 

 

$

55,462

 

 

$

56,065

 

 

 

 

$

27,331

 

 

 

 

Term deposits

 

 

95,673

 

 

 

202,335

 

 

 

134,133

 

 

 

38,030

 

 

 

 

 

154,868

 

 

 

 

Cash and cash equivalents

 

 

101,704

 

 

 

187,647

 

 

 

177,990

 

 

 

129,881

 

 

 

 

 

295,066

 

 

 

 

Net current assets

 

 

128,787

 

 

 

340,614

 

 

 

236,075

 

 

 

99,151

 

 

 

 

 

306,985

 

 

 

 

Total assets

 

 

1,544,784

 

 

 

1,765,456

 

 

 

1,570,286

 

 

 

1,083,211

 

 

 

 

 

1,309,010

 

 

 

 

Total equity

 

 

1,405,462

 

 

 

1,558,932

 

 

 

1,357,368

 

 

 

862,292

 

 

 

 

 

891,187

 

 

 

 

Loans and borrowings

 

 

749

 

 

 

652

 

 

 

707

 

 

 

25,584

 

 

(1

)

 

203,955

 

 

(1

)

Trade and other payables

 

 

121,563

 

 

 

181,430

 

 

 

110,970

 

 

 

70,747

 

 

 

 

 

53,581

 

 

 

 

Total liabilities

 

 

139,322

 

 

 

206,524

 

 

 

212,918

 

 

 

220,919

 

 

 

 

 

417,823

 

 

 

 

Total equity and liabilities

 

$

1,544,784

 

 

$

1,765,456

 

 

$

1,570,286

 

 

$

1,083,211

 

 

 

 

$

1,309,010

 

 

 

 

 

 

(1)

Includes $15.6 million as at March 31, 2021 (March 31, 2020: $24.6 million) of lease liabilities on account of adoption of IFRS 16 Leases from April 1, 2019. See Note 28 to the accompanying consolidated financial statements in Item 18 for more information.

 

Other Data:

The following table sets forth, for the periods indicated, certain selected consolidated financial and other data:

 

 

 

Fiscal Year Ended March 31,

 

 

 

2017

 

 

2018

 

 

2019

 

 

2020

 

 

2021

 

 

 

(in thousands, except percentages)

 

Unit Metrics(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Air Ticketing  - Flight segments(2)

 

 

20,560

 

 

 

33,339

 

 

 

39,485

 

 

 

42,054

 

 

 

15,019

 

Hotels and Packages - Room nights(3)

 

 

10,535

 

 

 

21,911

 

 

 

26,611

 

 

 

29,647

 

 

 

8,538

 

Standalone Hotels - Online(4) - Room

   nights(3)

 

 

9,102

 

 

 

20,998

 

 

 

25,911

 

 

 

29,043

 

 

 

8,435

 

Bus Ticketing - Travelled tickets

 

 

5,479

 

 

 

39,570

 

 

 

61,464

 

 

 

78,582

 

 

 

26,717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Margin:(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Air Ticketing

 

$

118,514

 

 

$

202,064

 

 

$

234,153

 

 

$

249,720

 

 

$

80,233

 

Hotels and Packages

 

 

140,335

 

 

 

313,684

 

 

 

351,615

 

 

 

360,116

 

 

 

67,482

 

Bus Ticketing(6)

 

 

5,615

 

 

 

44,402

 

 

 

58,825

 

 

 

75,637

 

 

 

22,850

 

Others

 

 

9,233

 

 

 

16,970

 

 

 

28,831

 

 

 

37,947

 

 

 

13,566

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Bookings:(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Air Ticketing

 

$

1,545,152

 

 

$

2,704,522

 

 

$

3,214,545

 

 

$

3,581,267

 

 

$

980,841

 

Hotels and Packages

 

 

745,136

 

 

 

1,389,623

 

 

 

1,515,464

 

 

 

1,626,732

 

 

 

376,444

 

Bus Ticketing

 

 

63,273

 

 

 

496,920

 

 

 

716,135

 

 

 

885,736

 

 

 

278,157

 

Adjusted Margin %:(8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Air Ticketing

 

7.7%(9)

 

 

 

7.5

%

 

 

7.3

%

 

 

7.0

%

 

 

8.2

%

Hotels and Packages

 

 

18.8

%

 

 

22.6

%

 

 

23.2

%

 

 

22.1

%

 

 

17.9

%

Bus Ticketing

 

 

8.9

%

 

 

8.9

%

 

 

8.2

%

 

 

8.5

%

 

 

8.2

%

 

Notes:

8


 

(1)

In fiscal year 2019, we discontinued tracking of our number of air ticketing and hotels and packages transactions as measures of our business performance in our air ticketing and hotels and packages segments. Instead, we began tracking flight segments in our air ticketing business, room nights in our hotel and packages business and travelled tickets in our bus ticketing business. Information on these measures for fiscal years 2017 and 2018 have been presented in accordance with the measures of business performance that we adopted in fiscal year 2019, for comparative purposes.

(2)

A “flight segment” is a flight between two cities, whether or not such flight is part of a larger or longer itinerary.

(3)

“Room nights,” also referred to as a “hotel-room nights,” is the total number of hotel rooms occupied by a customer or group, multiplied by the number of nights that such customer or group occupies those rooms.

(4)

“Standalone Hotels – Online” are Standalone Hotels booked on desktops, laptops, mobiles and other online platforms. Hotels and Packages – Room nights includes Standalone Hotels – Online  – Room nights.

(5)

The key travel services the Company offers are booking of air tickets, hotels and packages and bus tickets. Income from the sale of airline tickets, hotel room nights and bus tickets is recognized as an agent on a “net” commission earned basis, as the Company does not assume any performance obligation relating to the service. In our packages business, the Company acts as the primary obligor for such packages since the Group controls the services before such services are transferred to the traveler and accordingly, the revenue for packages is accounted for on a “gross” basis.

As certain parts of our revenue are recognized on a “net” basis and other parts of our revenue are recognized on a “gross” basis, we evaluate our financial performance in each of our reportable segments based on Adjusted Margin, which is a segment profitability measure, as we believe that Adjusted Margin reflects the value addition of the travel services that we provide to our customers. The presentation of this segment profitability information is not meant to be considered in isolation or as a substitute for our consolidated financial results prepared in accordance with IFRS as issued by the IASB. Our Adjusted Margin may not be comparable to similarly titled measures reported by other companies due to potential differences in the method of calculation.

The following table reconciles our revenue (an IFRS measure) to Adjusted Margin (a segment profitability measure):

 

 

 

Air Ticketing

 

 

Hotels and Packages

 

 

 

Fiscal Year Ended March 31,

 

 

Fiscal Year Ended March 31,

 

 

 

2017

 

 

2018

 

 

2019

 

 

2020

 

 

2021

 

 

2017

 

 

2018

 

 

2019

 

 

2020

 

 

2021

 

 

 

(in thousands)

 

Revenue as per

   IFRS(a)

 

$

118,514

 

 

$

167,391

 

 

$

166,714

 

 

$

174,361

 

 

$

57,013

 

 

$

314,254

 

 

$

439,963

 

 

$

237,524

 

 

$

235,814

 

 

$

67,976

 

Add: Customer

   inducement costs

   recorded as a

   reduction of

   revenue

 

 

 

 

 

34,673

 

 

 

68,632

 

 

 

75,779

 

 

 

23,513

 

 

 

 

 

 

43,068

 

 

 

274,915

 

 

 

265,706

 

 

 

18,652

 

Less: Service Cost as

   per IFRS

 

 

 

 

 

 

 

 

1,193

 

 

 

420

 

 

 

293

 

 

 

173,919

 

 

 

169,347

 

 

 

160,824

 

 

 

141,404

 

 

 

19,146

 

Adjusted Margin

 

$

118,514

 

 

$

202,064

 

 

$

234,153

 

 

$

249,720

 

 

$

80,233

 

 

$

140,335

 

 

$

313,684

 

 

$

351,615

 

 

$

360,116

 

 

$

67,482

 

 

9


 

 

 

 

 

Bus Ticketing

 

 

Others

 

 

 

 

Fiscal Year Ended March 31,

 

 

Fiscal Year Ended March 31,

 

 

 

 

(in thousands)

 

 

2017

 

 

2018

 

 

2019

 

 

2020

 

 

2021

 

 

2017

 

 

2018

 

 

2019

 

 

2020

 

 

2021

 

 

Revenue as per IFRS(a)

 

$

5,615

 

 

$

50,932

 

 

$

53,745

 

 

$

65,009

 

 

$

24,895

 

 

$

9,233

 

 

$

16,970

 

 

$

28,028

 

 

$

36,345

 

 

$

13,556

 

 

Add: Customer inducement costs

   recorded as a reduction of revenue

 

 

 

 

 

 

 

 

13,950

 

 

 

17,688

 

 

 

667

 

 

 

 

 

 

 

 

 

861

 

 

 

1,985

 

 

 

76

 

 

Less: Service Cost as per IFRS

 

 

 

 

 

6,530

 

 

 

8,870

 

 

 

7,060

 

 

 

2,712

 

 

 

 

 

 

 

 

 

58

 

b

 

383

 

b

 

66

 

b

Adjusted Margin

 

$

5,615

 

 

$

44,402

 

 

$

58,825

 

 

$

75,637

 

 

$

22,850

 

 

$

9,233

 

 

$

16,970

 

 

$

28,831

 

 

$

37,947

 

 

$

13,566

 

 

 

“a” Effective April 1, 2018, we adopted the new revenue recognition standard IFRS 15, where customer inducement costs have been recorded as a reduction of revenue. We have adopted the new standard by using the cumulative effect method and accordingly the comparative information has not been restated.

“b” Loyalty program costs amounting to $2.5 million, $5.1 million and $0.09 million have been excluded from service cost for the fiscal years 2019, 2020 and 2021, respectively, relating to “Others”.

(6)

Until March 31, 2018, for internal reporting purposes, our “Bus Ticketing” revenue was included under the “Others” segment. Effective April 1, 2018, we changed the composition of our operating segments which has resulted in “Bus Ticketing” now being reported as a separate segment. Following this change in the composition of our reportable segments, we have restated the corresponding items of segment information for fiscal years 2017 and 2018.

(7)

Gross bookings represent the total amount paid by our customers for the travel services and products booked through us, including taxes, fees and other charges, and are net of cancellations and refunds.

(8)

Adjusted Margin % is defined as Adjusted Margin as a percentage of gross bookings.

(9)

In fiscal year 2017, we recognized incremental revenue of $9.2 million based on quarterly evaluation of trends of refund rights exercised by our customers along with a change in the estimate for provisions for cancelled tickets pursuant to confirmation from a supplier. Excluding such incremental revenue, our Adjusted Margin % for air ticketing for fiscal year 2017 would be 7.1%.

 

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

 

10


 

 

D. Risk Factors

This Annual Report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those described in the following risk factors and elsewhere in this Annual Report. If any of the following risks actually occur, our business, financial condition and results of operations could suffer.

Risks Related to Us and Our Industry

The COVID-19 pandemic has had, and is expected to have, a material adverse effect on the travel industry and our business, financial condition, results of operations and cash flows.

An outbreak of a novel strain of coronavirus, or SARS-CoV-2, which causes the COVID-19 disease, was identified in December 2019 and was subsequently recognized as a pandemic by the World Health Organization on March 11, 2020. The COVID-19 pandemic has severely restricted the level of economic activity around the world, and the travel and tourism sector is one of the sectors that have been impacted most severely. In response to the COVID-19 pandemic, the government in India and governments in many countries and regions have implemented containment measures, such as imposing lockdowns and restrictions on travel and business operations and advising or requiring individuals to drastically limit the time spent outside of their homes. The ability to travel has been curtailed by city, state and national border closures, mandated travel restrictions and limited operations of airlines and hotels. Many of our customers and suppliers, including hotels and airlines, drastically curtailed their service offerings or ceased operations entirely. These measures are being continuously re-evaluated by the relevant authorities, and whether these measures are eased, continued or increased is outside of our control or ability to predict.

The measures implemented to contain and mitigate the COVID-19 pandemic have had, and are currently expected to continue to have, a significant negative effect on our business, financial condition, results of operations and cash flows. Further, we cannot predict the impact that the pandemic and its mitigation measures will continue to have in India or elsewhere, may have on our business, financial condition, results of operations and cash flows. In the fourth quarter of fiscal year 2020, we experienced, and expect to continue to experience, a significant decline in travel demand resulting in significant customer cancellations and refund requests and reduced new orders relating to international and domestic travel and lodging. We observed a significant decrease in supply of domestic transportation tickets and international air tickets in response to comprehensive containment measures in India and international regions. In the fourth quarter of fiscal year 2020, as a result of the significant negative impact related to the COVID-19 pandemic on the travel industry, our stock price and market capitalization, we performed a quantitative assessment of goodwill and, following that assessment, we recorded an impairment charge of our goodwill amounting to $272.2 million primarily related to our Goibibo business, which we had acquired in fiscal year 2017.

As a result of the COVID-19 pandemic outbreak, the Group’s businesses, results of operation, financial positions and cash flows were materially and adversely affected at the end of fourth quarter of fiscal year 2020 and for the full fiscal year 2021 with continuing impact in the subsequent periods. Domestic and international travel restrictions imposed in India materially disrupted our revenue lines after the fiscal year end 2020. Such restrictions have continued for the greater part of the first quarter of fiscal year 2021 with only some domestic travel and government approved international travel operations commencing in June 2020. From April 2020, we implemented various cost saving measures in response to current market conditions. These include compensation cuts of up to 100% of salary for our Group Executive Chairman and Group CEO, approximately 50% salary reductions for the rest of the senior management team and smaller reductions for the rest of our managerial positions for a large part of the first half of fiscal year 2021. We significantly reduced our outsourced teams at our call centers and our offline team managing corporate events, optimized our IT infrastructure costs, our office costs and various other general and administrative expenses. In addition to reductions in fixed costs, we reduced our variable costs such as marketing and sales promotions and payment gateway costs. We had also cancelled all discretionary expenses such as events, trainings and brand building. In light of our shift away from offline sales channels as well as continuing effort to optimize fixed costs, we closed our company-owned travel stores and airport counters in India in fiscal year 2021.

With the commencement of a phased rollout of vaccines in India from January 16, 2021, we witnessed significant recovery in domestic travel demand, with significant sequential quarter on quarter improvements across all our lines of business. However, towards the end of the fourth quarter of fiscal year 2021, India witnessed a rapid resurgence of daily recorded case counts, resulting in a second wave of COVID-19 cases, with several state governments imposing lockdowns and travel restrictions, which has resulted in the significant decline in our revenue. Such restrictions remain unpredictable as to their timing and may evolve in response to the evolution of the COVID-19 pandemic in India. We currently expect the impact of the second wave of COVID-19 pandemic

11


 

on our financial results to have a material impact on our revenue for the first quarter of fiscal year 2022. The extent of the effects of the COVID-19 pandemic on our business, results of operations, cash flows and growth prospects remain uncertain and would be dependent on future developments. These include, but are not limited to, the severity, extent and duration of the pandemic, its impact on the travel industries and consumer spending, rates of vaccination and the effectiveness of vaccinations against various mutations or variants of the COVID-19 pandemic. While many countries have begun the process of vaccinating their residents against COVID-19 pandemic, the large scale and challenging logistics of distributing the vaccines, efficacy of the vaccines against new mutations or variants of the virus and other factors may contribute to delays in economic recovery.

Our business and the travel industry in general is particularly sensitive to reductions in personal and business-related discretionary travel and spending levels. The COVID-19 pandemic could continue to impede global economic activity, even as restrictions are lifted, leading to decreased per capita income and disposable income, increased and prolonged unemployment or a decline in consumer confidence, change in consumer behavior and preferences, all of which could significantly reduce discretionary travel and spending by individuals and businesses. In turn, that could have a negative impact on demand for our services and could lead us, our suppliers or our competitors to reduce prices or offer incentives to attract travelers, despite already operating in a highly competitive industry. Such circumstances or developments could have a material adverse impact on our business, financial condition, results of operations and cash flows. We cannot reasonably estimate the impact of the COVID-19 pandemic on our future revenues, results of operations, cash flows, liquidity or financial condition, but such impact has been and will likely continue to be significant for the foreseeable future.

 

 

 

Declines or Disruptions in the Travel Industry Could Adversely Affect Our Business and Financial Performance.

Our business and financial performance is affected by the health of the travel industry in India and worldwide, including changes in supply and pricing. Events specific to the travel industry that could negatively affect our business include changes in the commercial aviation landscape, fare increases, travel-related strikes, aviation accidents or labor unrest, general civil unrest, fuel price volatility and bankruptcies or liquidations of our suppliers. For example, the COVID-19 pandemic has had a significant negative impact on the travel industry in India, including our business, and around the world. For March 2020, the global travel industry was severely disrupted by the COVID-19 pandemic, which resulted in significant travel cancellations and a steep reduction of domestic and international travel. In India, virtually all travel was halted due to the nationwide stay at home orders put in place by the Indian government to slow down the spread of the virus.  Although we observed a gradual increase in travel activity and supplier capacity from late May 2020, a second wave of COVID-19 cases has resulted in a significant decline in travel sentiment since March 2021. We expect to observe continued volatility in relation to travel sentiment at least until a significant proportion of the population in India has been vaccinated. Even if domestic and international air passenger traffic begins to return to pre-pandemic levels, public health and safety regulations or restrictions imposed in India or elsewhere and other factors may delay or impede recovery in the travel industry. For more information, see “– The COVID-19 pandemic has had, and is expected to have, a material adverse effect on the travel industry and our business, financial condition, results of operations and cash flows.”

Political and social unrest, including in India, the Middle East, Southeast Asia, Europe and the Maldives has also adversely impacted travel to and within India at times in the past. Such events, particularly in the Middle East, also impact crude oil prices, which may have an adverse impact on the travel industry globally, including our business. Sudden disruptions in travel have also followed terrorist attacks carried out internationally, such as in the United States, Sri Lanka, Paris, Brussels and the United Kingdom, as well as domestically in India. Adverse weather conditions or other natural disasters, such as May 2021 cyclones in western and eastern regions of India, the April 2019 cyclone in Odisha (India), the April 2015 Nepal earthquake, the September 2014 Kashmir (India) floods and pandemic situations. In addition, the drop in the average value of the Indian Rupee as compared to the US dollar in the last few fiscal years has adversely impacted the Indian travel industry as it made travel for Indian consumers outside of India more expensive.

The majority of the domestic Indian air travel industry is concentrated among a small base of domestic airlines. Therefore, adverse market developments, particularly among the most dominant domestic airlines, are more likely to impact our business. For example, in April 2019, Jet Airways (India) Limited, one of the leading airlines in India, suspended all of its flight operations, which reduced the supply of air travel tickets available on our platform.

Additionally, our business is sensitive to safety concerns, and thus our business has in the past declined and may in the future decline after incidents of actual or threatened terrorism, during periods of political instability or conflict or during other periods in which travelers become concerned about safety issues, including as a result of

12


 

natural disasters such as tsunamis or earthquakes or when travel might involve health-related risks, such as the COVID-19 pandemic, Ebola virus disease, Middle East respiratory syndrome, the influenza A virus (H1N1), avian flu (H5N1 and H7N9), Severe Acute Respiratory Syndrome, the Zika virus or other epidemics or pandemics. In addition, there may be work stoppages or labor unrest at airlines or airports. Acts of terrorism and adverse weather conditions or other natural disasters such as those mentioned above may also in the future have a negative impact on our tourism business. Hotels, airlines, airports and cruises have in recent years been the subject of terrorist attacks in India, Spain, Egypt, Russia, Turkey, Sri Lanka, France, Belgium and the United Kingdom. Such events are outside our control and could result in a significant decrease in demand for our travel services. Any such decrease in demand, depending on its scope and duration, together with any other issues affecting travel safety, could significantly and adversely affect our business and financial performance over the short and long term. The occurrence of such events could result in disruptions to our customers’ travel plans and we may incur additional costs and constrained liquidity if we provide relief to affected customers by not charging cancellation fees or by refunding the cost of airline tickets, hotel reservations and other travel services and products. If there is a prolonged substantial decrease in travel volumes, for these or any other reasons, our business, financial condition and results of operations would be adversely affected.

Our Business and Results of Operations Could Be Adversely Affected by Global Economic Conditions.

Perceived or actual adverse economic conditions, including slow, slowing or negative economic growth, unemployment rates, inflation and weakening currencies, and concerns over government responses such as higher taxes and reduced government spending, could impair consumer spending and adversely affect travel demand. Consumer purchases of discretionary items generally decline during periods of recession and other periods in which disposable income is adversely affected. As a substantial portion of travel expenditure, for both business and leisure, is discretionary, the travel industry tends to experience weak or reduced demand during economic downturns.

Unfavorable changes in the above factors or in other business and economic conditions affecting our customers could result in fewer reservations made through our websites and/or lower our Adjusted Margin %, and have a material adverse effect on our financial condition and results of operations.

The global economy may be adversely impacted by unforeseen events beyond our control including incidents of actual or threatened terrorism, regional hostilities or instability, unusual weather patterns, natural disasters, political instability and health concerns (including epidemics or pandemics), defaults on government debt, tax increases and other matters that could reduce discretionary spending, tightening of credit markets and further declines in consumer confidence. For example, the COVID-19 pandemic has had a significant negative impact on the travel industry in India, including our business, and around the world. See also “– The COVID-19 pandemic has had, and is expected to have, a material adverse effect on the travel industry and our business, financial condition, results of operations and cash flows.” In addition, the uncertainty of macro-economic factors and their impact on consumer behavior, which may differ across regions, makes it more difficult to forecast industry and consumer trends and the timing and degree of their impact on our markets and business, which in turn could adversely affect our ability to effectively manage our business and adversely affect our results of operations. The weakness and uncertainty in the global economy have negatively impacted both corporate and consumer spending patterns and demand for travel services, globally and in India, and may continue to do so in the future.

As an intermediary in the travel industry, a significant portion of our revenue is affected by fares and tariffs charged by our suppliers as well as volumes of sales made by us. During periods of poor economic conditions, airlines and hotels tend to reduce rates or offer discounted sales or run promotions to stimulate demand, thereby reducing our commission-based income. A slowdown in economic conditions may also result in a decrease in transaction volumes and adversely affect our revenue. It is difficult to predict the effects of the uncertainty in global economic conditions. If economic conditions worsen globally or in India, our growth plans, business, financial condition and results of operations could be adversely impacted.

If We Are Unable to Maintain Existing, and Establish New, Arrangements with Travel Suppliers, Our Business May Be Adversely Affected.

Our business is dependent on our ability to maintain our relationships and arrangements with existing suppliers, such as airlines which supply air tickets to us directly, Amadeus IT Group SA, Travelport Worldwide Ltd and Trip.com (our majority shareholder), our global distribution system, or GDS, service providers, Indian Railways, hotels, hotel suppliers and destination management companies, bus operators and car hire companies, as well as our ability to establish and maintain relationships with new travel suppliers. In addition, we rely on a limited number of travel suppliers and aggregators to provide the majority of our accommodation and other travel products in markets outside India. A substantial portion of our Revenue and Adjusted Margin is derived from fees and commissions negotiated with travel suppliers for bookings made through our websites, mobile platforms or

13


 

via our other distribution channels. Adverse changes in existing arrangements, including an inability by any travel supplier to fulfill their payment obligation to us in a timely manner, increasing industry consolidation or our inability to enter into or renew arrangements with such parties on favorable terms, could reduce the amount, quality, pricing and breadth of the travel services and products that we are able to offer, which could adversely affect our business and financial performance. For example, we have experienced short-term disruptions in the supply of tickets from domestic airlines in the past.

In addition, adverse economic developments affecting the travel industry could also adversely impact our ability to maintain our existing relationships and arrangements with one or more of our suppliers. In particular, adverse changes to the overall business and financial climate for the airline industry in India due to various factors including, but not limited to, rising fuel costs, high taxes, significant depreciation of the Indian Rupee as compared to the US dollar making travel for Indian consumers outside India more expensive, and increased liquidity constraints, could affect the ability of one or more of our airline suppliers to continue to operate or otherwise meet our demand for tickets, which, in turn, could materially and adversely affect our financial results.

The COVID-19 pandemic has had a significant negative impact on the travel industry in India, including our business, and around the world. For more information, see “Risk Factors – Risks Relating to Us and Our Industry – The COVID-19 pandemic has had, and is expected to have, a material adverse effect on the travel industry and our business, financial condition, results of operations and cash flows.” The COVID-19 or any similar pandemic may also result in interruptions to the operation of our suppliers, which could in turn adversely affect our ability to provide certain services to our customers.

Over the last few years, the domestic airlines in India have reduced the base commissions paid to travel agencies, which has had an adverse impact on our business. In addition, rising competition in the Indian travel market prompted us to significantly increase our spending on marketing and sales expenses to promote transactions on our mobile platforms in India and to promote our non-air ticketing business. Any consolidation in the airline industry involving our suppliers may also adversely affect our existing relationships and arrangements with such suppliers.

No assurance can be given that our agreements or arrangements with our travel suppliers or GDS service providers will continue. In addition, our travel suppliers or GDS service providers may further reduce or eliminate fees or commissions or attempt to charge us for content, terminate our contracts, make their products or services unavailable to us as part of exclusive arrangements with our competitors or default on or dispute their payment or other obligations towards us, any of which could reduce our revenue and Adjusted Margin % or may require us to initiate legal or arbitral proceedings to enforce their contractual payment obligations, which may adversely affect our business and financial performance. See also “— Some of Our Airline Suppliers (Including Our GDS Service Providers) May Reduce or Eliminate the Commission and Other Fees They Pay to Us for the Sale of Air Tickets and This Could Adversely Affect Our Business and Results of Operations.”

We Do Not Have Formal Agreements with Many of Our Travel Suppliers.

We rely on various travel suppliers to facilitate the sale of our travel services. We do not have formal agreements with many of our travel suppliers whose booking systems or central reservations systems are relied upon by us for bookings and confirmation as well as certain payment gateway arrangements, and there can be no assurance that these third parties will not terminate these arrangements with us at short notice or without notice. Further, where we have entered into formal agreements, many of these agreements are short-term contracts, requiring periodic renewal and providing our counterparties with a right to terminate at short notice or without notice. Some of these agreements are scheduled to expire in the near future and we are in the process of renewing those agreements. Many of our suppliers with whom we have formal agreements, including airlines, are also able to alter the terms of their contracts with us at will or at short notice. Our agreement with Indian Railways Catering and Tourism Corporation Limited, or IRCTC, which allows us to transact with Indian Railways’ passenger reservation system through the Internet, can be terminated or temporarily suspended by IRCTC without prior notice and at its sole discretion. Termination, non-renewal or suspension or an adverse amendment of any of the abovementioned agreements and/or arrangements could have a material adverse effect on our business, financial condition and results of operations.

We Have Sustained Operating Losses in the Past and May Continue to Experience Operating Losses in the Future.

We sustained operating losses in fiscal years from 2013 to 2021 and in all our fiscal years prior to and including fiscal year 2010. While we generated operating profits in fiscal years 2011 and 2012, there can be no assurance that we will be able to return to profitability or that we can avoid operating losses in the future. We

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expect to continue making investments in mobile technology, marketing and sales promotion (including brand building) and customer acquisition programs and expanding our hotels and packages offerings as part of our long-term strategy to increase the net revenue contribution of our hotels and packages business and to increase the share of outbound travel from India. The degree of increases in these expenses will be largely based on anticipated organizational growth and revenue trends, the competitive environment, pricing trends and trends in online penetration of the Indian travel market. As a result, any decrease or delay in generating additional sales volumes and revenue could result in substantial operating losses in recent years we made significant investments in our ongoing customer inducement and acquisition programs, such as cash incentives and select loyalty program incentive promotions, to accelerate growth in our standalone hotel booking business in response to increased competition in the domestic travel market in India. This was the primary factor that resulted in our operating loss of $(152.9) million and $(429.4) million (of which $(302.9) million was the result of an impairment of goodwill and provision for litigations), in fiscal years 2019 and 2020, respectively. Further in fiscal year 2021, we curtailed our marketing and sales promotions expenses in response to lower travel demand due to the COVID-19 pandemic and reported operating loss of $(67.7) million.

The Travel Industry in India and Worldwide is Highly Competitive, and We May Not Be Able to Effectively Compete in the Future.

The market for travel services and products is highly competitive. We compete with established and emerging providers of travel services and products, including other online travel agencies such as Yatra.com, Booking.com, Cleartrip.com, EaseMyTrip.com, Airbnb.co.in and Expedia.com, and offline traditional travel agencies, tour operators and travel suppliers. We also face potential competition from payment platforms, online marketplaces, search engines and intermediaries that also offer travel services. Many large, established internet search engines who offer travel services and meta-search companies who can aggregate travel search results also compete with us for customers. Consumers may favor travel services offered by meta-search platforms or search companies over online travel companies such as ours, which could reduce traffic to our online platforms and require us to further increase our expenditures on marketing and other customer acquisition. The Indian market is highly competitive, and current and new competitors may be able to launch new services at a lower cost. In the hotels and packages segment, we primarily compete with traditional travel players such as Thomas Cook, Travel Triangle and others in packages offerings, as well as online travel agencies in the case of standalone hotel bookings and new entrants.

Factors affecting our competitive success include, among other things, price, availability and breadth of choice of travel services and products, brand recognition, customer service, fees charged to travelers, ease of use, accessibility and reliability. Certain of our competitors have launched brand marketing campaigns to increase their visibility with customers. In addition, many large hotel chains and Over the Counter chains have launched initiatives, such as increased discounting and incentives, to encourage consumers to book accommodations through their websites. Discounting and couponing coupled with a high degree of consumer shopping behavior is particularly common in Asian markets we operate in, while brand loyalty in such markets is less important. In some cases, our competitors are willing to make little or no profit on a transaction, or offer travel services at a loss, in order to gain market share. Some of our competitors have significantly greater financial, marketing, personnel and other resources than us and certain of our competitors have a longer history of established businesses and reputations in the Indian travel market (particularly in the hotels and packages business) as compared with us. From time to time, we may be required to reduce service fees and commissions charged to suppliers in order to compete effectively and maintain or gain market share.

Over the years, there has been a proliferation of new channels through which accommodation providers can offer reservations as the market for travel services has evolved. For example, several leading online travel companies now allow alternative accommodation property owners, particularly individuals, to list alternative accommodations on their platforms, which has resulted in direct competition with our alternative accommodation services. Further, we may also face increased competition from new entrants in our industry, some of whom may offer discounted rates and other incentives from time to time. We cannot assure you that we will be able to successfully compete against existing or new competitors in our existing lines of business as well as new lines of business into which we may venture. If we are not able to compete effectively, our business and results of operations may be adversely affected.

Some travel suppliers are seeking to decrease their reliance on distribution intermediaries like us, by promoting direct distribution channels. Many airlines, hotels, car rental companies and tour operators have call centers and have established their own travel distribution websites and mobile applications. From time to time, travel suppliers offer advantages, such as bonus loyalty awards and lower transaction fees or discounted prices, when their services and products are purchased from supplier-related channels.

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We also compete with competitors who may offer less content, functionality and marketing reach but at a relatively lower cost to suppliers. If our access to supplier-provided content or features were to be diminished either relative to our competitors or in absolute terms or if we are unable to compete effectively with travel supplier-related channels or other competitors, our business could be materially and adversely affected.

We Have Incurred and May Continue to Incur Significant Expenses to Grow Our Businesses, Including Marketing and Sales Promotion Expenses.

In order to drive our growth strategy in the hotels business, in the past we have incurred increased marketing and sales promotion expenses. Over the last few years, we have also made significant investments in customer acquisition through our customer inducement programs such as cash incentives and select loyalty program incentive promotions, to accelerate growth in our standalone hotel booking business in response to increased competition in the domestic travel market in India. We may continue to incur such expenses in future, including expenses associated with our strategy of converting our traditional offline customers into online customers. We have incurred and expect to continue to incur expenses associated with customer inducement and acquisition programs in our hotels and packages business to offer cash incentives and select loyalty program incentive promotions from time to time on our booking platforms. We may also increase our marketing and sales promotion expenses as a result of our expansion into new markets and such expenses may not be offset by increased revenue particularly at the initial commencement of business in these new markets. We may also be required to lower our fees and commissions charged to hotel suppliers to retain and increase our market share in response to competitors that are able to negotiate better rates and higher performance linked and other incentives from such suppliers, including new entrants with greater financial resources than us. We may also incur increasing marketing and sales promotion expenses as we grow our redBus business in India as well as overseas (which we acquired as part of our acquisition of the ibibo Group), and which competes with, among others, Abhibus, Paytm and other regional competitors. Such expenses and any loss of revenue from competitive pressures may adversely affect our business, financial condition and results of operations.

In the past, we identified a material weakness in our internal control over financial reporting. We cannot assure you that additional material weaknesses will not be identified in the future. Our failure to implement and maintain effective internal control over financial reporting could result in material misstatements in our financial statements which could require us to restate financial statements in the future, cause investors to lose confidence in our reported financial information and have a negative effect on our stock price.

In connection with our management’s assessment of the effectiveness of our internal control over financial reporting for fiscal year 2020, our management identified a material weakness in our internal control over financial reporting and had concluded that as of March 31, 2020, our disclosure controls and procedures and internal control over financial reporting were not effective. In the fourth quarter of fiscal year 2020, as a result of the significant negative impact related to COVID-19 pandemic on the travel industry and our stock price and market capitalization, we performed a quantitative assessment of goodwill and, following that assessment, we recorded an impairment charge of our goodwill amounting to $272.2 million, primarily related to our Goibibo business, which we had acquired in fiscal year 2017. Forecast financial information produced to support Goibibo’s annual business planning process is a key data input into the impairment assessment. While the COVID-19 pandemic has made it challenging to forecast financial information in the travel industry, the controls associated with the business planning process were not effective to mitigate the risk of material misstatement. Specifically, controls over development and review of forecast financial information including related assumptions used in goodwill impairment testing did not operate as designed to address the related risks of material misstatement. Our management had determined that this deficiency constituted a material weakness in internal control over financial reporting as of March 31, 2020, based on our evaluation under the criteria in Internal Control — Integrated Framework (May 2013) issued by the COSO. Accordingly, management concluded that we did not maintain effective internal control over financial reporting as of March 31, 2020.

Despite our efforts to ensure the integrity of our financial reporting process and the steps that we are taking to remediate this material weakness, we cannot assure you that additional material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future. Any failure to maintain or improve existing controls or implement new controls could result in material misstatements in our financial statements and adversely affect the results of annual management evaluations regarding the effectiveness of our internal control over financial reporting. In addition, any such failure could result in additional material weaknesses or significant deficiencies and cause us to fail to meet our periodic reporting obligations which in turn could cause our shares to be de-listed or suspended from trading on the Nasdaq Global Market. Any of the

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foregoing could cause investors to lose confidence in our reported financial information, leading to a decline in our share price.

We Rely on Third-Party Systems and Service Providers, and Any Disruption or Adverse Change in Their Businesses Could Have a Material Adverse Effect on Our Business.

We currently rely on a variety of third-party systems, service providers and software companies. These include the GDSs and, other electronic central reservation systems used by airlines, various offline and online channel managing systems and reservation systems used by hotels and accommodation suppliers and aggregators. We also rely on systems used by Indian Railways, systems used by bus and car operators and aggregators, technologies used by payment gateway providers, as well as systems used by the local transit authorities, amusement parks, tourist attractions. In particular, we rely on third parties to:

 

enable searches for airfares and process air ticket bookings;

 

process hotel reservations;

 

process bus ticket bookings, car rental reservations and services under Experiences, a category of services that allows our users to buy tickets to attractions, dinners and many other travel and local activities in their region;

 

process credit card, debit card, net banking and e-wallet payments;

 

provide computer infrastructure critical to our business; and

 

provide customer relationship management, or CRM, software services.

Any interruption or deterioration in performance of these third-party systems and services could have a material adverse effect on our business. Further, the information provided to us by certain of these third-party systems, such as the central reservations systems of certain of our hotel suppliers, may not always be accurate due to either technical glitches or human error, and we may incur monetary and/or reputational loss as a result.

Our success is also dependent on our ability to maintain our relationships with these third-party systems and service providers, including our technology partners. In the event our arrangements with any of these third parties are impaired or terminated, we may not be able to find an alternative source of systems support on a timely basis or on commercially reasonable terms, which could result in significant additional costs or disruptions to our business.

Our Strategic Investments and Acquisitions May Not Bring Us Anticipated Benefits, and We May Not Be Successful in Pursuing Future Investments and Acquisitions.

Part of our growth strategy is the pursuit of strategic investments and acquisitions, and we have made a number of investments and acquisitions in the past. For example, in January 2017, we acquired a 100% equity interest in the ibibo Group, which provides online travel services in India. In July 2018, we acquired 100% equity interest in Bitla, which provides technology support for bus operators. In April 2019, we acquired 51% equity interest from the existing shareholders of Quest2Travel, which provides travel solutions for various corporates across India. We believe that our investments and acquisitions serve to strengthen our presence in key geographic markets and expand the travel products and services that we offer our customers.

There can be no assurance that our investments and acquisitions will achieve their anticipated benefits. We may not be able to integrate acquired operations, personnel and technologies successfully or effectively manage our combined business following the acquisition. Our investments and acquisitions may subject us to uncertainties and risks, including potential ongoing and unforeseen or hidden liabilities, diversion of management resources and cost of integrating acquired businesses. We may also experience difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business and retaining suppliers and customers of the acquired business. For example, we acquired a group of companies known as the Hotel Travel Group in 2012, but significantly reduced their operations and recognized an impairment of goodwill and brands of $14.6 million in fiscal year 2017. In addition, in the fourth quarter of fiscal year 2020, we performed a quantitative assessment of goodwill and, following that assessment, we recorded an impairment charge of our goodwill amounting to $272.2 million primarily related to our Goibibo business, which we had acquired in fiscal year 2017, though this non-cash charge does not affect our long-term operating plans for the Goibibo brand. We plan to continue driving synergies across our portfolio of multiple brands on the path of disciplined and financially sustainable growth while making appropriate investments to drive online penetration in various travel segments to support the long-term growth of our company, including the Goibibo brand.

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We may not succeed in implementing our strategy of growth through strategic investments and acquisitions in the future, as it is subject to many factors, which are beyond our control, including our ability to identify, attract and successfully execute suitable acquisition opportunities and partnerships. Any failure to achieve the anticipated benefits of our past investments and acquisitions or to consummate new investments and acquisitions in the future could negatively impact our ability to compete in the travel industry and have a material adverse effect on our business.

For details on our investments and acquisitions, see “Item 4. Information On the Company — History and Development of our Company — Investments and Acquisitions.”

Our Results of Operations Are Subject to Fluctuations in Currency Exchange Rates.

Our presentation currency is the US dollar. However, the functional currency of MMT India and Ibibo India, our key operating subsidiaries, is the Indian Rupee. We receive a substantial portion of our revenue in Indian Rupees and most of our costs are incurred in Indian Rupees. Any fluctuation in the value of the Indian Rupee against the US dollar, such as the approximately 4.3% depreciation in the average value of the Indian Rupee as compared to the US dollar in fiscal year 2021 as compared to the average value of the Indian Rupee against the US dollar in fiscal year 2020, will affect our results of operations. The drop in the average value of the Indian Rupee as compared to the US dollar in fiscal years 2020 and 2021 adversely impacted the Indian travel industry as it made outbound travel for Indian consumers more expensive. In addition, our exposure to foreign exchange risk also arises in respect of our non-Indian Rupee-denominated trade and other receivables, trade and other payables, and cash and cash equivalents.

Based on our operations in fiscal year 2021, a 10.0% appreciation of the US dollar against the Indian Rupee as of March 31, 2021, assuming all other variables remained constant, would have increased our loss for fiscal year 2021 by $19.1 million. Similarly, a 10.0% depreciation of the US dollar against the Indian Rupee as of March 31, 2021, assuming all other variables remained constant, would have decreased our loss for fiscal year 2021 by $19.1 million.

We currently do not have any hedging agreements or similar arrangements with any counter-party to cover our exposure to any fluctuations in foreign exchange rates. Fluctuation in the Indian Rupee-US dollar exchange rate could have a material adverse effect on our business financial condition and results of operations, which we report in US dollars.

We Outsource a Significant Portion of Our Call Center Services and If Our Outsourcing Service Providers Fail to Meet Our Requirements or Face Operational or System Disruptions, Our Business May Be Adversely Affected.

We outsource our call center service for sales for all international flights and for post-sales customer service support for all flights (domestic and international), hotel reservations and packages, and rail and bus ticketing, as well as back office fulfillment and ticketing services, to various third parties in India. If our outsourcing service providers experience difficulty meeting our requirements for quality and customer service standards, our reputation could suffer and our business and prospects could be adversely affected. Our operations and business could also be materially and adversely affected if our outsourcing service providers face any operational or system interruptions.

 

Further, many of our contracts with outsourcing service providers are short-term or have short notice periods. For example, our agreements with each of our call center providers may be terminated by either party on relatively short notice ranging from 30 to 90 days. In the event one or more of our contracts with our outsourcing service providers is terminated on short notice, we may be unable to find alternative outsourcing service providers on commercially reasonable terms, or at all. Further, the quality of the service provided by a new or replacement outsourcing service provider may not meet our requirements, including during the transition and training phase. Hence, termination of any of our contracts with our outsourcing service providers could cause a decline in the quality of our services, disrupt, and adversely affect our business results of operations and financial condition. Beginning in April 2020, we have also significantly reduced our outsourced teams at our call centers and our offline team managing corporate events in response to the lower travel demand due to the COVID-19 pandemic.

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We Rely on Information Technology to Operate Our Business and Maintain Our Competitiveness, and Any Failure to Adapt to Technological Developments or Industry Trends Could Harm Our Business.

The markets in which we compete are characterized by rapidly changing technology, evolving industry standards, competitor consolidation, frequent new service announcements and changing consumer demands. We may not be able to keep up with these rapid changes. In addition, these market characteristics are heightened by the progress of technology adoption in various markets, including the continuing adoption of the internet and online commerce in certain geographies and the emergence and growth of the use of smartphones and tablets for mobile e-commerce transactions, including through the increasing use of mobile apps. New developments in other areas, such as cloud computing, could make entering our markets easier for competitors due to lower upfront technology costs. As a result, our future success depends in part on our ability to adapt to rapidly changing technologies, to adapt our services and online platforms to evolving industry standards and to continually innovate and improve the performance, features and reliability of our services and online platforms in response to competitive service offerings and the evolving demands of the marketplace. In particular, it is increasingly important for us to effectively offer our services on mobile devices through mobile apps and mobile-optimized websites. Any failure by us to successfully develop and achieve customer adoption of our mobile apps and mobile-optimized websites would have a material and adverse effect on our growth, market share, business and results of operations. We believe that ease-of-use, comprehensive functionality and the look and feel of our mobile apps and mobile-optimized websites are increasingly critical as consumers obtain more of their travel and related services through mobile devices. As a result, we intend to continue to invest in the maintenance, development and enhancement of our websites and mobile platforms. Further, technical innovation often results in bugs and other system failures. Any such bug or failure, especially in connection with a significant technical implementation could result in lost business, harm to our brands or reputation, customer complaints and other adverse consequences, any of which could adversely affect our business, financial condition and results of operations.

Our MakeMyTrip, Goibibo and redBus platforms are hosted on Amazon Web Services, or AWS, which provides a high degree of reliability, security and scalability and helps us to maintain adequate capacity, however, the ability to restore any disruption of these services is therefore outside of our control. In addition, we license from third-parties some of the technologies incorporated into our websites, and there can be no assurance that we will be able to renew such licenses on favorable terms or at all. As we continue to introduce new services that incorporate new technologies, we may be required to license additional technology. We cannot be sure that such technology licenses will be available on commercially reasonable terms, if at all.

Some of Our Airline Suppliers (Including Our GDS Service Providers) May Reduce or Eliminate the Commission and Other Fees They Pay to Us for the Sale of Air Tickets, and This Could Adversely Affect Our Business and Results of Operations.

In our air ticketing business, we generate revenue through commissions and incentive payments from airline suppliers, service fees charged to our customers and fees earned from our GDS service providers. Our airline suppliers may reduce or eliminate the commissions and incentive payments they pay to us. If airlines continue to move away from distribution through GDSs and use other distribution channels, it may result in a decrease in our fees earned from our GDS providers. For example, airlines in India have been reducing the base commissions paid to travel agencies since fiscal year 2015. To the extent any of our airline suppliers further reduce or eliminate the commissions or incentive payments they pay to us in the future, our revenue may be further reduced unless we are able to adequately mitigate such reduction by increasing the service fees we charge to our customers in a sustainable manner. Any increase in service fees, to mitigate reductions in or elimination of commissions or otherwise, may also result in a loss of potential customers. Our business would also be negatively impacted if competition or regulation in the travel industry causes us to reduce or eliminate our service fees.

We Rely on the Value of Our Brands, and Any Failure to Maintain or Enhance Consumer Awareness of Our Brands Could Have a Material Adverse Effect on Our Business, Financial Condition and Results of Operations.

We believe continued investment in our brands, “MakeMyTrip,” “Goibibo,” and “redBus,” is critical to retain and expand our business. We believe that our brands are well respected and recognized in the Indian travel market. We have invested in developing and promoting our brand and expect to continue to spend on maintaining our brand’s value to enable us to compete against increased spending by our competitors, as well as against emerging competitors, including search engines and meta-search engines, and to allow us to expand into new geographies and products where our brand is not well known. There is no assurance that we will be able to successfully maintain or enhance consumer awareness of our brands. Even if we are successful in our branding efforts, such efforts may not be cost-effective. If we are unable to maintain or enhance consumer awareness of our brands and generate demand in a cost-effective manner, it would negatively impact our ability to compete in the travel industry and would have a material adverse effect on our business. Negative events or circumstances

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could also adversely affect consumer perception and the value of our brands. See also “— We Cannot Be Sure That Our Intellectual Property Is Protected from Copying or Use by Others, Including Current or Potential Competitors, and We May Be Subject to Third Party Claims for Intellectual Property Rights Infringement.”

We May Not Be Successful in Implementing Our Growth Strategies.

Our growth strategies involve expanding our hotels and packages business (including through our travel agents’ network and our outbound air ticketing and hotels business for overseas travel), expanding our service and product offerings, enhancing our service platforms by investing in technology, expanding into new geographic markets and pursuing strategic partnerships and acquisitions.

Our success in implementing our growth strategies is affected by:

 

our ability to increase our customer base or drive repeat bookings from our existing customer base;

 

the general condition of the global economy (particularly in India and markets with close proximity to India) and continued growth in demand for travel services, particularly online;

 

the growth of the Internet and mobile technology as a medium for commerce in India;

 

our ability to expand our businesses through strategic acquisitions and successfully integrate such acquisitions;

 

our ability to increase the number of suppliers, especially hotel suppliers, that are directly connected to us, which is dependent on the willingness of such suppliers to invest in new technology;

 

our ability to maintain relationships with our suppliers, including international hotel suppliers, online travel agents and aggregators outside India, particularly in key outbound destinations;

 

our ability to continue to expand our distribution channels, and market and cross-sell our travel services and products to facilitate the expansion of our business;

 

our ability to compete effectively with existing and new entrants to the Indian travel industry, including online travel companies, hotel room aggregators, traditional offline travel agents and tour providers;

 

our ability to build or acquire required technology;

 

changes in our regulatory environment;

 

our ability to attract and retain key personnel; and

 

the management and operation of our franchisee-owned travel stores.

Many of these factors are beyond our control and there can be no assurance that we will succeed in implementing our strategies.

Even if we are successful in executing our growth strategies, our different businesses may not grow at the same rate or with a uniform effect on our revenues and profitability. For example, the rate of growth in our hotels and packages and bus ticketing business, which has generally outpaced our air ticketing business and is a relatively higher margin business, may not grow at a pace to affect our overall growth in the short term.

We are also subject to additional risks involved in our strategies of expanding into new geographic markets and pursuing strategic partnerships and acquisitions. See “— Our International Operations Involve Additional Risks” and “— Our Strategic Investments and Acquisitions May Not Bring Us Anticipated Benefits, and We May Not Be Successful in Pursuing Future Investments and Acquisitions.”

Our Arrangements with Some of Our Suppliers May Subject Us to Additional Monetary Risks.

We generally do not assume inventory risk in our air ticketing business as we typically act as an agent. However, from time to time, we pre-purchase air ticket inventory in our Hotels and Packages business in order to obtain special negotiated rates and we assume inventory risk on such tickets. We assume similar inventory risk on admission tickets for amusement parks and attractions. When we sell pre-purchased tickets to our customers, revenue is accounted for on a “gross” basis (representing the price of the tickets paid by our customers) and the amount spent to pre-purchase the ticket is classified as a service cost. If we are unable to sell pre-purchased tickets inventory at expected rates or at all, our revenue and business may be adversely affected.

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Our International Operations Involve Additional Risks.

We have been operating in the United States since 2000, servicing mainly the air ticketing needs of non-resident Indians in the United States traveling inbound to India. We launched our website in the United Arab Emirates in December 2009. We need to continue to tailor our services and business model to the unique circumstances of such markets to succeed, including building new supplier relationships and customer preferences. We have also expanded, and intend to continue to expand, our business in other new markets, particularly those with a significant non-resident Indian population as well as those with proximity to India or favored by Indian travelers. We had previously entered into new geographies in Southeast Asia, in Europe and in Latin America through our acquisitions of Luxury Tours, the Hotel Travel Group, the EasyToBook Group, the ITC Group, Busportal entities in Peru and Colombia. These acquisitions have not always yielded the benefits that we anticipated. For example, after we acquired the Hotel Travel Group in 2012, we significantly reduced its operations and recognized an impairment of goodwill and brands of $14.6 million in fiscal year 2017. Adapting our practices and models effectively to the supplier and customer preferences in these, or other, new markets could be difficult and costly and could divert management and personnel resources. We could also face additional regulatory requirements in these, or other new markets, which could be onerous. We cannot assure you that we will be able to efficiently or effectively manage the growth of our operations in these, or other, new markets.

In addition, we are subject to risks in our international operations that may not exist in our Indian operations, including:

 

differences and unexpected changes in regulatory requirements and exposure to local economic conditions;

 

differences in consumer preferences in such markets;

 

increased risk to and limits on our ability to enforce our intellectual property rights;

 

competition from providers of travel services in such foreign countries;

 

restrictions on the repatriation of earnings from such foreign countries, including withholding taxes imposed by certain foreign jurisdictions; and

 

currency exchange rate fluctuations.

If we are not able to effectively mitigate or eliminate these risks, our results of operations could be adversely affected.

Our Business Could Be Negatively Affected by Changes in Search Engine Logic.

A portion of the traffic to our websites is driven by Google, and, to a lesser extent, we use other search and meta-search websites and social websites to generate traffic to our websites, principally through pay-per-click advertising campaigns. The pricing and operating dynamics on these search and metasearch websites can experience rapid change commercially, technically and competitively. For example, Google frequently updates and changes the logic, which determines the placement and display of its search results, such that the placement of links to our websites can be negatively affected and our costs to improve or maintain our placement in search results can increase. Changes by Google in how it presents travel search results, including its promotion of its travel metasearch services, or the manner in which it conducts the auction for placement among search results, may be competitively disadvantageous to us and may impact our ability to efficiently generate traffic to our websites, which in turn would have an adverse effect on our business, market share and results of operations. Similarly, changes by our other search and meta-search partners in how they present travel search results or the manner in which they conduct the auction for placement among search results may be competitively disadvantageous to us and may impact our ability to efficiently generate traffic to our websites.

In addition, we rely on various third-party distribution channels (i.e., marketing affiliates) to distribute hotel accommodation and airline ticket reservations. Should one or more of such third parties cease distribution of reservations made through us, or suffer deterioration in its search or meta-search ranking, due to changes in search or meta-search algorithms or otherwise, our business, market share and results of operations could be negatively affected.

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Our processing, storage, use and disclosure of personal data exposes us to risks of internal or external security breaches and could give rise to liabilities.

The security of data when engaging in electronic commerce is essential to maintaining consumer and travel service provider confidence in our services. Any security breach whether instigated internally or externally on our systems or third-party systems upon which we are dependent could significantly harm our business, financial condition, results of operations, brands and market share. It is possible that computer circumvention capabilities or other developments, including our own acts or omissions, could result in a breach of our security systems and compromise of consumer or other third-party data that we store and process. For example, third parties may attempt to fraudulently induce employees, travel service provider partners or customers to disclose user names, passwords, credit card details or other sensitive information, which may in turn be used to access our information technology systems or to defraud our partners or customers. We have previously experienced targeted and organized attacks, including website attacks, phishing scams and denial of service and it is possible that we may experience more in the future. These risks are likely to increase as we expand our offerings, integrate our products and services, and store and process more data, including personal information. Our efforts to protect information from unauthorized access may be unsuccessful or may result in the rejection of legitimate attempts to book reservations through our services, any of which could result in lost business and materially adversely affect our business, financial condition, results of operations and reputation.

Our existing security measures may not be successful in preventing security breaches. A party (whether internal, external, an affiliate or unrelated third party) that is able to circumvent our security systems could steal confidential or proprietary information that we store and process. In the last few years, several major companies experienced high-profile security breaches which exposed their systems and information and/or their customers' or employees' personal information. We expend significant resources to protect against the risk of such security breaches, and we may need to increase our security-related expenditures to maintain or increase our systems' security or to address problems caused and liabilities incurred by breaches. Advances in technology or other developments could result in a compromise or breach of the technology that we use to protect consumer and transaction data. These issues are likely to become more difficult to manage as we expand the number of places where we operate and the number and variety of services we offer, and as the tools and techniques used in such attacks become more advanced. Security breaches could result in severe damage to our information technology infrastructure, including damage that could impair our ability to offer our services or the ability of consumers to make reservations or conduct searches through our services. Such breaches could result in loss of customer, financial or other data that could materially and adversely affect our ability to conduct our business, satisfy our commercial obligations or meet our public reporting requirements in a timely fashion or at all. Security breaches could also result in negative publicity, damage our reputation, expose us to risk of loss or litigation and possible liability, subject us to regulatory penalties and sanctions, or cause consumers to lose confidence in our security and choose to use the services of our competitors, any of which occurrences would have a negative effect on our business, financial condition, results of operations, brands and market share. Our insurance policies may not be adequate to reimburse us for losses caused by security breaches.

We have agreements with banks and certain companies that process customer credit card transactions for the facilitation of customer bookings of travel services from our travel suppliers. We may be liable for accepting international fraudulent credit cards on our websites. In fiscal year 2021, we incurred losses of $0.08 million due to unauthorized credit card transactions and refunds related to disputed settlements. These losses pertained to credit card or digital commerce fraud committed by third parties on our websites primarily through the purchase of air tickets and hotels and packages products using fraudulent credit cards. We may also be subject to other payment disputes with our customers for such sales. If we are unable to combat the use of fraudulent credit cards, our revenue from such sales would be susceptible to demands from the relevant banks and credit card processing companies, and our results of operations and financial condition could be adversely affected.

We also face risks associated with security breaches affecting third parties conducting business over the internet. Consumers generally are concerned with security and privacy on the internet, and any publicized security problems could negatively affect consumers' willingness to provide private information or effect commercial transactions on the internet generally, including through our services. Some of our business is conducted with third-party marketing affiliates, which may generate travel reservations through our infrastructure or through other systems. Additionally, consumers using our services could be affected by security breaches at third parties such as travel service providers, payment processors or GDSs upon which we rely. A security breach at any such third-party marketing affiliate, travel service provider, payment processor, GDS or other third party on which we rely could be perceived by consumers as a security breach of our systems and in any event could result in negative publicity, subject us to notification requirements, damage our reputation, expose us to risk of loss or litigation and possible liability and subject us to regulatory penalties and sanctions. In addition, such third parties may not comply with applicable disclosure requirements, which could expose us to liability.

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System Interruption in Our Information Systems and Infrastructure including System Capacity Constraints May Harm Our Business.

We rely significantly on computer systems to manage consumer traffic to our websites and mobile platforms and facilitate and process transactions. We may in the future experience system interruptions that make some or all of these systems unavailable or prevent us from efficiently fulfilling bookings or providing services to our customers. Any interruptions, outages or delays in our systems, or deterioration in their performance, could impair our ability to process transactions and decrease the quality of our service to our customers.

Further, the consumer traffic to our websites and through our mobile platforms continues to increase. If our systems cannot be expanded to cope with increased demand or fail to perform, we could experience unanticipated disruptions in service, slower response times, decreased customer service and customer satisfaction and delays in the introduction of new services, any of which could impair our reputation, damage our brands and materially and adversely affect our results of operations. If we were to experience frequent or persistent system failures, our reputation and brands could be harmed.

Our computer hardware for operating our services are currently located at hosting facilities in India. While we have backup systems and contingency plans for critical aspects of our operations or business processes, certain other non-critical systems are not fully redundant and our disaster recovery or business continuity planning may not be sufficient. Fires, floods, power outages, telecommunications failures, earthquakes, acts of war or terrorism, acts of God, computer viruses, sabotage, break-ins and electronic intrusion attempts from both external and internal sources and similar events or disruptions may damage, impact or interrupt our computer or communications systems, business processes or infrastructure at any time. Although we have put measures in place to protect certain portions of our facilities and assets, any of these events could cause system interruptions, delays and loss of critical data, and could prevent us from providing services to our customers and/or suppliers for a significant period of time. We do not carry business interruption insurance for such eventualities. Remediation may be costly and we may not have adequate insurance to cover such costs. Moreover, the costs of enhancing infrastructure to attain improved stability and redundancy may be time consuming and expensive and may require resources and expertise that are difficult to obtain.

We Cannot Be Sure That Our Intellectual Property Is Protected from Copying or Use by Others, Including Current or Potential Competitors, and We May Be Subject to Third Party Claims for Intellectual Property Rights Infringement.

Our websites and mobile applications rely on content and in-house customizations and enhancements of third-party technology, much of which is not subject to intellectual property protection. We protect our logo, brand name, websites’ domain names and, to a more limited extent, our content by relying on copyrights, trademarks, trade secret laws and confidentiality agreements. Even with all of these precautions, it is possible for someone else to copy or otherwise obtain and use our content, techniques, and technology without our authorization or to develop similar technology. While our domain names cannot be copied, another party could create an alternative domain name resembling ours that could be passed off as our domain name. Effective trademark, copyright and trade secret protection may not be available in every country in which we operate offline or through the Internet, and policing unauthorized use of our content and technological customizations is difficult and expensive.

We have registered the domain names www.makemytrip.com, www.makemytrip.ae, www.makemytrip.com.sg, www.goibibo.com, and www.redbus.in, and have full legal rights over all these domain names for the period for which such domain names are registered. We primarily conduct our business under the “MakeMyTrip,” “Goibibo” and “redBus” brand names and logos. We have registered the trademark “MakeMyTrip,” “Goibibo” and “redBus” in India, Australia, Canada, certain member states of the European Union, Russia, Singapore, the USA and various other jurisdictions, and we have other trademark applications pending in these jurisdictions. We have also applied for patents in India for certain aspects of our technological systems.

Our key logos are also registered trademarks in India, including “MakeMyTrip,” “MMT Black,” “MMT Double Black,” “MakeMyTripMyBusiness,” “go-mmt,” “GoStays,” “GoIbibo,” “Ibibo,” “MAKEMY,” and “redbus.in.”

In fiscal year 2021, a series of new trademark applications were filed, some of which have also been registered. Additionally, to protect the marks of MakeMyTrip, Goibibo and redBus, we file objections before the trademark registry from time to time against deceptively similar trademarks.

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We cannot be sure that our trademarks or domain names will be protected to the same extent as in the countries in which they are already registered or that the steps we have taken will prevent misappropriation or infringement of what we consider our proprietary information. Such misappropriation or infringement could have a material adverse effect on our business. In the future, we may need to engage in litigation to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Such litigation might result in substantial costs and diversion of resources and management attention.

Third parties may assert that our services, products, and technology, including software, processes and domain names, violate their intellectual property rights. As competition in our industry increases and the functionality of technology offerings further overlaps, such claims and counterclaims could increase. There can be no assurance that we do not or will not inadvertently infringe on the intellectual property rights of third parties. Any intellectual property claim against us, regardless of its merit, could have an adverse effect on our business, financial condition and results of operations and can be expensive and time consuming to defend. Our failure to prevail in such matters could result in loss of intellectual property rights, judgments awarding substantial damages and injunctive or other equitable relief against us, or require us to delay or cease offering services or reduce features in our services.

Our Business Experiences Seasonal Fluctuations and Quarter-to-Quarter Comparisons of Our Results May Not Be Meaningful.

Our business experiences seasonal fluctuations. We tend to experience higher revenue from our hotels and packages business in the second and fourth calendar quarters of each year, which coincide with the summer holiday travel season and the year-end holiday travel season for our customers in India and other markets. In our air ticketing business, we may have higher revenues in a particular quarters arising out of periodic discounted sales of tickets by our suppliers. Our bus ticketing business is less impacted by seasonality. As a result, quarter-to-quarter comparisons of our results may not be meaningful. These seasonal trends may be affected by the COVID-19 pandemic and its ongoing impact on the travel industry.

Changing Laws, Rules and Regulations and Legal Uncertainties in India, Including Adverse Application of Corporate and Tax Laws, May Adversely Affect Our Business and Financial Performance.

The regulatory and policy environment in which we operate is evolving and subject to change. Such changes, including the instances briefly mentioned below, may adversely affect our business, financial condition, results of operations and prospects, to the extent that we are unable to suitably respond to and comply with such changes in applicable law and policy. Changes in laws, rules or regulations may subject us to greater compliance costs and regulatory risks.

The Taxation Laws (Amendment) Act, 2019 received the assent of the President on December 11, 2019 and were published in the Gazette of India on December 12, 2019, which provides an option for companies to opt for reduced corporate tax rate of 22% (plus surcharge and cess) provided that they do not claim prescribed benefits under the provisions of the Income Tax Act. In addition, such companies shall not be required to pay Minimum Alternative Tax. The Company has opted for reduced tax rate for subsidiaries. The Government of India has rolled out comprehensive national goods and services tax, or GST, law that combines taxes and levies by the Central and State Governments into a unified tax structure with effect from July 1, 2017. The implementation of GST has significant impact on overall tax computation and compliance. We have implemented necessary changes to our business processes, accounting and IT systems in compliance with GST law. We are also incurring additional tax compliance costs under the new tax law.

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On May 10, 2016, a protocol for amendment of the India-Mauritius tax treaty was signed by India and Mauritius (which came into force on July 19, 2016) under which India gets the taxation rights on capital gains arising from alienation of shares acquired on or after April 1, 2017 in an Indian resident company. Further, in respect of such capital gains arising during the transition period beginning April 1, 2017 and ending March 31, 2019, the tax rate will be limited to 50% of the domestic tax rate in India on such gains subject to fulfillment of certain specified conditions. After March 31, 2019, the tax is charged at full domestic tax rates.

Further, the General Anti Avoidance Rules, or GAAR, came into effect on April 1, 2017. Any income accruing or arising from transfer of investments made before April 1, 2017 is exempted from GAAR provisions. It is also proposed that the relevant rules be amended to protect investments made up to March 31, 2017 from the applicability of GAAR. The tax consequences of the GAAR provisions being applied to an arrangement could result in denial of tax benefit amongst other consequences. In the absence of any precedents on the subject, the application of these provisions is uncertain. If the GAAR provisions are made applicable to our company, it may have an adverse tax impact on us.

We are subject to proceedings and notices under the Motor Vehicles Act, 1988, or the MV Act, challenging the status of our redBus business, and may be subject to similar challenges in future. “Item 8. Financial Information – Consolidated Statements and Other Financial Information – Legal Proceedings – Other Proceedings – Writ petition filed in the Delhi High Court regarding applicability of the Motor Vehicles Act, 1988, as amended, or the MV Act, to the redBus business.” In addition, amendments to the MV Act which became effective in 2019 and 2020, and guidelines issued thereunder, introduced a license requirement for “aggregators”, defined as digital intermediaries or market places for passengers to connect with drivers for transportation. Such guidelines specify compliance requirements with respect to the aggregator’s online platform, including safety features, data storage in India, fare regulation and responsibilities with respect to drivers on the platform. In the event any portion of our business is deemed to require a license under any covered categories in the MV Act, we may be required to obtain a license and comply with conditions therein. Although we believe that our business is compliant with applicable laws, depending on the outcome of the above-mentioned proceedings, as well as amendments to the MV Act or any other applicable laws, we may be required to adhere to additional compliance requirements.

In December 2019, the Personal Data Protection Bill 2019 was tabled in the Indian Parliament by the Government of India and has currently been referred to a joint parliamentary committee. This bill proposes to provide mechanisms for the protection of personal data and establish a government authority for data protection. If this or similar legislation is enacted, we may incur additional compliance costs and it may affect us in other ways that we are currently unable to predict.

The Consumer Protection Act, 2019, along with the Consumer Protection (E-Commerce) Rules, 2020, became effective in 2020 and replaced the Consumer Protection Act, 1986, as amended. The new law and rules regulate matters relating to consumer rights, unfair trade practices and false or misleading advertising, and also establish regulatory authorities, including addressing complaints, conduct investigations and adjudicate disputes. The rules impose obligations on marketplace and inventory e-commerce entities and sellers relating to the conduct of business and disclosure of information. In addition, the government has recently in June 2021 invited comments on draft amendments to the Consumer Protection (E-Commerce) Rules, 2020, which include various compliance requirements, including registration of e-commerce entities, restrictions on certain sales and marketing activities and disclosure requirements. The timing or impact of such amendments, which remain in draft form, are not yet certain. We may incur increased compliance costs in order to comply with these new requirements, which may also require significant management time and other resources, and any failure to comply may adversely affect our business and results of operations.

The growth and development of e-commerce may result in more stringent consumer protection laws that may impose additional burdens on Internet businesses generally. India’s Department of Promotion of Industry and Internal Trade, Ministry of Commerce and Industry invited comments on a draft National e-Commerce Policy in 2019, which addresses topics, such as data and e-commerce regulation. The timing or impact of this policy, which remains in draft form, is not yet certain. Any such changes could have an adverse effect on our business and financial performance.

Pursuant to amendments in April 2020 to the FDI policy and the FEMA rules, prior government approval will be required for any non-debt investment into India by non-resident entities from countries that share a land border with India or where the beneficial owner of such an investment is situated in or is a citizen of any such country, as well as for any transfer of any such proposed or existing non-debt investment, directly or indirectly, that would result in ownership by any such non-resident entity or beneficial owner. The list of land border countries includes Afghanistan, Bangladesh, Bhutan, the People’s Republic of China, Myanmar, Nepal and Pakistan. This approval requirement applies to investments in all sectors, including those that previously did not require such approval, such as travel and tourism.  The term “beneficial owner” has not yet been defined for purposes of the FDI Policy and the FEMA. If we are deemed to be a non-resident entity or an entity with a beneficial owner restricted by these amendments, prior government approval will be required for investments in non-debt instruments in our direct and indirect Indian subsidiaries and group entities, including MMT India and Ibibo India, as well as for any such proposed investments or acquisitions by us or our affiliates, including MMT

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India, Ibibo India and affiliates which are not resident in India. Investments in our ordinary shares, including upon conversion of our Class B shares or our 2028 Notes, and our Class B shares would be deemed to be non-debt investments into our Indian subsidiaries, including MMT India and Ibibo India. Accordingly, under the current FDI Policy and the FEMA rules, any proposed holder of our ordinary shares or our Class B shares that is a non-resident entity from a country that shares a land border with India or where the beneficial owner of such an investment is situated in or is a citizen of any such country would need to have obtained prior government approval in India, and any holder or beneficial owner of our 2028 Notes will not be able to convert such notes into ordinary shares without such approval.

The impact of any or all of the above changes to Indian legislation on our business cannot be fully determined at this time. Additionally, our business and financial performance could be adversely affected by unfavorable changes in or interpretations of existing, or the promulgation of new, laws, rules and regulations applicable to us and our business, including those relating to the Internet and e-commerce, consumer protection and privacy. Such unfavorable changes could decrease demand for our services and products, increase costs and/or subject us to additional liabilities. For example, there may continue to be an increasing number of laws and regulations pertaining to the Internet and e-commerce, which may relate to liability for information retrieved from or transmitted over the Internet or mobile networks, user privacy, taxation and the quality of services provided through the Internet.

The application of various Indian and international sales, use, occupancy, value-added and other tax laws, rules and regulations to our services and products is subject to interpretation by the applicable taxing authorities. Many of the statutes and regulations that impose these taxes were established before the growth of the Internet, mobile networks and e-commerce. If such tax laws, rules and regulations are amended, new adverse laws, rules or regulations are adopted or current laws are interpreted adversely to our interests, particularly with respect to occupancy or value-added or other taxes, the results could increase our tax payments (prospectively or retrospectively) and/or subject us to penalties and, if we pass on such costs to our customers, decrease the demand for our services and products. As a result, any such changes or interpretations could have an adverse effect on our business and financial performance. In recent years, we have received notices from the Indian tax regulatory authority for a demand of service tax on certain matters, some of which relate to the travel industry in India and involve complex interpretation of law. We have also received notices and various assessment orders from the Indian income tax authorities, to which we have responded. There can be no assurance that the Indian tax authorities will not take a different view. See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Legal Proceedings.”

We are subject to privacy regulations, and compliance with these regulations could impose significant compliance burdens.

In our processing of travel transactions, we receive and store a large volume of personally identifiable data. This data is increasingly subject to legislation and regulations in numerous jurisdictions around the world, such as the Indian Information Technology Act, 2000, as amended, which would subject us to civil liability to compensate for wrongful loss or gain arising from any negligence by us in implementing and maintaining reasonable security practices and procedures with respect to sensitive personal data or information that we possess in our computer systems, networks, databases and software. India has also implemented privacy laws, including the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, which impose limitations and restrictions on the collection, use and disclosure of personal information.

Practices regarding the collection, use, storage, transmission and security of personal information by companies operating over the internet have recently come under increased public scrutiny around the world. In the European Union, the General Data Protection Regulation, requires companies to implement and remain compliant with regulations regarding the handling of personal data, including its use, protection and the ability of persons whose data is stored to correct or delete such data about themselves. Other countries in Asia, Europe and Latin America have passed or are considering similar privacy regulations, resulting in additional compliance burdens and uncertainty as to how some of these laws will be interpreted. Any liability we may incur for violation of such laws and regulations and related costs of compliance and other burdens may adversely affect our business and profitability. We could be adversely affected if legislation or regulations are expanded to require changes in our business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business, results of operations or financial condition. In India in December 2019, the Personal Data Protection Bill 2019 was tabled in the Indian Parliament by the Government of India and has currently been referred to a joint parliamentary committee. This bill proposes to provide mechanisms for the protection of personal data and establish a government authority for data protection. If this or similar legislation is enacted, we may incur additional compliance costs and it may affect us in ways that we are currently unable to predict.

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We are also subject to payment card association rules and obligations under our contracts with payment card processors. Under these rules and obligations, if information is compromised, we could be liable to payment card issuers for associated expenses and penalties. In addition, if we fail to follow payment card industry security standards, even if no customer information is compromised, we could incur significant fines or experience a significant increase in payment card transaction costs.

Our Significant Shareholder Exercises Significant Influence over Our Company and May Have Interests That Are Different from Those of Our Other Shareholders.

As of March 31, 2021, Trip.com Group Limited, or Trip.com, beneficially owns 100.0% of our issued and outstanding Class B Shares and 48.16% of our aggregate ordinary shares and Class B Shares. For more information, see “Item 7. Major Shareholders and Related Party Transactions” and “Item 10. Additional Information – B. Memorandum and Articles of Association – Amended and Restated Trip.com Investor Rights Agreement.”

Trip.com has the ability to exercise significant influence over our company and certain aspects of our affairs and business, including the election of directors, the timing and payment of dividends, the adoption and amendments to our Constitution, the approval of a merger or sale of substantially all our assets and the approval of most other actions requiring the approval of our shareholders. As a result of its ownership of our Class B Shares, Trip.com is entitled to nominate five directors to our board of directors (one of whom shall be a resident of Mauritius). So long as Trip.com beneficially owns 10% or more of our issued and outstanding voting securities (subject to adjustment for any share split, share dividend, recapitalization, reclassification or similar transaction in respect of any such ordinary shares), it will be entitled to nominate a number of directors to our board of directors in proportion to its beneficial ownership in our company. In addition, under the Amended and Restated Trip.com Investor Rights Agreement, one Independent Director must be appointed from a pool of candidates recommended by Trip.com and approved by Mr. Deep Kalra and Mr. Rajesh Magow, a majority of Independent Directors must be appointed from a pool of candidates approved by Mr. Deep Kalra, Mr. Rajesh Magow and a majority of the Trip.com directors and one of the investor directors designated by Trip.com shall be entitled to exercise the casting vote to which the chairman of the board of directors would otherwise have been entitled pursuant to Article 114 of our Constitution. Under the Amended and Restated Trip.com Investor Rights Agreement, Trip.com and its affiliates are not restricted from purchasing additional ordinary shares of MakeMyTrip on the open market and can further increase their ownership in MakeMyTrip  up to 74.9% under the Amended and Restated Trip.com Investor Rights Agreement, which means that Trip.com and its affiliates may acquire enough ordinary shares of MakeMyTrip to control more than a majority of our issued and outstanding voting securities and consequently the right to appoint a majority of our board of directors. In addition, important matters relating to MakeMyTrip which constitute Reserved Matters (as defined herein) must be approved by a majority of the total number of directors (including the Class B directors) and a majority of the Class B directors, which provides Trip.com and its affiliates with significant veto rights over such matters. The Terms of Issue governing the Class B Shares, or the Terms of Issue, also provide that certain transferees of Class B Shares may, subject to certain minimum ownership thresholds, acquire some of the same rights with respect to board representation and Reserved Matters that Trip.com currently has.

The interests of Trip.com and its affiliates may be different from or conflict with the interests of our other shareholders and their influence may result in the delay or prevention of a change of management or control of our company or other significant actions affecting our company, even if such transactions or actions may be beneficial to our other shareholders.

Our Ability to Attract, Train and Retain Executives and Other Qualified Employees Is Critical to Our Business, Results of Operations and Future Growth.

Our business and future success is substantially dependent on the continued services and performance of our key executives, senior management and personnel, including personnel with travel industry experience or expertise in information technology and systems, software services, engineering and financial services. Any of these individuals may choose to terminate their employment with us at any time. There is a limited pool of individuals who have the skills and training needed to help us grow our company, and we cannot assure you that we will be able to retain these employees or find adequate replacements, if at all. The specialized skills we require can be difficult, time-consuming and expensive to acquire and/or develop and, as a result, these skills are often in short supply. A lengthy period may be required to hire and train replacement personnel when skilled personnel depart our company. Our ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees. We may be required to increase our levels of employee compensation more rapidly than in the past to remain competitive in attracting the quality of employees that our business

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requires. High attrition rates of qualified personnel could have an adverse effect on our ability to expand our business, as well as cause us to incur greater personnel expenses and training costs. If we do not succeed in attracting well-qualified employees or retaining or motivating existing employees, our business and prospects for growth could be adversely affected.

Inaccurate Information from Suppliers May Lead to Customer Complaints.

Our customers may rely on the description of the products and services presented on our websites and platforms to ascertain the quality of the accommodation, service or other product. We receive information utilized in the descriptions on our websites and platforms directly from the accommodation or other provider. To the extent that the information presented on our websites and platforms does not reflect the actual quality of product or service, we may face customer complaints that may have an adverse effect on our reputation and the likelihood of repeat customers, which in turn may adversely affect our business and may also cause financial loss, in case we are required to pay damages or compensation for loss cause to the customer.

Our Substantial Level of Indebtedness Could Limit Our Financial and Operating Activities and Adversely Affect Our Ability to Obtain Additional Financing to Fund Future Operational Needs.

We have significant outstanding indebtedness, including under our 2028 Notes. A significant portion of our cash flows will be required to repay out existing indebtedness, and we may not generate sufficient cash flows from operations, or have future borrowing capacity available, to enable us to repay our indebtedness or to fund other liquidity needs. Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including our 2028 Notes, and to satisfy our other obligations, will depend upon our future operating performance and financial condition and the availability of refinancing opportunities, which will also be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond our control, such as the disruption caused by the COVID-19 pandemic. We cannot assure you that our business will generate sufficient cash flows from operations, or that future fund raising or borrowing opportunities will be available to us in amounts sufficient to fund our liquidity needs or to meet our debt repayment obligations. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

In addition to making it more difficult for us to satisfy our debt repayment obligations, our substantial indebtedness could limit our ability to incur additional indebtedness if needed for other purposes, including working capital, capital expenditures, acquisitions and general corporate or other purposes, on satisfactory terms or at all. As a result, our indebtedness could increase our vulnerability to future economic downturns and impair our ability to withstand declines in the travel industry and limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate.

 

We May Not Have the Ability to Raise the Funds Necessary to Meet Our Payment Obligations Under Our 2028 Notes.

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Holders of our 2028 Notes will have the right to require us to repurchase such 2028 Notes on February 15, 2024 and February 15, 2026, and upon the occurrence of a fundamental change, in each case, at a repurchase price equal to 100% of the principal amount of the 2028 Notes to be repurchased, plus accrued and unpaid special interest, if any. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of the 2028 Notes surrendered therefor or 2028 Notes being converted. In addition, our ability to repurchase and/or redeem our 2028 Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness. Our failure to repurchase our 2028 Notes or pay the redemption price with respect to our 2028 Notes or repay the principal at a time when the repurchase or such payment is required by the indenture governing our 2028 Notes would constitute a default under the indenture. A default under the indenture governing our 2028 Notes offered hereby could also lead to a default under agreements governing our future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase our 2028 Notes or make required payments on our 2028 Notes when due.

 

 

Risks Related to Operations in India

A Substantial Portion of Our Business and Operations Are Located in India and We Are Subject to Regulatory, Economic, Social and Political Uncertainties in India.

A substantial portion of our business and most of our employees are located in India, and we intend to continue to develop and expand our business in India. Consequently, our financial performance and the market price of our ordinary shares will be affected by changes in exchange rates and controls, interest rates, volatility in and actual or perceived trends in trading activity on India’s principal stock exchanges, prevailing economic conditions, changes in government policies, including taxation policies and foreign investment policies, social and civil unrest and other political, social and economic developments in or affecting India.

The Government of India has exercised and continues to exercise significant influence over many aspects of the Indian economy. Since 1991, successive Indian governments have generally pursued policies of economic liberalization and financial sector reforms, including by significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained significant and we cannot assure you that such liberalization policies will continue. The rate of economic liberalization could change, and specific laws and policies affecting travel service companies, e-commerce, data, foreign investments, currency exchange rates and other matters affecting investments in India could change as well or be subject to unfavorable changes, interpretations, or uncertainty, including by reason of limited administrative or judicial precedents. There can be no assurance that the Government of India may not implement new regulations and policies, which will require us to obtain approvals and licenses or impose onerous requirements and conditions on our operations. A significant change in India’s policy of economic liberalization and deregulation or any social or political uncertainties could adversely affect business, financial condition, results of operations and prospects.

See also “— Changing Laws, Rules and Regulations and Legal Uncertainties in India, Including Adverse Application of Corporate and Tax Laws, May Adversely Affect Our Business and Financial Performance.”

As the Domestic Indian Market Constitutes a Significant Source of Our Revenue, a Slowdown in Economic Growth in India Could Cause Our Business to Suffer.

 

In fiscal years 2019, 2020 and 2021, 93.4%, 96.0% and 98.9%, respectively, of our revenue was derived directly from sales by our subsidiaries in India. The performance and growth of our business are necessarily dependent on economic conditions prevalent in India, which may be materially and adversely affected by political instability or regional conflicts, a general rise in interest rates, inflation, and economic slowdown elsewhere in the world or otherwise. The Indian economy has grown at a rapid rate in the last 20 years, but has experienced marginally slower GDP growth in the past three years. In 2020, India’s economy continued to decelerate from prior year’s growth due to the impact of the COVID- 19 pandemic, which resulted in a sharp decline in various economic activities, including consumer spending, across the country. The Indian economy contracted by an estimated 8.9% in 2020 according to Moody’s Investors Service. As the Indian economy has been impacted by a second wave of COVID-19 cases across the country, we cannot predict whether or when travel bookings will return to pre-COVID-19 levels. The Indian economy also remains largely driven by the performance of the agriculture sector, which depends on external factors such as the quality of the monsoon season each year.

 

A change in government or in economic and deregulation policies could adversely affect economic conditions prevalent in the areas in which we operate our business. For example, in November 2016, the Government of India and the Reserve Bank of India issued notifications withdrawing certain high-value denominations of currency notes as legal tender, which resulted in a short-term negative impact on the economy, including the travel industry. These and similar future measures may adversely affect India’s economy and growth rate. In the past, economic slowdowns in the Indian economy have harmed the travel industry as customers have

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less disposable income for their travels, especially holiday travel. Any slowdown in the Indian economy or increase in inflation could have a material adverse effect on the demand for the travel products we sell and, as a result, on our financial condition and results of operations.

Trade deficits, any downgrading of India’s debt rating by a domestic or international rating agency or any changes in the rate of increase of Indian price inflation could also adversely affect our business and the price of our ordinary shares. India’s trade relationships with other countries and its trade deficit, driven to a major extent by global crude oil prices, may adversely affect Indian economic conditions. If trade deficits increase or are no longer manageable because of the rise in global crude oil prices or otherwise, the Indian economy, and therefore our business, our financial performance and the price of our ordinary shares could be adversely affected.

India also faces major challenges in sustaining its growth, which include the need for substantial infrastructure development and improving access to healthcare and education. If India’s economic growth cannot be sustained or otherwise slows down significantly our business and prospects could be adversely affected.

The Travel Industry in India is Susceptible to Extraneous Events Such As Terrorist Attacks and Other Acts of Violence, Which May Result in a Reduction in Travel Volumes to Affected Areas.

Terrorist attacks and other acts of violence or war, such as growing conflict in the Israel-Palestine region in May 2021, border conflicts between India and People’s Republic of China in the Himalayan Region in 2020, the terrorist attacks in Paris, Brussels and the United Kingdom between 2015 and 2017, in Jammu and Kashmir, India and in Sri Lanka in 2019, as well as other neighboring countries may adversely affect the Indian markets and the worldwide financial markets. As many terrorist attacks tend to be focused on tourists or tourist destinations, such acts may also result in a reduction in confidence in the Indian travel industry and could adversely impact our business and prospects. In addition, any deterioration in international relations between India and other countries may result in concerns regarding regional stability, which could adversely affect the price of our ordinary shares. The occurrence of any of these events may result in a loss of business confidence and have an adverse effect on our business and financial performance.

South Asia has also experienced instances of civil unrest and hostilities among neighboring countries from time to time, including between India and Pakistan and China. There have also been incidents in and near India such as terrorist attacks, precision strikes or incursions and troop mobilizations along the border. Such military activity, terrorist attacks or other adverse social, economic and political events in India in the future could adversely affect the Indian economy by disrupting communications and making travel more difficult. Resulting political tensions could create a greater perception that investments in Indian companies or travel to affected regions involve a high degree of risk and could have an adverse impact on our business and the price of our ordinary shares. Furthermore, if India were to become engaged in armed hostilities, we might not be able to continue our operations. While we maintain insurance for losses arising from terrorist activities, our insurance policies do not cover business interruptions from terrorist attacks or for other reasons.

Natural Calamities, Outbreak of Epidemics and Other Disruptions Could Have a Negative Impact on the Indian Economy and Cause Our Business to Suffer.

 

India has experienced natural calamities such as earthquakes, tsunamis, floods, cyclones and drought in the past few years. For example, in September 2014, the state of Jammu and Kashmir in northern India, a popular tourism destination, experienced widespread floods and landslides. In April 2015, an earthquake occurred in the Nepal with aftershocks and landslides subsequently affecting the country. Floods and cyclones have also occurred in other parts of India over the years. Such natural disasters can have an adverse impact on economic activity and travel demand in affected areas or nationwide. The outbreak of pandemics or epidemics could have a material adverse effect on the Indian economy and our business. For example, the COVID-19 pandemic and related lockdowns and economic disruptions have had a significant negative impact on the travel industry in India, including our business, and around the world. For more information, see “– The COVID-19 pandemic has had, and is expected to have, a material adverse effect on the travel industry and our business, financial condition, results of operations and cash flows.” Substantially all of our operations and employees are located in India and there can be no assurance that we will not be affected by natural disasters, epidemics or disruptions or epidemics in the future. The occurrence of such events in the future could have an adverse impact on our business and financial performance.

 

Restrictions on Foreign Investment in India May Prevent or Delay Future Acquisitions or Investments By Us in India, or Require Us to Make Changes to Our Business, Which May Adversely Affect Our Business and Financial Performance, and Require Prior Government Approval for Holders of Our Ordinary Shares, Including Upon Conversion of Our Class B Shares or Our 2028 Notes, and Our Class B Shares.

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India regulates ownership of Indian companies by foreigners, although some restrictions on foreign investment have been relaxed in recent years. These regulations and restrictions may apply to acquisitions by us or our affiliates, including MMT India, Ibibo India and affiliates that are not resident in India, of shares in Indian companies or the provision of funding by us or any other entity to Indian companies within our group. For example, under the Government of India’s consolidated foreign direct investment policy, or FDI policy, and India’s Foreign Exchange Management Act, 1999, and the rules and regulations thereunder, each as amended, or FEMA, additional requirements are applicable to foreign investments in India, including requirements with respect to downstream investments by Indian companies owned or controlled by foreign entities, and the transfer of ownership or control of Indian companies in sectors with caps on foreign investment from resident Indian persons or entities to foreigners, as well as such transactions between foreigners. These requirements, which include restrictions on pricing, valuations of shares and sources of funding for such investments and may in certain cases, include prior notice to or approval of the Government of India, may adversely affect our ability to make future acquisitions or investments in India.

In addition, pursuant to amendments in April 2020 to the FDI policy and the FEMA rules, prior government approval will be required for any non-debt investment into India by non-resident entities from countries that share a land border with India or where the beneficial owner of such an investment is situated in or is a citizen of any such country, as well as for any transfer of any such proposed or existing non-debt investment, directly or indirectly, that would result in ownership by any such non-resident entity or beneficial owner. The list of land border countries includes Afghanistan, Bangladesh, Bhutan, the People’s Republic of China, Myanmar, Nepal and Pakistan. This approval requirement applies to investments in all sectors, including those that previously did not require such approval, such as travel and tourism.  The term “beneficial owner” has not yet been defined for purposes of the FDI Policy and the FEMA. If we are deemed to be a non-resident entity or an entity with a beneficial owner restricted by these amendments, prior government approval will be required for investments in non-debt instruments in our direct and indirect Indian subsidiaries and group entities, including MMT India and Ibibo India, as well as for any such proposed investments or acquisitions by us or our affiliates, including MMT India, Ibibo India and affiliates which are not resident in India. Investments in our ordinary shares, including upon conversion of our Class B shares or our 2028 Notes, and our Class B shares would be deemed to be non-debt investments into our Indian subsidiaries, including MMT India and Ibibo India. Accordingly, under the current FDI Policy and the FEMA rules, any proposed holder of our ordinary shares or our Class B shares that is a non-resident entity from a country that shares a land border with India or where the beneficial owner of such an investment is situated in or is a citizen of any such country would need to have obtained prior government approval in India. and any holder or beneficial owner of our 2028 Notes will not be able to convert such notes into ordinary shares without such approval. The Government of India has made and may continue to make revisions to the FDI Policy and the FEMA rules, which may impose additional requirements with respect to any holder’s ability to acquire our ordinary shares, including upon conversion of our Class B shares or our 2028 Notes, and/or requirements for acquisition of our ordinary shares or Class B shares upon a transfer thereof. Further, under the FEMA, we are restricted from lending to or borrowing from our Indian subsidiaries and our Indian subsidiaries are restricted from lending or borrowing in foreign currencies. We are also required to complete FEMA filings with respect to past investments in order to make further investments in India. There can be no assurance that we will be able to obtain any required approvals for future acquisitions or investments in India, including in our Indian subsidiaries and group entities, or that we will be able to obtain such approvals in a timely manner, on satisfactory terms or at all. Under the FEMA, the Reserve Bank of India has the power to impose monetary penalties, including of up to three times the value of a FEMA violation, where quantifiable, and confiscate the shares at issue.

Further, the Government of India has made and may continue to make revisions to the FDI policy on e-commerce in India, including in relation to business model, inventory, pricing and permitted services. India’s Department of Promotion of Industry and Internal Trade, Ministry of Commerce and Industry invited comments on a draft National e-Commerce Policy in 2019, which addresses topics such as data and e-commerce regulation. The timing or impact of this policy, which remains in draft form, is not yet certain. Such changes may require us to make changes to our business in order to comply with Indian law.

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Our Business and Activities Are Regulated by the Competition Act, 2002.

The Competition Act, 2002, as amended, or the Competition Act, regulates practices that could have an appreciable adverse effect on competition in India. Under the Competition Act, any arrangement, understanding or action, whether formal or informal, which causes or is likely to cause an appreciable adverse effect on competition in India is void and may result in substantial penalties and compensation to be paid to persons shown to have suffered losses. Any agreement among competitors which directly or indirectly determines purchase or sale prices, results in bid rigging or collusive bidding, limits or controls production, supply, markets, technical development, investment or the provision of services, or shares the market or source of production or provision of services in any manner, including by way of allocation of geographical area or types of goods or services or number of customers in the market, is presumed to have an appreciable adverse effect on competition. Further, the Competition Act prohibits the abuse of a dominant position by any enterprise either directly or indirectly, including by way of unfair or discriminatory pricing or conditions in the sale of goods or services, using a dominant position in one relevant market to enter into, or protect, another relevant market, and denial of market access, and such practices are subject to substantial penalties and may also be subject to compensation for losses and orders to divide the enterprise. Acquisitions, mergers and amalgamations that exceed certain revenue and asset thresholds (combinations) require the prior approval of the Competition Commission. Any such combinations that have, or are likely to have, an appreciable adverse effect on competition in India are prohibited and void. There can be no assurance that we will be able to obtain approval for such future transactions on satisfactory terms, or at all. Further, the Competition Commission of India or CCI has extraterritorial powers and can investigate any agreements, abusive conduct or combination occurring outside India if such agreement, conduct or combination has, or is likely to have, an appreciable adverse effect on competition in India.

If we or any member of our group, including MMT India or Ibibo India, are affected, directly or indirectly, by the application or interpretation of any provision of the Competition Act or any proceedings initiated by the CCI or any other relevant authority (or any other claim by any other party under the Competition Act) or any adverse publicity that may be generated due to scrutiny or prosecution under the Competition Act, including by way of financial penalties, our business, financial performance and reputation may be materially and adversely affected.

Our Investors May Be Subject to Indian Taxes on Income Arising Through the Sale of Our Ordinary Shares.

Amendments introduced in 2012 to the Income Tax Act, 1961, as amended, provide that income arising directly or indirectly through the sale of a capital asset, including any shares or interest in a company incorporated outside of India, will be subject to tax in India, if such shares or interest directly or indirectly derive their value substantially from assets located in India, irrespective of whether the seller of such shares has a residence, place of business, business connection, or any other presence in India. Through amendments introduced in 2015 to the Income Tax Act, 1961, the word “substantially” has been defined and investors may be subject to Indian income taxes on the income arising directly or indirectly through the sale of our ordinary shares subject to the provisions of double taxation avoidance agreements that India has entered into with other countries. Further, the amendments also contain an exemption with respect to alienation of shares by a transferor-investor whose voting rights or share capital, at any time during twelve-month period preceding the date of sale, does not exceed 5% of the total voting rights or share capital in the company, provided such transferor-investor is not vested with rights of management or control in any other form.

On May 10, 2016, a protocol for amendment of the India-Mauritius tax treaty was signed by India and Mauritius (which came into force on July 19, 2016) under which India is entitled to taxation rights on capital gains arising from alienation of shares acquired on or after April 1, 2017 in an Indian resident company. Further, in respect of such capital gains arising during the transition period beginning April 1, 2017 and ending March 31, 2019, the tax rate will be limited to 50% of the domestic tax rate in India on such gains, subject to fulfillment of certain specified conditions. After March 31, 2019, the tax is charged at full domestic tax rates.

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Risks Related to Investments in Mauritian Companies

As Our Shareholder, You May Have Greater Difficulties in Protecting Your Interests Than As a Shareholder of a United States Corporation.

We are incorporated under the laws of Mauritius. The laws generally applicable to United States corporations and their shareholders may provide shareholders of United States corporations with rights and protection for which there may be no corresponding or similar provisions under the Companies Act 2001 of Mauritius, as amended, or the Mauritius Companies Act. As such, if you invest in our ordinary shares, you may or may not be accorded the same level of shareholder rights and protection that a shareholder of a United States corporation may be accorded under the laws generally applicable to United States corporations and their shareholders. Taken together with the provisions of our Constitution, some of these differences may result in your having greater difficulties in protecting your interests as our shareholder than you would have as a shareholder of a United States corporation. This affects, among other things, the circumstances under which transactions involving an interested director are voidable, whether an interested director can be held accountable for any benefit realized in a transaction with us, what rights you may have as a shareholder to enforce specified provisions of the Mauritius Companies Act or our Constitution, and the circumstances under which we may indemnify our directors and officers.

We May Become Subject to Unanticipated Tax Liabilities That May Have a Material Adverse Effect on Our Results of Operations.

We are a Mauritius Global Business License Company and are tax resident in Mauritius. The Income Tax Act 1995 of Mauritius imposes a tax in Mauritius on the chargeable income of our company at the rate of 15.0%. However, under the Income Tax (Foreign Tax Credit) Regulations 1996 of Mauritius, subject to the Income Tax Act 1995 and the regulations under the Income Tax (Foreign Tax Credit) Regulations 1996, a credit is allowed for foreign tax on the foreign source income of a resident of Mauritius against Mauritius tax computed by reference to the same income, the Deemed Foreign Tax Credit, and where a credit is allowed against Mauritius tax chargeable in respect of any income, the amount of Mauritius tax so chargeable shall be reduced by the amount of the credit. Under the Income Tax Act 1995, “foreign source income” means income which is not derived from Mauritius and includes, in the case of a corporation holding a Category 1 Global Business License under the Financial Services Act 2007 of Mauritius, income derived from its transactions with non-residents or corporations holding a Category 1 Global Business License under the Financial Services Act. Subject to the provisions of the Income Tax (Foreign Tax Credit) Regulations 1996, no credit is allowed in respect of foreign tax unless written evidence is presented to the Mauritius Revenue Authority showing the amount of foreign tax which has been charged. For this purpose, “written evidence” includes a receipt of the relevant authorities of the foreign country for the foreign tax or any other evidence that the foreign tax has been deducted or paid to the relevant authorities of that country. However, pursuant to regulation 8 of the Income Tax (Foreign Tax Credit) Regulations 1996, if written evidence is not presented to the Mauritius Revenue Authority showing the amount of foreign tax charged on our company’s foreign source income, the amount of foreign tax shall nevertheless be conclusively presumed to be equal to 80.0% of the Mauritius tax chargeable with respect to that income and in such circumstance, the effective tax rate in Mauritius on our company’s chargeable income would be 3.0%.

As of January 1, 2019, the Category 1 Global Business License (GBL1) has been renamed as the Global Business License (GBL) and companies holding the Category 1 Global Business License were grandfathered until June 30, 2021 (provided the license was issued on or before October 16, 2017) or December 31, 2018 (in all other cases).

As from July 1, 2021, grandfathered companies holding Category 1 Global Business Licences will automatically be deemed to hold GBL licences. A GBL company will no longer be entitled to a maximum effective tax rate of 3% on all its income under the new partial exemption regime and will be subject to tax at the normal rate of 15%.

Nevertheless, GBL entities, like any other Mauritius tax-resident entities, will be entitled to either claim:

 

tax credits on actual foreign tax suffered where this can be evidenced; or

 

a partial exemption of 80% of the Mauritian tax liability on certain types of income, such as interest and foreign sourced dividends, provided that certain prescribed substance requirements are met.

In order to maintain their GBL licences, GBL companies will have to adhere to new substance requirements such as carrying out their core income generating activities in or from Mauritius.

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Our company holds a specific Tax Residence Certificate for India, valid until May 4, 2022 and a general Tax Residence Certificate for all jurisdictions, valid until May 8, 2022, from the Mauritius Revenue Authority, as per the guidelines prescribed by the Mauritius Revenue Authority. These tax residence certificates are renewed annually.

We believe that a significant portion of the income derived from our operations will not be subject to tax in countries in which we conduct activities or in which our customers are located, other than Mauritius, India, Malaysia, Thailand, Singapore and the United States. However, this belief is based on the anticipated nature and conduct of our business, which may change. It is also based on our understanding of our position under the tax laws of the countries in which we have assets or conduct activities. This position is subject to review and possible challenge by taxing authorities and to possible changes in law that may have retroactive effect. Our results of operations could be materially and adversely affected if we become subject to a significant amount of unanticipated tax liabilities.

Risks Related to Our Ordinary Shares

Investors May Have Difficulty Enforcing Judgments against Us, Our Directors and Management.

We are incorporated under the laws of Mauritius. Further, we conduct substantially all of our operations in India through our key operating subsidiaries in India. The majority of our directors and officers, and some of the experts named in this Annual Report, reside outside the United States, and a majority of our assets and some or all of the assets of such persons are located outside the United States. As a result, it may be difficult or impossible to effect service of process within the United States upon us or those persons, or to recover against us or them on judgments of United States courts, including judgments predicated upon the civil liability provisions of the United States federal securities laws. An award of punitive damages under a United States court judgment based upon United States federal securities laws is likely to be construed by Mauritian and Indian courts to be penal in nature and therefore unenforceable in both Mauritius and India. Further, no claim may be brought in Mauritius or India against us or our directors and officers in the first instance for violation of United States federal securities laws because these laws have no extraterritorial application under Mauritian or Indian law and do not have force of law in Mauritius or India. However, a Mauritian or Indian court may impose civil liability, including the possibility of monetary damages, on us or our directors and officers if the facts alleged in a complaint constitute or give rise to a cause of action under Mauritian or Indian law. Moreover, it is unlikely that a court in Mauritius or India would award damages on the same basis as a foreign court if an action were brought in Mauritius or India or that a Mauritian or Indian court would enforce foreign judgments if it viewed the amount of damages as excessive or inconsistent with Mauritius or Indian practice or public policy.

The courts of Mauritius or India would not automatically enforce judgments of United States courts obtained in actions against us or our directors and officers, or some of the experts named herein, predicated upon the civil liability provisions of the United States federal securities laws, or entertain actions brought in Mauritius or India against us or such persons predicated solely upon United States federal securities laws. Further, there is no treaty in effect between the United States and Mauritius providing for the enforcement of judgments of United States courts in civil and commercial matters and the United States has not been declared by the Government of India to be a reciprocating territory for the purposes of enforcement of foreign judgments, and there are grounds upon which Mauritian or Indian courts may decline to enforce the judgments of United States courts. A judgment of courts in the United States may be enforced in India only by a fresh suit upon the foreign judgment and not by proceedings in execution. Some remedies available under the laws of United States jurisdictions, including remedies available under the United States federal securities laws, may not be allowed in Mauritian or Indian courts if contrary to public policy in Mauritius or India. Because judgments of United States courts are not automatically enforceable in Mauritius or India, it may be difficult for you to recover against us or our directors and officers or some experts named in this Annual Report based upon such judgments. In India, prior approval of the Reserve Bank of India is required in order to repatriate any amount recovered pursuant to such judgments.

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As a Foreign Private Issuer, We are Permitted to, and We Will, Follow Certain Home Country Corporate Governance Practices in Lieu of Certain NASDAQ Requirements Applicable to US Issuers. This May Afford Less Protection to Holders of Our Ordinary Shares.

As a foreign private issuer whose ordinary shares are listed on the Nasdaq Global Market, we are permitted to, and we will, follow certain home country corporate governance practices in lieu of certain Nasdaq Marketplace Rules, or the Nasdaq Rules. A foreign private issuer must disclose in its Annual Reports filed with the Securities and Exchange Commission, or the SEC, each Nasdaq Rule with which it does not comply followed by a description of its applicable home country practice. As a company incorporated in Mauritius and listed on the Nasdaq Global Market, we currently intend to follow our home country practice with respect to the composition of our board of directors, nominations committee, audit committee, executive sessions and approval of amendments to our share incentive plans. Unlike the Nasdaq Rules, the corporate governance practice and requirements in Mauritius do not require us to have a majority of our board of directors to be independent; do not require us to establish a nominations committee; do not require an audit committee to have at least three members, do not require us to hold regular executive sessions where only independent directors shall be present and do not require us to obtain shareholder approval prior to the issuance of securities when a stock option or purchase plan is materially amended. Such Mauritian home country practices may afford less protection to holders of our ordinary shares.

An Active or Liquid Trading Market for Our Ordinary Shares May Not Be Maintained and the Trading Price for Our Ordinary Shares May Fluctuate Significantly.

An active, liquid trading market for our ordinary shares may not be maintained in the long term and we cannot be certain that any trading market for our ordinary shares will be sustained or that the present price will correspond to the future price at which our ordinary shares will trade. Loss of liquidity could increase the price volatility of our ordinary shares.

Any additional issuance of ordinary shares would dilute the positions of existing investors in the ordinary shares and could adversely affect the market price of our ordinary shares. We cannot assure you that our ordinary shares will not decline below their prevailing market price. You may be unable to sell your ordinary shares at a price that is attractive to you.

The Sale or Availability for Sale of Substantial Amounts of Our Ordinary Shares Could Adversely Affect Their Market Price.

Sales of substantial amounts of our ordinary shares in the public market, or the perception that such sales could occur, could adversely affect the market price of our ordinary shares and could materially impair our future ability to raise capital through offerings of our ordinary shares.

As of March 31, 2021, we had 65,065,075 ordinary shares and 39,667,911 Class B Shares outstanding. All of the ordinary shares sold in our prior public offerings are freely tradable without restriction or further registration under the US Securities Act of 1933, or the Securities Act, unless held by our “affiliates” as that term is defined in Rule 144 under the Securities Act. Subject to applicable restrictions and limitations under Rule 144 of the Securities Act, all of our shares outstanding before our prior public offerings will be eligible for sale in the public market. If these shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our ordinary shares could decline. We cannot predict what effect, if any, market sales of ordinary shares held by our significant shareholders or any other shareholder or the availability of these ordinary shares for future sale will have on the market price of our ordinary shares.

Future Issuances of Any Equity Securities, Including Upon Conversion of Our Class B Shares and Our 2028 Notes, May Decrease the Trading Price of Our Ordinary Shares and Result in Substantial Dilution to Holders of Our Ordinary Shares.

We may issue equity or equity-linked securities in the future for a number of reasons, including to finance our operations and business strategy (including in connection with acquisitions and other transactions), to adjust our ratio of debt to equity, to satisfy our obligations upon the exercise of then-outstanding options or other equity-linked securities, if any, or for other reasons. For example, in 2017, we issued 38,971,539 Class B Shares to MIH Internet as partial consideration for the acquisition of the ibibo Group, issued 413,035 ordinary shares to MIH Internet for an aggregate consideration of $8.8 million and 5,500,000 our ordinary shares to various investors (including 916,666 of our ordinary shares to Trip.com) and 3,666,667 of our Class B Shares to MIH Internet in a private placement for total gross proceeds of $330 million.

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In February 2021, we issued $230.0 million aggregate principal amount of 0.00% convertible senior notes due 2028, or the 2028 Notes. Pursuant to the Terms of Issue of our Class B Shares, if and when any holder of the 2028 Notes offered hereby elects to convert its 2028 Notes into our ordinary shares, Trip.com (or any subsequent transferee in a Forty Percent Transfer (as in the Terms of Issue of our Class B Shares)) will have a pre-emptive right to subscribe for and purchase such number of additional Class B Shares that would preserve the percentage of its voting power in our share capital (after giving pro forma effect to the issuance of our ordinary shares upon the relevant conversion), at a price per Class B share equal to the then-effective conversion price (being $1,000 divided by the then-effective conversion rate). The maximum number of Class B Shares that may be issued pursuant to the exercise of Trip.com’s pre-emptive rights as of March 31, 2021 is 6,869,681 assuming (i) no adjustment to the conversion rate for any 2028 Notes converted in connection with a make-whole fundamental change or any conversion rate adjustments (in each case, as described in the indenture relating to the 2028 Notes) (ii) all 2028 Notes are converted simultaneously immediately prior to maturity and (iii) there are no changes to our share capital after March 31, 2021 until such pre-emptive rights are exercised, other than issuance of our ordinary shares upon conversion of the entire aggregate principal amount of the 2028 Notes. Such maximum number of Class B Shares includes Class B Shares issuable to Trip.com in connection with the exercise of its pre-emptive rights to subscribe for and purchase new Class B Shares (which Trip.com has deferred to a later date on which the purchase by Trip.com of the new Class B Shares would in the good faith judgment of Trip.com not be inconsistent with any applicable law) as a result of the issuance of ordinary shares pursuant to the exercise or settlement of equity awards under our Share Incentive Plan 2010 between August 19, 2020 to March 31, 2021. See “Item 10. Additional Information — B. Memorandum and Articles of Association — Trip.com’s Pre-Emptive Rights in relation to our 2028 Notes.” Any issuance of our Class B Shares will be subject to applicable restrictions under foreign investment laws in India. See “Item 3. Key Information — D. Risk Factors—Risks related to Operations in India—Restrictions on Foreign Investment in India May Prevent or Delay Future Acquisitions or Investments By Us in India, or Require Us to Make Changes to Our Business, Which May Adversely Affect Our Business and Financial Performance, and Require Prior Government Approval for Holders of Our Ordinary Shares, Including Upon Conversion of Our Class B Shares or Our 2028 Notes, and Our Class B Shares”.

The issuance of ordinary shares upon the conversion of some or all of our Class B Shares or the 2028 Notes may result in substantial dilution to each holder of ordinary shares by reducing that shareholder’s percentage ownership of our total outstanding shares. In addition, any future issuance of equity securities could dilute the interests of our shareholders and could substantially decrease the trading price of our ordinary shares.

Provisions of Our 2028 Notes Could Discourage An Acquisition of Us By a Third Party.

Certain provisions of our 2028 Notes could make it more difficult or more expensive for a third party to acquire us, or may even prevent a third party from acquiring us. For example, upon the occurrence of certain transactions constituting a fundamental change, holders of our 2028 Notes will have the right, at their option, to require us to repurchase their 2028 Notes. In the event of a fundamental change, we may also be required to increase the conversion rate for conversions in connection with such fundamental changes. By discouraging an acquisition of us by a third party, these provisions could have the effect of depriving the holders of our ordinary shares and our Class B Shares of an opportunity to sell their ordinary shares or Class B Shares, as applicable, at a premium over prevailing market prices.

Our Holding Company Will Have to Rely Principally on Dividends and Other Distributions on Equity Paid by Our Operating Subsidiaries and Limitations on Their Ability to Pay Dividends to Our Holding Company Could Adversely Impact Shareholders’ Ability to Receive Dividends on Our Ordinary Shares.

Dividends and other distributions on equity paid by our operating subsidiaries will be our holding company’s principal source for cash in order for us to be able to pay any dividends and other cash distributions to our shareholders. As of the date of this Annual Report, MMT India, Ibibo India or any other subsidiary has not paid any cash dividends on its equity shares to MakeMyTrip. If our operating subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to our holding company. As our key operating subsidiaries are established in India, such subsidiaries also subject to certain limitations with respect to dividend payments.

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Compliance with Rules and Requirements Applicable to Public Companies May Cause Us to Incur Additional Costs, and Any Failure by Us to Comply with Such Rules and Requirements Could Negatively Affect Investor Confidence in Us and Cause the Market Price of Our Ordinary Shares to Decline.

As a public company, we incur significant legal, accounting and other expenses. For example, we are required by Section 404 of the Sarbanes-Oxley Act of 2002 to include a report of management’s assessment on our internal control over financial reporting and an auditor’s attestation report on our internal control over financial reporting in our Annual Report on Form 20-F. Effective internal control over financial reporting is necessary for us to provide reliable financial reports.

Complying with these rules and requirements may be difficult and costly for us. We have incurred and anticipate that we will continue to incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other United States public company reporting requirements. We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. In addition, if we fail to comply with any significant rule or requirement associated with being a public company, such failure could result in the loss of investor confidence and could harm our reputation and cause the market price of our ordinary shares to decline.

We May Be Classified as a Passive Foreign Investment Company, Which Could Result in Adverse US Federal Income Tax Consequences to US Holders of Our Ordinary Shares.

 

Based on, among other things, the current and anticipated valuation of our assets and composition of our income and assets, we do not believe we will be a passive foreign investment company, or PFIC, for US federal income tax purposes for our current taxable year or will become a PFIC in the foreseeable future. However, the application of the PFIC rules is subject to uncertainty in several respects. In addition, a separate determination must be made after the close of each taxable year as to whether we were a PFIC for that year. Accordingly, we cannot assure you that we will not be a PFIC for our current taxable year or any future taxable year. A non-US corporation will be a PFIC for any taxable year if either (1) at least 75.0% of its gross income for such year is passive income or (2) at least 50.0% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income. For this purpose, we will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25.0% (by value) of the stock. Because the value of our assets for purposes of the PFIC test will generally be determined in part by reference to the market price of our ordinary shares, fluctuations in the market price of the ordinary shares may cause us to become a PFIC. In addition, changes in the composition of our income or assets may cause us to become a PFIC. If we are a PFIC for any taxable year during which a US Holder (as defined in “Item 10. Additional Information — E. Taxation — US Federal Income Taxation”) holds an ordinary share, certain adverse US federal income tax consequences could apply to such US Holder. See “Item 10. Additional Information — E. Taxation — US Federal Income Taxation — Passive Foreign Investment Company.”

 

We May Be Treated as a “Foreign Financial Institution” Under the US Foreign Account Tax Compliance Act, Which May Impose Withholding Requirements on Payments on Our Ordinary Shares.

 

Provisions under the US Foreign Account Tax Compliance Act and Treasury Regulations thereunder, commonly referred to as “FATCA,” generally may impose 30.0% withholding on certain “withholdable payments” and, subject to the proposed regulations discussed below, may impose such withholding on “foreign passthru payments” (each as defined in the US Internal Revenue Code) made by a “foreign financial institution” (as defined in the US Internal Revenue Code) that has entered into an agreement with the IRS to perform certain diligence and reporting obligations with respect to the foreign financial institution’s US-owned accounts (each such foreign financial institution, a “Participating Foreign Financial Institution”). If we were treated as a foreign financial institution and if we become a Participating Foreign Financial Institution, to the extent payments on the ordinary shares are considered foreign passthru payments, such withholding may be imposed on such payments to any foreign financial institution (including an intermediary through which a holder may hold the ordinary shares) that is not a Participating Foreign Financial Institution or any other investor who does not provide information sufficient to establish that the investor is not subject to withholding under FATCA, unless such foreign financial institution or investor is otherwise exempt from FATCA. Under current guidance, the term “foreign passthru payment” is not defined and it is therefore not clear whether or to what extent payments on the ordinary shares would be considered foreign passthru payments, although IRS guidance has indicated that the definition of “foreign passthru payment” is intended to cover payments that are attributable to underlying US source income. Under recently proposed regulations, any withholding on foreign passthru payments would apply to passthru payments made on or after the date that is two years after the date of publication in the Federal Register of applicable final regulations defining foreign passthru payments. Although these recent regulations are not final,

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taxpayers generally may rely on them until final regulations are issued. The United States has entered into intergovernmental agreements with certain non-US jurisdictions that will modify the FATCA withholding regime described above. It is not yet clear how the intergovernmental agreements will address foreign passthru payments and whether such intergovernmental agreements may relieve foreign financial institutions of any obligation to withhold on foreign passthru payments.

 

If a United States person is treated as owning at least 10% of our shares, such holder may be subject to adverse U.S. federal income tax consequences.

If a United States person is treated as owning (directly, indirectly or constructively) at least 10.0% of the value or voting power of our stock, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any). If our group includes one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries could be treated as controlled foreign corporations (regardless of whether we are not treated as a controlled foreign corporation). A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject you to significant monetary penalties and may prevent the statute of limitations with respect to your U.S. federal income tax return for the year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S. subsidiaries are treated as a controlled foreign corporation or whether such investor is treated as a United States shareholder with respect to any of such controlled foreign corporations or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A United States investor should consult its advisors regarding the potential application of these rules to an investment in the stock.

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ITEM 4.

INFORMATION ON THE COMPANY

A. History and Development of our Company

MakeMyTrip Limited (Company No. 24478/5832) is a public company incorporated under the laws of Mauritius with limited liability on April 28, 2000, and we hold a Category 1 Global Business License issued by the Financial Services Commission in Mauritius. Our registered office is located at c/o IQ EQ Corporate Services (Mauritius) Limited, 33 Edith Cavell Street, Port Louis, Republic of Mauritius and the telephone number for this office is (230) 212 9800. Our principal executive office is located at 19th Floor, Building No. 5, DLF Cyber City, Gurugram, India, 122002 and the telephone number for this office is (91-124) 439-5000. Our principal website address is www.makemytrip.com. Our other websites include www.goibibo.com; and www.redbus.in. Information contained on our website, or the website of any of our subsidiaries or affiliates, is not a part of this Annual Report. Our agent for service in the United States is MakeMyTrip Inc., 60 East 42nd Street, Suite 605, New York, NY 10165.

Founded by Mr. Deep Kalra, we commenced operations in 2000 and in the first five years following our inception, we focused on the non-resident Indian market in the United States, servicing mainly their need for United States-India inbound air tickets. We started our Indian business with the launch of our Indian website in September 2005.

As of March 31, 2010, our stated capital was $53,900,376.00, comprising 877,106 ordinary shares with a par value of $0.01 each and 616,223 preferred shares with a par value of $0.01 each, of which 328,863 preferred shares were designated Series A preferred shares, 148,315 preferred shares were designated Series B preferred shares and 139,045 preferred shares were designated Series C preferred shares. We effected a 20-for-one share split on July 22, 2010.

On August 17, 2010, we completed an initial public offering of 5,750,000 of our ordinary shares at $14.00 per share. All of our preferred shares were converted into 12,324,460 ordinary shares upon the completion of our initial public offering in August 2010.

On June 2, 2011, we completed a follow-on public offering of 5,244,000 of our ordinary shares at $24.00 per share. On June 29, 2011, in connection with our follow-on public offering, we completed an additional over-allotment offering of 350,000 of our ordinary shares at $24.00 per share. On March 19, 2014, we completed a follow-on public offering of 5,500,000 of our ordinary shares at $23.00 per share and an over-allotment offering of 825,000 of our ordinary shares at $23.00 per share.

On April 22, 2014, we issued 38,655 ordinary shares as part of deferred consideration payable in relation to our acquisition of the Hotel Travel Group. These shares were issued from treasury shares held by us.

On January 7, 2016, we entered into an agreement for the issue of $180 million of 4.25% convertible notes due in 2021, redeemable at par value, in two tranches to Trip.com. On October 28, 2016, we issued an aggregate of 9,857,028 ordinary shares (comprising 659,939 ordinary shares issued from treasury shares held by us and 9,197,089 new ordinary shares) to Trip.com upon conversion of all its convertible notes.

On January 29, 2016, we re-issued 274,135 of our own shares to discharge the balance deferred consideration for the acquisition of Hotel Travel Group.

On January 31, 2017, we issued 38,971,539 Class B Shares to MIH Internet as consideration for the acquisition of the ibibo Group and a cash contribution of $83.3 million from MIH Internet (representing 40% of our consolidated net working capital upon the completion of the acquisition, after giving effect to the cash contribution from MIH Internet). As part of the consideration for the acquisition, we also issued 413,035 ordinary shares to MIH Internet for an aggregate value of $8.8 million.

On May 5, 2017, we completed a private placement of 5,500,000 of our ordinary shares to various investors (including 916,666 of our ordinary shares to Trip.com) at a price of $36.00 per ordinary share and 3,666,667 of our Class B Shares to MIH Internet at a price of $36.00 per Class B Share, which generated total gross proceeds of $330 million.

On April 26, 2019, MIH Internet and MIH B2C Holdings B.V. entered into a share purchase agreement with Trip.com, or the Naspers-Trip.com Agreement, pursuant to which Trip.com agreed to acquire all of our ordinary shares and Class B Shares held by MIH Internet, or the Naspers-Trip.com Transaction. On August 30, 2019, Trip.com completed the share exchange transaction with MIH Internet and increased its shareholding in our Company to 49.0% of our total voting power based on our then-outstanding ordinary shares and Class B Shares voting as a single class.

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On February 9, 2021, we issued $230.0 million aggregate principal amount of 0.00% convertible senior notes due 2028. The 2028 Notes are convertible based upon an initial conversion rate of 25.8035 ordinary shares per $1,000 principal amount of 2028 Notes (equivalent to a conversion price of approximately $38.75 per ordinary share), which conversion rate is subject to certain adjustments in connection with a make-whole fundamental change or any conversion rate adjustments (in each case, as described in the indenture relating to the 2028 Notes). The 2028 Notes will mature on February 15, 2028, unless earlier repurchased, redeemed or converted. The 2028 Notes are convertible into ordinary shares, at the option of the holders, in integral multiples of $1,000 principal amount, at any time prior to the close of business on the second business day preceding February 15, 2028.

As of March 31, 2021, our stated capital was $2,025,965,420.82 comprising 65,065,075 ordinary shares and 39,667,911 Class B Shares with a par value of $0.0005 each.

Investments and Acquisitions

Acquisition of the ibibo Group

On January 31, 2017, we undertook a strategic combination with the ibibo Group by way of an acquisition of 100% equity interest in the ibibo Group from MIH Internet, an indirect subsidiary of Naspers, pursuant to a transaction agreement dated October 18, 2016, or the Naspers Transaction Agreement. In consideration for the acquisition of the ibibo Group and MIH Internet’s cash contribution of $83.3 million to our holding company (representing 40% of our consolidated net working capital upon the completion of the acquisition after giving effect to the cash contribution from MIH Internet), we issued 38,971,539 Class B Shares to MIH Internet and MIH Internet exercised its option to purchase 413,035 new ordinary shares for a total cash consideration of $8.8 million.

The ibibo Group was founded in 2007 and provides online travel services in India through its consumer travel brands. The ibibo Group owns and operates www.goibibo.com, a hotel and travel packages aggregator and booking service focused on the Indian consumer travel market. The ibibo Group’s standalone hotels business is substantially similar to MMT India’s standalone hotels business and, following the completion of the acquisition of the ibibo Group, we continue to operate our hotels and packages business through MMT India under the MakeMyTrip brand, and Ibibo India under the Goibibo brand.

Goibibo also offers hotel room bookings and air ticketing services on www.goibibo.com and its mobile platforms, which are comparable to the hotels room bookings and air ticketing services offered on www.makemytrip.com and its mobile platforms. Like MMT India, the ibibo Group also offers rail tickets and ancillary travel services. While the ibibo Group and MMT India continue to operate these businesses under their respective Goibibo and MakeMyTrip brands, we believe that our acquisition of the ibibo Group will contribute to the growth of these complementary businesses under the MMT India and Ibibo India.

The ibibo Group also owns and operates redBus, a leading online bus ticketing brand with a presence across India and in select countries overseas. redBus operates its domestic business through www.redbus.in and its mobile platforms. redBus also sells bus tickets through its Seatseller platform. We believe that the addition of the redBus brand through our acquisition of the ibibo Group is a significant step in the growth of our bus ticketing business. redBus continues to operate separately under its existing brand.

Notwithstanding our plans to continue to operate the ibibo Group’s businesses separately from MMT India’s, over the years, we have integrated multiple technology platforms like telephony, CRM, web platforms etc. to support both MMT India and Ibibo India business. Further, we believe that bringing together the MakeMyTrip, Goibibo and redBus brands will strengthen each individual business. See also “Item 3. Key Information — D. Risk Factors —Risks Related to Us and Our Industry — Our Strategic Investments and Acquisitions May Not Bring Us Anticipated Benefits, and We May Not Be Successful in Pursuing Future Investments and Acquisitions.”

Other Acquisitions

In July 2018, we acquired 100% equity interest in Bitla, which provides technology support for bus operators. In April 2019, we also acquired 51% equity interest from the existing shareholders of Quest2Travel, which provides travel solutions for various corporates across India.

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Additional Information

The SEC maintains an internet site, www.sec.gov, that contains reports, proxy and information statements, and other information regarding issuers, like us, that file electronically with the SEC. We also maintain a website at www.makemytrip.com, which contains information about our company. The information on our website shall not be deemed part of this Annual Report.

B. Business Overview

We are a leading online travel company in India. Through our primary websites, www.makemytrip.com, www.goibibo.com and www.redbus.in, and mobile platforms, travelers can research, plan and book a wide range of travel services and products in India as well as overseas. Our services and products include air ticketing, hotels and packages, bus tickets, rail tickets, car hire, experiences and ancillary travel requirements such as facilitating access to third-party travel and other insurance products and visa processing. As of March 31, 2021, we provided our customers with access to all major domestic full-service and low-cost airlines operating in India and all major airlines operating to and from India, over 77,500 domestic accommodations in India, over 700,000 hotels and properties outside India, Indian Railways and over 3,500 bus operators, including several major bus operators in India, Peru, Colombia and select countries in Southeast Asia.

We commenced operations in 2000 with a focus on the non-resident Indian market in the United States, primarily servicing its demand for United States to India air tickets. We started our Indian business with the launch of our Indian MakeMyTrip website in September 2005. We primarily target Indian leisure and corporate travelers for our services and travel products who prefer to make their own travel arrangements through our online and offline sales channels.

We have invested significant capital in our infrastructure and in sales and marketing efforts to build our brand, acquire customers and gain recognition, and recorded net losses for each of our fiscal years except for fiscal years 2011 and 2012. We recorded a net loss $(167.9) million and $(447.5) million (of which $(302.9) million was the result of an impairment of goodwill and provision for litigations) in fiscal years 2019 and 2020, respectively. Further in fiscal year 2021, we curtailed our marketing and sales promotions expenses in response to lower travel demand due to the COVID-19 pandemic and reported a net loss of $(56.0) million.

We have leveraged our significant market share in air ticketing and our strong brand to rapidly diversify into the hotels and packages business, which represented 36.6% of our Adjusted Margin during fiscal year 2021 and 49.8% in fiscal year 2020. We continue to expand our bus ticketing business under the redBus brand, which we acquired as part of our acquisition of ibibo Group in fiscal year 2017. Air ticketing – Flights Segments, Hotels and packages – Room nights and Bus ticketing – Travelled tickets booked through us was 39.5 million, 26.6 million and 61.5 million, respectively, in fiscal year 2019, 42.1 million, 29.6 million and 78.6 million, respectively, in fiscal year 2020, and 15.0 million, 8.5 million and 26.7 million, respectively, in fiscal year 2021. Our gross bookings were $5.4 billion, $6.1 billion and $1.6 billion during 2019, 2020 and 2021, respectively.

Customers are able to make bookings on our MakeMyTrip, Goibibo and redBus mobile and desktop sites accessible through www.makemytrip.com, www.goibibo.com and www.redbus.in, respectively, and through our mobile applications for iOS, Android and Windows, which allow bookings for Indian and international flights, hotels and holiday packages, and Indian bus offerings, trains and inter-city cabs.

We have built advanced and secure technology platforms, which integrate our sales, customer service and fulfillment operations. Our technology platforms are scalable and can be upgraded to handle increased traffic and complexity of products with limited additional investment such as high traffic generated by promotional rates offered simultaneously by multiple travel operators. In order to meet the requirements of this growing Indian middle-class travel market, we also utilize other technology-enhanced distribution channels, including call centers in India, as well as our travel agents’ network in India.

We have made selective acquisitions in the past to grow our business, enhance our hotel inventory in popular travel destinations for our user base and to gain access to technology. In January 2017, we acquired the ibibo Group, a hotel and travel packages aggregator and booking service focused on the Indian consumer travel market. Through our acquisition of the ibibo Group, we also acquired and continue to operate and expand redBus, a leading online bus ticketing platform with a presence across India and in select countries overseas.

We believe the strength of our brands, quality of our services, user-friendliness of our website experience, focus on our customers and efficacy of our marketing programs have enabled us to capture a significant share of the domestic air travel market in India, while increasing online penetration of the primarily-offline international

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air and hotels market in India. Our MakeMyTrip, Goibibo and redBus brands have won a number of awards in the past four fiscal years, including:

 

Award

Brand

Year

Best Brand Performance Marketing Campaign at the Exchange4Media - Streaming India Awards.

MakeMyTrip

2021

Best Influencer Marketing Campaign at the Exchange4Media - Streaming India Awards.

MakeMyTrip

2021

Business World People HR Excellence (under different categories)

MakeMyTrip

2021

Best Domestic Tour Operator with operations more than 5 years at South Asia Travel and Tourism Exchange (“SATTE”)

MakeMyTrip

2020

Silver for Best B2C Campaign at ET Brand Equity DigiPlus Awards

Goibibo

2020

Favorite Specialist Tour Operator by CNT India (2019)

MakeMyTrip

2019

Best Online Travel Agency - B2C Category at FICCI Travel & Tourism Excellence Awards

MakeMyTrip

2019

Best Domestic Tour Operator by SATTE (2019)

MakeMyTrip

2019

SATTE Award for Excellence in Online booking sites

MakeMyTrip

2018

ET Brand Equity Marketing Awards - Integrated marketing campaign

MakeMyTrip

2018

ET Brand Equity Marketing Awards - Integrated marketing campaign

MakeMyTrip

2018

Times Travel Awards – Online Travel Agency of the year  (India)

MakeMyTrip

2018

Exchange4Media PrimeTime Awards

MakeMyTrip

2018

Jury Award for Best Travel Partner at Zee Business Travel Awards

MakeMyTrip

2018

 

Our Strengths

We have the following competitive strengths:

A Leading Travel Company in India with Well-Recognized Brands. Since commencing our travel business in India in 2005, we have become a leading company in the Indian travel market for air ticketing and hotels and packages bookings. In fiscal year 2019, 33.5 million flight segments for domestic air tickets in India and 26.6 million room-nights for hotels and packages were booked through us. In fiscal year 2020, 35.3 million flight segments for domestic air tickets in India and 29.6 million room-nights for hotels and packages were booked through us. In fiscal year 2021, 14.7 million flight segments for domestic air tickets in India and 8.5 million room-nights for hotels and packages were booked through us. Furthermore, based on data from the DGCA, we estimate that nearly one in three domestic air passengers in India booked their air ticket through our company by the end of fiscal year 2021.

We believe that our award-winning MakeMyTrip, Goibibo and redBus brands are well-recognized in the Indian travel industry. We have invested in developing and promoting our MakeMyTrip brand since our inception, using a combination of traditional channels such as print, radio and television, mass media campaigns, as well as search engine marketing and other innovative digital marketing tools, such as outreach through Facebook, YouTube, LinkedIn, Twitter and other social media websites, viral marketing and online display banners, to broaden our reach to travelers in India and overseas. We expect to continue to invest in our MakeMyTrip, Goibibo and redBus brands. We also believe that our brand strength is responsible for allowing us to source a significant portion of our traffic from non-paid sources such as search engine results and direct traffic, as opposed to paid results, such as search engine marketing. We believe that our reputation and market position have also provided us with the ability to negotiate competitive rates when contracting with airlines, hotels and other suppliers.

We believe that as the leading online travel agency in India we are well positioned to succeed as consumers’ destination of choice for fast, easily searchable and more transparent travel research and shopping. As our market share grows, we are increasingly able to leverage deep knowledge of the travel industry and consumer trends and preferences to further personalize our travel offerings and drive higher customer conversion. Additionally, we are able to provide better pricing through scale and by bundling multiple travel products together in a single offer.

Comprehensive Selection of Service and Product Offerings. We offer our customers a comprehensive selection of travel and travel-related services and products. We cater to the travel needs of residents in India as

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well as non-resident Indians and others traveling to India from the United States, Southeast Asia, the Gulf Cooperation Council countries and elsewhere. Our services and products include air tickets, hotels and packages, rail tickets, bus tickets, car hire, experiences and ancillary travel requirements such as facilitating access to travel and other insurance products and visa processing. As of March 31, 2021, we provided our customers with access to all major domestic full-service and low-cost airlines operating in India and all major airlines operating to and from India, over 77,500 domestic accommodation properties in India, over 700,000 hotels and properties outside India, Indian Railways and over 3,500 bus operators, including several major Indian, Peru, Colombia and South-East Asia countries bus operators. Our selection of hotels is diverse, with choices for travelers from budget to premium category offerings, homestays, villas and apartments being available on all our brands and also through our offline channels and corporate offerings. We believe our comprehensive selection of travel services and products makes us a “one stop shop” for various types of travel and related ancillary services for our customers’ travel needs and allows us to combine multiple products and provide customized packages that suit the unique needs of our customers.

Broad Distribution Network. We use a variety of technology-enhanced distribution channels to target the growing Indian middle-class travel market. Our distribution network is centered on our India-focused websites, www.makemytrip.com, www.goibibo.com and www.redbus.in, mobile applications for Android and iOS, our United Arab Emirates-focused website, www.makemytrip.ae, our call centers, and various franchisee-owned travel stores in India as of March 31, 2021. Travel agents can access our MakeMyTrip and redBus B2B websites through a dedicated platform called MyPartner which enable them to sell our full suite of online travel services to their customers. Our Holiday Experts initiative also offers a unique career opportunity to Indian women homemakers as it helps them utilize their skill-sets by providing them in-depth training and access to latest tools and technology, along with close and continuous mentoring. This initiative boasts more than 850 women who are working from home and helping our customers with our holiday offerings.

Advanced, Secure and Scalable Technology Platform. We have built an advanced and secure common technology platform which integrates our sales, supplier and customer services fulfillment operations. We have designed our websites and mobile applications to be user-friendly, providing our customers with extensive low-price options and alternative routings, as well as offering them combinations of flight and hotel bookings at cost-effective rates. Our websites also enable our customers to find their right destinations easily by using colloquial names or major landmarks. We continuously make improvements to our online booking platforms to enhance the user experience for researching and booking air tickets, hotels, packages and bus tickets on www.makemytrip.com, www.goibibo.com and www.redbus.in. We also continue to focus on automation, for example by making changes to our MakeMyTrip and Goibibo extranet sites to allow more of our hotel suppliers to use a self-service mode in managing their rates and inventory. redBus recently launched the redPro platform, which provides real-time operational insights to bus operators, allowing them to provide customized deals for our customers, analyze customer feedback and respond to customer concerns.

Our web-based booking engines have been designed to link to our suppliers’ systems either through “direct connects” or a GDS (we use both Amadeus CRS and Galileo GDS), and are capable of delivering real-time availability and pricing information for multiple options simultaneously. In addition, we also provide extranet access to our hotel suppliers where they can update their rates, inventory and content on our websites.

Our MakeMyTrip, Goibibo and redBus platforms are hosted on AWS, which provides a high degree of reliability, security and scalability and helps us to maintain adequate capacity. Our technology platforms can be upgraded to handle increased traffic and complexity of products with limited additional investment. In the past, we have experienced peak traffic on our websites when multiple airlines have offered promotional rates, simultaneously. On those occasions, on average our www.makemytrip.com website handled approximately 42,000 transactions and over 2.0 million searches in a day, our www.goibibo.com website handled approximately 80,000 transactions and over 4.0 million searches in a day across all our hotel, car, train and bus offerings and our website www.redbus.in, handled approximately 1.5 million website requests and over 6.0 million searches per day across our platforms.

Customer-Focused Approach.  We place significant emphasis on technology, personnel and training to improve our services to our customers. Our customers can choose from our various customer service channels to contact us, including web-based self-service or automated chat support as well as our toll-free call centers, our franchisee-owned travel stores and e-mail. We have access to a large amount of customer data through our MakeMyTrip, Goibibo and redBus businesses, which allows us to optimize our online marketing and provide customized product offerings. Our mobile service platforms allow customers to receive e-tickets and flight alerts via text messages and WhatsApp messages on their mobile phones. Our customers are also able to make bookings on our mobile sites and web application mobile sites, accessible through www.makemytrip.com,

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www.goibibo.com and www.redbus.in. In addition to being able to make different types of travel bookings on their smartphones and mobile devices, customers can view their booking details, cancel bookings, request e-tickets, track refund status, check flight status, look for new deals and use location-based services to find nearby places of interest. Our websites and mobile applications provide an enhanced user experience for researching and booking hotels, as well as valuable travel information not available on our mobile sites, such as user-generated travel reviews and destination guides to help customers conduct research and make travel decisions.

Our self-service web-support is available through free online accounts on our websites and allows customers to check the status of their domestic and international flight, train, bus or hotel bookings, cancel bookings and track the progress of refunds. Customers who require assistance or have inquiries about certain products also have an option to contact our sales representatives through our website. We have dedicated personnel available 24 hours a day, seven days a week, who provide assistance to our customers on a real-time basis.

MakeMyTrip and Goibibo also offer loyalty programs. MMT India offers the “MMT Black” loyalty program for select customers on an invite-only basis to promote repeat bookings and enhancing stickiness to the platform. MMT Black members earn rewards based on their spending on our apps and websites and these rewards can be used to get discounts on bookings on our website and mobile platforms and can also be exchanged for coupons and rewards from partner brands. In fiscal year 2021, we relaunched our premier, invite-only “MMT Black” loyalty program with enhanced supply funded benefits such as special discounts and upgrades on participating hotel brands, tier based complimentary flights, holiday privileges and rewards on each booking on our app and websites. As of March 31, 2021, we had 1.0 million enrolments in MMT Black. MMT India also offers “MakeMyTrip Double Black”, which aims to encourage users to make early bookings, without concerns relating to subsequent cancellations.

Goibibo’s “GoTribe” loyalty program allows registered users to earn rewards and benefits on their travel bookings. In fiscal year 2021, Goibibo also relaunched its loyalty program “GoTribe” to reward high value customers and to secure our users’ loyalty with our brand. Members earn Tribe coins and benefits such as special discounts and complimentary privileges with participating hotel brands, tier based complimentary flight seats on each booking. The Tribe coins can be used to convert to goCash+ or to claim Tribe coupons, which can be used for getting discounts in bookings. As of March 31, 2021, Goibibo had 0.6 million enrolments in GoTribe.

We primarily outsource our call center operations and fulfillment process in India to iEnergizer IT Services, Radical Minds Technologies, Concentrix Daksh Services, and others as we believe that these providers are experienced, reputable and able to adhere to our customer service standards and enhance our service quality. We also have a dedicated in-house escalation service team, which operates 24 hours a day, seven days a week, and is responsible for addressing issues or complaints raised by our customers. All of our representatives participate in a formal training program before commencing work and have in-depth knowledge of their relevant local market. Our representatives also attend periodic training programs to familiarize themselves with our new services and products.

Experienced Management Team. We operate in an industry where we believe one of the most important assets is the quality of our people. Our senior management team is comprised of industry executives with significant experience in the travel industry, including online travel agencies, in India and the United States. Our senior management team also has in-depth experience in the internet, consumer services and consumer product industries, having worked with companies such as GE Capital, PepsiCo, Colgate and Seagram. Our senior management team is supported by our broader leadership team, comprising talented and experienced professionals that oversee and implement our day-to-day operations. We also actively recruit MBA graduates and engineers from leading institutions in India to fill important management roles in our company.

Our Strategy

We believe that India’s growing base of more than half a billion internet and smartphone users, coupled with the country’s rapid drive towards digital adoption driven by its young population provide us with significant growth opportunities. Our objective is to pursue long-term market share growth opportunities to grow profitably by building on our current position as one of India’s leading online travel companies. The key elements of our strategy include:

Expand Our Hotels and Packages Business. Our hotels and packages business generally yields higher Adjusted Margin % than our air ticketing business, and we intend to continue shifting our business mix towards this segment. In fiscal year 2017, we acquired the ibibo Group, which operates a hotels and packages business under the Goibibo brand that is substantially similar to our MakeMyTrip business, making us one of the leading online hotels and packages providers in India.

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We aim to increase our market share by investing in automation, adoption of new technologies and greater focus on customers. Our objective is to enable more hotel suppliers to seamlessly connect to our various platforms using the latest technology, including direct connects, channel managers and direct integrations with various aggregators. We also continue to focus on automation by making changes to our extranet to allow more of our hotel suppliers to use a self-service mode for managing their rates, inventory, content, payments and confirm bookings made by our customers on a real-time basis. According to World Economic Forum, India is expected to have 1.1 billion internet users by 2030, driven by the continued adoption of smartphone usage. In terms of travel growth, industry experts have forecasted India to become the third largest aviation market by 2022 in the world and there are plans to increase the number of operational airports over the next 20 years. We believe that we can increase our total number of transactions as internet penetration in India increases over time. In addition, given the high penetration of smartphones in India, we have also introduced our extranet mobile application which allows hotels to directly update inventory and rates, and confirm bookings through the application. We are investing on improving the customer experience by improving our offering on various devices (especially mobile and tablets) which the customers use to connect with us and becoming more content-focused. We also intend to grow our packages business outside India through strategic partnerships and acquisitions, as well as by strengthening our relationships with key aggregators from whom we procure inventory for our packages products.

Expand Our Service and Product Portfolio to Enhance Cross-Selling Opportunities. We believe that expanding our service and product offerings is an important means of customer acquisition as the diversity of our services and products will improve our offerings to customers, attract more customers to our websites and mobile applications and allow us to cross sell higher-margin services and products to them. We expect to explore opportunities to expand our offerings of alternative accommodation, activities, experiences, multi-modal transportation and travel offerings across regions.

We seek to continue expanding our travel offerings beyond core air tickets, hotels and packages to mass market products including bus and rail. We introduced the sale of bus tickets in 2008 and the sale of rail tickets in 2009 under our MakeMyTrip brand. In January 2017, we expanded both of these businesses through the acquisition of the ibibo Group and the addition of its redBus bus ticketing and Goibibo rail ticketing businesses to our offerings. We also provide car hire services in conjunction with our holiday package bookings and in fiscal year 2018, we introduced intercity car hire services on both MakeMyTrip and Goibibo platforms. In fiscal year 2019, we introduced “Experiences”, a new category of service that allows our users to buy tickets to attractions, dinners and many other travel and local activities in their region. Further, we also provide other value-added ancillary services such as facilitating access to insurance and visa processing to enhance our customers’ travel. Currently we offer over 45,000 activities and experiences on our MakeMyTrip and Goibibo platforms, both domestically and overseas.  While this vertical is fairly new, we are already seeing meaningful cross selling of hotels and flights taking place from new users in our “Experiences” offerings. Further, we also provide other value-added ancillary services such as facilitating access to insurance and visa processing to enhance our customers’ travel experience.

Enhance Our Service Platforms by Investing in Technology. We intend to continue to invest in technology to enhance the features of our services and our platforms. We have integrated our hotels extranets platform, flights supply unification, pricing system and CRM unification across our MakeMyTrip and Goibibo brands. We also intend to extend user feedback features to more products, enable more user-friendly bookings to be saved by our customers and used across all our services and products, enhance our mobile service platform to make mobile transactions more user-friendly and allow real-time fingerprinting to prevent online credit card fraud. We intend to sell more of our holiday packages online in addition to selling through our call centers, which we believe will result in increasing our operating margins. We believe that our continued investments in technology will enable us to enhance our customer service and to capitalize on the expected growth opportunities in the online travel market in India. We intend to continue to focus on increasing our online and mobile customer base. We intend to continue to invest in mobile offerings and applications. We also intend to strengthen our focus on analytics, and upgrading our technology platform. We have also unified our back end systems for MakeMyTrip, Goibibo and redBus, which we believe will yield faster and more efficient development and deployment of system enhancements.

Expand into New Geographic Markets. We believe we are well positioned for growth in other overseas markets, particularly those with a significant non-resident Indian population as well as destinations with proximity to India and favored by Indian travelers, particularly popular regional destinations that are located within a five-hour flight from India. In December 2009, we launched our website, www.makemytrip.ae, in the United Arab Emirates, following, among other things, the registration of our website’s domain name with the relevant registry as well as the procurement of additional servers to handle the increased traffic from this new international website. The United Arab Emirates has a significant non-resident Indian population, and our website is intended to serve the travel needs of non-resident Indian travelers traveling from the United Arab Emirates and neighboring Middle

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Eastern countries to India as well as on their travels elsewhere. In 2021, we launched our flights and hotels desktop and mobile web platform covering the Gulf Cooperation Countries. We have developed multilingual content and vernacular search optimized pages in Arabic and English for such markets, which has resulted in additional travelers from the region using both our web and mobile platforms. We plan to expand our Arabic language-based offerings to our mobile apps and other channels and believe that we are well-positioned to capitalize on increased demand for travel-related products in this region after regional and international travel regains traction.

We entered the Singapore market by acquiring Luxury Tours in May 2011. In July 2011, we incorporated Luxury Tours (Malaysia) to expand our operations in Malaysia and adjacent markets. In November 2012, we expanded in South-East Asia through our acquisition of the ITC Group. In January 2017, as part of our acquisition of the ibibo Group, we entered the Colombia and Peru markets through our redBus business. In April 2018, redBus also commenced operations in Indonesia.

Pursue Selective Strategic Partnerships and Acquisitions. In addition to growing our business organically, we have in the past and may continue to pursue strategic partnerships and targeted acquisitions that complement our service offerings, strengthen or establish our presence in our targeted domestic and overseas markets or to gain access to technology. On January 31, 2017, we undertook a strategic combination with the ibibo Group by way of an acquisition of 100% equity interest in the ibibo Group, which owns and operates air ticketing, hotels and packages and rail and bus ticketing businesses under its Goibibo and redBus brands. In 2015, we acquired a minority stake in Inspirock, Inc. that currently stands at 19.8%. Inspirock owns and operates www.inspirock.com, an online planning tool for developing custom-made itineraries. In 2014, we acquired a minority equity interest in Simplotel which currently stands at 41.9%. In fiscal year 2013, we became the sole owner of Luxury Tours, a Singapore-based travel agency which is engaged in the business of providing hotel reservations, excursion tours and other related services to inbound and outbound travelers in Singapore and the rest of South-East Asia, following our initial investment in 2011. We became the sole owner of the ITC Group in 2015, a well-established hotel aggregator and tour operator focused on Thailand in which we initially invested in 2012. In fiscal year 2019, we acquired 100% equity interest in Bitla, which provides technology support for bus operators and in fiscal year 2020, we also acquired 51% equity interest from the existing shareholders of Quest2Travel, which provides travel solutions for various corporates across India. We also hold a 38.6% stake in Saaranya Hospitality Technology Private Limited. We believe that our acquisitions and partnerships, together with our technology platform that enables us to successfully and cost-effectively integrate our new acquisitions and partners, have helped to strengthen our positions in our different businesses. We expect to continue to monitor strategic partnerships and acquisitions in the future.

Our Services and Products

We offer a comprehensive selection of travel and travel-related services and products catering to the travel needs of residents in India as well as non-resident Indians and others traveling to India from the United States, Southeast Asia, the Gulf Cooperation Council countries and elsewhere. We provide travelers with the tools and information they need to efficiently research, plan, book and purchase travel services and products in India as well as overseas. Our services and products include air tickets, hotels, packages, bus tickets, rail tickets, car hire, experiences and ancillary travel requirements such as visa processing and facilitating access to travel and other insurance products. Our key customers include leisure travelers and corporates.

Air Ticketing

Our air ticketing business is primarily targeted at domestic travel within India and international travel originating in India; and inbound travel to India from the United States, Southeast Asia, the Gulf Cooperation Council countries and elsewhere. We further expanded our air ticketing business in 2017 through our acquisition of the ibibo Group, through which we continue to operate our Goibibo business.

We commenced our air ticketing operations under our MakeMyTrip brand in 2000 and have experienced significant growth in our air ticketing business covering domestic travel within India and international travel from India. Furthermore, based on data from the DGCA, we estimate that nearly one in three domestic air passengers in India booked their air ticket through our company by the end of fiscal year 2021. The following table sets forth the number of flight segments booked through our platforms for the periods indicated.

 

 

 

Number of Flight Segments

 

 

For Fiscal Year March 31

 

 

2019

 

2020

 

2021

Indian domestic air travel

 

33.5 million

 

35.3 million

 

14.7 million

Outbound (outside India) air travel

 

6.0 million

 

6.8 million

 

0.3 million

 

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We provide our customers with a wide selection of airline tickets for all major domestic full-service and low-cost airlines operating in India, including Air India, Air India Express, Go Air, IndiGo, SpiceJet, Vistara, Air Asia and Trujet; and all major international flights that originate from cities in India, including Air India, Air France-KLM, British Airways, Emirates, Lufthansa, Malaysia Airlines, Singapore Airlines, Thai Airways, Air Asia, Etihad Airways, Kenya Airways, Qatar Airways, Virgin Atlantic and Malindo. We make bookings with these airlines either through a GDS (we use both Amadeus CRS and Galileo GDS) or via “direct connects” to the airlines’ booking systems.

We believe our websites and mobile platforms provide comprehensive information to our customers in a time-efficient and unbiased manner. Customers are able to quickly and easily evaluate a broad range of potential fare and airline combinations through our user-friendly websites. Customers may search for flights based on their preferred travel dates, destinations, number of passengers, number of stops and class of travel, or may use our more advanced search tool and include additional search parameters. For example, for our Indian domestic flights, customers may include searches for night flights, specify a preference for direct flights, as well as include only certain airlines and only refundable fares. Customers can also easily filter and sort the results of their search according to their preferences. Further, we have also introduced features that allow customers to select their preferred seats, book meals and check in baggage using our website and mobile platforms.

Hotels and Packages

We introduced our hotels and packages business in 2005 and have since experienced significant growth in this area, including through our acquisition of the ibibo Group in January 2017. We operate our hotels and packages business mainly through MMT India under the MakeMyTrip brand and the ibibo Group under the Goibibo brand. The total number of room-nights in our hotels and packages business was 26.6 million, 29.6 million and 8.5 million in fiscal years 2019, 2020 and 2021, respectively.

Hotels. Customers can search 77,500 domestic accommodation properties including over 23,000 alternative accommodation properties in India and over 700,000 hotels and properties outside India on our MakeMyTrip and Goibibo websites. We obtain access to room inventory from our hotel suppliers through three methods: “direct connects,” “direct allocation” and for most hotels outside India, through contracts with online travel agents and aggregators outside India. Substantially all of our hotel suppliers in India have a “direct allocation” arrangement with us whereby they allocate rooms directly to us either by managing their room inventory on an extranet provided by us, or through channel managers, or supported by us via telephone. We do not assume any inventory risk for such “direct allocation” as unsold inventory is released to the hotels within an agreed period of time. The remaining hotels in India are connected through direct connects. “Direct connect” is the method by which our booking systems are integrated with the central reservations systems of the hotels and reservations made are confirmed on a real-time basis, although this applies to a small proportion of our total hotel bookings. Through our ongoing efforts to increase the automation of and otherwise improve our extranet, our hotel suppliers are now able to perform most of the necessary functions for executing transactions through our system without our direct involvement. We obtain access to inventory for most hotels outside India through contracts with other online travel agents and aggregators outside India. In some instances, in order to enjoy special negotiated rates for these hotels, we pre-purchase hotel room nights and assume inventory risk on them. Our inventory also includes home stays and budget rooms through “goSTAYS” at Goibibo and MakeMyTrip. In 2017, we also introduced MakeMyTrip Assured Hotels, which categorizes based on quality and service reviews to provide quality assurance to customers at the time of booking. During fiscal year 2018, we merged our supplier extranet for MakeMyTrip and Goibibo to a common technology platform for our domestic and self-contracted international accommodation properties both on our websites and mobile applications. We are also working to further develop this platform by adding features such as payment reconciliation, management of inventory, rates, promotions and analytical capabilities. We have also expanded our hotel offerings by providing alternate accommodations, which include villas, apartments, hostels, homestays and cottages. We do not assume any inventory risk and these properties allocate their inventory to us directly or through channel managers. We have also introduced calendar sync option, which allows alternative accommodation providers to update inventory by synchronizing their calendars. We allow customers to book these properties through all of our online platforms. In 2020, we introduced a feature for certain alternative accommodation properties to facilitate communication between customers and hosts.

Our customer base is primarily residents in India and non-resident Indians and others traveling to India from the United States, Southeast Asia, the Gulf Cooperation Council countries and elsewhere. With respect to our websites and applications, the focus of our technological improvement and sales efforts is on consolidating multiple supply sources and identifying the best rates possible for our customers. On our www.makemytrip.com and www.goibibo.com websites and through our applications on various mobile platforms, customers may search for hotels based on their destination, preferred dates for check-in and check-out, and may easily filter their search

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results by selecting star ratings, specific hotel chains, location, accommodation type and other options. Customers can also indicate amenity preferences, such as business services, internet access, fitness centers, swimming pools and travel assistance. MakeMyTrip’s “View Map” offers customers the ability to compare hotel locations on an interactive neighborhood map. Our online hotel booking platforms provide an enhanced user experience for researching and booking hotels on desktop and mobile devices.

Packages. We offer pre-packaged vacations designed by our in-house product specialists, under arrangements with various travel suppliers and our GDS service providers to cater to both individual and group travelers. Our packages also include various travel services such as facilitating access to travel and other insurance products from third-party insurers, visa processing, airport transfer and sightseeing.

 

Indian Domestic Packages. We offer a variety of packages, including escorted tours, honeymoon specials and weekend breakaways, as well as vacation themes, such as beach, adventure, family, pilgrimage, romantic, shopping, cruise and culture. Our demographic target for the “weekend breakaways” packages is corporate executives.

 

International Packages. We offer pre-designed independent packages, customized independent vacations, customized group tours and pre-designed escorted tours. The wide array of holiday options offered is intended to suit varying budgets and preferences of potential customers.

 

Meetings, Incentives, Conferences, Exhibitions and Events. Our MICE team offers services to organizations and other groups who wish to plan meetings, conferences, weddings or other events or organize group trips. Our MICE team assists such customers in planning and booking travel arrangements for large groups of travelers and delivers tickets and other documentation, and, on request of the customers, a member of our MICE team will accompany the group during the travel in order to ensure that all plans and activities run smoothly.

 

Corporate Travel Service. In fiscal year 2018, we introduced the corporate booking tool “myBiz” which is a complete business travel solution for the booking of travel services by corporates and SMEs. myBiz was built to provide greater flexibility and convenience for business travel and also offers corporate travel benefits for employees. myBiz is also designed to reduce payment inefficiencies and minimize corporate card abuse. It offers a centralized, corporate level wallet for all bookings, which is managed by corporate administrators and provides real-time reporting. With the acquisition of Quest2Travel in April 2019, which provides travel solutions for various corporates across India, we intend to further strengthen our offerings to corporate travelers. As of March 31, 2021, more than 10,300 corporates transacted on our platform across air ticketing or hotel bookings. We have seen great customer satisfaction scores and multi-fold growth in this business in the last fiscal.

See Note 6 to the accompanying consolidated financial statements in Item 18 for a breakdown of total revenues by geographical location of customers for each of the last three fiscal years.

Bus Ticketing

We own and operate our bus ticketing business primarily through redBus, a leading online bus ticketing platform with a presence across India through www.redbus.in and in select countries overseas through our other regional redBus websites. We acquired our redBus through our acquisition of the ibibo Group in 2017. Customers can also make bus bookings on our MakeMyTrip and Goibibo websites in India and on mobile platforms through our mobile applications for iOS and Android. We believe that the strength of these three brands have positioned us to increase our penetration of the bus ticketing market in India. Customers can also access YourBus, a vehicle tracking tool and other features in all three brands. Through our websites and mobile platforms, 61.5 million, 78.6 million and 26.7 million bus tickets were booked in fiscal years 2019, 2020 and 2021, respectively.

We have agreements with several major Indian, Peruvian, Colombian and South-East Asian countries bus operators including government bus operators, some of which are operators of multiple routes, as well as with aggregators and other intermediaries. Our bus tickets inventory is obtained through two channels: real-time inventory from operators who are directly connected to our booking system; inventory from aggregators who are directly connected to our booking system.

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Customers can search for bus tickets based on their preferred platform with their travel dates and routes and our websites will typically display numerous options for customers to choose from. We offer our customers basic information on the type of bus used on the relevant route and customers are able to select seats, choose from the available boarding points in the relevant city on the routes as well as obtain information on the location of the chosen boarding point among other details. Our websites and apps also enables our customers to find their destinations easily by using colloquial names. We also recently made significant improvements to our online bus booking platform, such as more flexible filters and crowd-sourced bus images and reviews from our users which helps our customers make informed decisions while booking buses.

redBus also sells bus tickets through agent platform, SeatSeller, which comprises more than 12,800 agents across India, South-East Asia and Latin America. In addition, redBus tickets are sold through more than 200 application programming interface, or API partners. The redBus transaction database is highly scalable to cater to our growing transaction needs.

In fiscal year 2021, redBus launched a variety of initiatives aimed at improving our customer experience, including “Flexi Ticket” which enables customers to reschedule bookings efficiently, “Primo” which provides customers with information on available third-party services during their journey and a customized travel insurance product in collaboration with an insurance provider. In international markets, redBus offers “Pay@Bus”, which enables customers to book bus tickets in advance and pay for such tickets upon boarding.

Other Services and Products

Rail Tickets. We sell railway tickets in India on our MakeMyTrip and Goibibo platforms through “direct-connect” access to Indian Railways’ passenger reservation system online, allowing customers to reserve and purchase Indian Railways tickets on a real-time basis through our websites. Indian Railways is India’s state-owned railway, which owns and operates most of India’s rail transport. We booked 1.8 million, 4.1 million and 1.2 million transactions for rail tickets in fiscal years 2019, 2020 and 2021, respectively.

Using a customized search interface, our customers are able to quickly search for train tickets based on their preferred travel dates, destinations and class of travel. Customers are able to compare travel options across various trains, classes, dates and prices. The search results displayed are detailed and have been customized to suit the needs of local Indian railway users.

In 2020, we launched our partnership with Larson & Turbo Metro Rail Hyderabad Ltd, to enable commuters to book paperless Hyderabad metro tickets on our MakeMyTrip and Goibibo platforms. We booked 0.15 million and 0.1 million transactions for these metro tickets in fiscal years 2020 and 2021, respectively.

Car Hire. We provide car hire services in conjunction with holiday package bookings, pick and drop from airport and outstation cabs on both MakeMyTrip and Goibibo platforms. In fiscal year 2018, we introduced outstation cabs services on both MakeMyTrip and Goibibo platforms. Customers can make their bookings on our desktop and mobile sites and using our mobile applications for iOS and Android. As of March 31, 2021, we offered outstation cab services in more than 1,200 cities in India. We also offer airport pick-up and drop-off services from and to 12 airports across the country. Through our websites and mobile platform more than 0.4 million, 0.5 million and 0.1 million transactions were booked in fiscal years 2019, 2020 and 2021, respectively, for outstation cabs services. For airport pick-up and drop-off services, 0.4 million and 0.2 million transactions were booked in fiscal years 2020 and 2021, respectively.

Experiences

 

In fiscal year 2019, we introduced “Experiences” to enable our users to explore local activities in destinations that they travel to. We aim to provide our customers with a wide range of options for local activities for a seamless integrated trip across destinations, facilitated by instant confirmations on our booking systems. As of March 31, 2021, we have partnered with premium service providers across the world to bring over 45,000 domestic and international products to our customers.

Ancillary Services and Products

As an ancillary service offered to our customers, customers have the option of purchasing travel insurance from third-party insurers for trips booked on our online platforms at the time of booking. In the fiscal year 2020, MMT India and Ibibo India began offering lost baggage protection for international flyers in the form of

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compensation for delayed or lost baggage. In addition, our customers can pre-book meals from various airport meal outlets in select cities.

In the fiscal year 2021, MMT India and Ibibo India began facilitating access to COVID-19 insurance from third-party insurers, which covers hospitalization upon illness within 15 days of travel. We also launched door-to-door baggage delivery services through third party logistics providers to provide added convenience and seamless airport transfers to our customers.

Distribution Channels

We utilize a variety of technology-enhanced distribution channels to target the growing Indian middle-class travel market, where digital and ecommerce adoption is still at an early stage. Our broad distribution network gives us access to Indians traveling domestically or overseas and also reaches non-resident Indians and others traveling inbound to India. Our distribution network uses a combination of our websites, call centers, and franchisee-owned travel stores as well as our travel agents’ network in India and mobile service platform, giving us multiple channels to access these customers. The majority of our total transactions are carried out through our websites and mobile applications.

Our customers’ varied needs are served by different distribution channels. During fiscal year 2019, nearly all of our sales of air tickets for travel were made through our websites and mobile applications and the balance of our sales for air tickets, were made through our call centers and were most commonly for inbound travel. While we experienced a decrease in the average number of active users per month on our desktop websites between fiscal years 2019 and 2021, we believe that this is due to more customers shifting towards using our mobile applications instead of our desktop website as a result of the increased use of smartphones and mobile devices in India. Our sales of hotel rooms are also primarily made through our websites and our mobile applications. Our customers can book standard flight plus hotel packages on our websites and our mobile applications, but the majority of the sales of packages within or outside India are concluded through our call centers, and travel agents’ network. All of our bus and rail ticket sales in India are made through our Indian website and our mobile applications.

Internet Websites and Mobile Applications

Our MakeMyTrip brand operate through the websites www.makemytrip.com and other overseas regional websites servicing the Indian domestic and outbound market, the United States-India inbound market (focusing in particular on non-resident Indians in the United States), the Gulf Cooperation Council countries, and neighboring South-East Asian countries. Our Goibibo brand operates through www.goibibo.com and our redBus brand operates through www.redbus.in and other overseas regional websites.

Our websites and their content are tailored to our predominantly Indian user base. For example, on www.makemytrip.com, we have localized our top-selling hotel webpages with information and using language that we believe would be more attractive and relevant to an Indian user. Following our acquisition of the ibibo Group in January 2017, we have integrated the in-house development capabilities of MMT India and the ibibo Group to continuously maintain and improve our various platforms, including our www.makemytrip.com, www.goibibo.com and www.redbus.in websites. In 2021, we also launched the Arabic language version of our desktop and mobile website for flights and hotels product offerings in the Middle-East, specifically the Gulf Cooperation Council countries. The multilingual content has helped us build vernacular search optimized pages and acquire more Arabic speaking travelers and also led to increase in our mobile application downloads (English version) and acquire new users gradually in the region.

Using our websites, customers can easily and quickly review the pricing and availability of nearly all our services and products, evaluate and compare options, and book and purchase such service and products online. We have also designed our websites to offer personalized recommendations and offers based on a customer’s history. In addition, we have self-service customer support modules on our websites to let our customers check their refund status, modify or cancel reservations and view their travel itineraries. Customers can also purchase ancillary travel-related services and products, such as travel and other insurance products as part of the booking process. Certain packages for MICE or other customized packages cannot be purchased online although customers can submit inquiries through our websites and our sales representatives will contact such customers to follow up and process the transaction, if required.

Typically, a transaction on our websites involves the following steps:

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Search. A customer conducts a search for a particular product, or combination of products (for example, flight plus hotel), on our websites by defining desired parameters. For example, for domestic Indian flights, apart from the city of departure and destination, number of travelers and dates of travel, our customers can also input additional parameters such as preferred cabin class, preferred airlines, refundable fares and direct flights. Our websites’ search capabilities employ scalable search and routing logic that we believe return comprehensive results without sacrificing search response times or creating added stress on our suppliers’ infrastructure. Our search results are generated in a cost-effective and time-efficient manner since over 80% of our search results come from cache. Our web-based MakeMyTrip, Goibibo and redBus booking engines, which have been designed to link to our suppliers’ systems either through “direct connects” or a GDS (we use both Amadeus CRS and Galileo GDS), allows us to deliver real-time information. In addition, we also provide extranet access to our hotel suppliers where they can update their rates, inventory and content on our websites.

Select. At this stage, our websites display to the customer various possible selections that are available in a user-friendly format, and also prompt the customer with available special offers or provide additional information about the product. Our websites are enabled with asynchronous JavaScript and extensible markup language allowing customers to sort or refine search results by further defining certain parameters such as price range, time range, preferred airlines and availability of refunds for air tickets, and star rating, preferred hotel chains and hotel amenities.

Review. After a customer has selected a particular option, our websites will provide the customer with an opportunity to review the details of the product being purchased and the terms and conditions of such purchase. At this stage, our websites connect to the GDS (Amadeus CRS and Galileo GDS) or the websites of our travel suppliers to confirm the availability and pricing of the product selected, and in the event the customer’s choice is not available, the customer will be informed of the next-best alternative to the selected product. Customers booking travel products on our websites and mobile applications will also be shown options to purchase travel and other insurance products and other related ancillary services.

Payment. We offer our customers a variety of payment methods. On our Indian websites, customers may pay in Indian Rupees with credit cards, debit cards issued by several major banks in India (including Citibank, ICICI Bank, HDFC Bank, State Bank of India and AXIS Bank), bank transfers, e-wallets and unified payment interfaces such as GooglePay and PhonePe. We also offer partial payment options for large value transactions. All sales made through our desktop and mobile platforms require consumers to pay or guarantee their purchases with their credit cards or other payment options. Our online payment gateways are secured by “Verified by VISA,” “MasterCard Secure Code,” “Diners ProtectBuy,” “RuPay PaySecure” and “American Express SafeKey.” Customers may also use our propriety prepaid wallets (“MyWallet”, “GoCash” and “redBus Wallet”) to obtain instant refunds and a quicker checkout experience. We also accept international cards (issued outside India) through single factor authorization for which fraud chargeback liability is on MakeMyTrip. On our US MakeMyTrip website, customers may pay in US dollars with credit cards or through PayPal. On our United Arab Emirates website, customers may pay in United Arab Emirates Dirhams with credit cards or other payment modes acceptable in UAE. On our other international websites, customers may pay in multiple currencies with credit cards.

In fiscal year 2021, we launched deferred payment plans through one of our subsidiary in India to serve the online customers of MMT India and Ibibo India, giving our customers the option to pay for their bookings in monthly instalments over a duration of up to 12 months, in partnership with banks such as ICICI and IDFC and non-banking finance companies such as Kissht, Capital Float and Zest Money. We do not assume credit risk for these travel loans. We also offer an algorithm-based “Book Now, Pay Later” option for certain customers and offerings, as well as a hotel booking option that requires Rs. 1 at booking with the remainder auto-debited after completion of the stay.

In order to simplify the booking process for our customers, our websites do not require prior customer registration in order for the purchase to be completed. Customers who do not wish to register will simply be prompted prior to payment to provide basic contact details (including their name, telephone number and e-mail address) for purposes of the travel product they intend to purchase. An electronic confirmation is sent to the customer’s e-mail address and customers can also use our self-service web-support, My Account, to check their booking details, print e-tickets and vouchers, cancel bookings and track progress of refunds.

We use single factor authentication for Latin America transactions in our redBus ticketing business and have enabled fraud verification through a risk mitigation tool, CyberSource which helps in screening suspicious transactions. We support offline payments for Indonesia and Latin American markets, where customers can reserve seats for a fixed number of hours and subsequently pay for such seats in cash at ATM stores and other offline locations.

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Our MakeMyTrip, Goibibo and redBus mobile platforms cater to the full range of traveler needs. This includes our mobile websites and mobile applications, which allow customers to search, book and pay for Indian domestic and international air tickets, hotels and packages, bus and rail tickets, cab bookings and attractions and activity bookings on their mobile phones at no additional cost with flexibility of payment options. The tickets and bookings are delivered through email and WhatsApp messages. We also send regular updates on our offers to our customers via push notification on mobile applications. In addition to being able to make different types of travel bookings on their smartphones and mobile devices, customers can view their booking details, cancel bookings, request e-tickets, track refund status, look for new deals and use location-based services to find nearby places of interest. Our mobile applications are available for Android, iOS, and Windows devices. As of March 31, 2021, we had over 51 million life to date transacted customers on our various platforms.

According to App Annie, our MakeMyTrip mobile application had a total average of over 17.3 million, 22.2 million and 15.1 million active users per month in fiscal years 2019, 2020 and 2021, respectively, our Goibibo mobile applications had a total average of over 10.4 million, 12.8 million and 9.2 million active users per month in fiscal years 2019, 2020 and 2021, respectively, and redBus mobile applications had a total average of over 9.2 million, 14.1 million and 7.6 million active users per month in fiscal years 2019, 2020 and 2021, respectively.

As of March 31, 2021, our MakeMyTrip mobile application had been downloaded approximately 114.8 million times on Android, approximately 12.4 million times on iOS and approximately 0.4 million times on Windows Mobile. As of March 31, 2021, our Goibibo mobile application had been downloaded approximately 98.2 million times on Android and approximately 7.7 million times on iOS. As of March 31, 2021, our redBus mobile application had been downloaded approximately 56.1 million times on Android and 4.1 million times on iOS. Approximately 86% of our Indian online visitors reached us through our mobile platforms in fiscal year 2021. We have invested significantly in customer acquisition and inducement programs in order to increase mobile application downloads and accelerate growth in our India standalone hotel booking business. In our standalone hotels business, more than 80% of online transactions in fiscal year 2021 were completed through our mobile platforms.

Call Centers

Our in-house call centers that handle our sales and post-sales customer service support for MMT India’s international hotels and packages business as well as domestic Indian packages with more complicated itineraries, are run out of Gurugram and Nashik in India. For our International business operations, we also have our call centers in Singapore and Thailand. Our in-house call centers that handle our sales and post-sales customer service support for our bus-related services are run out of Bengaluru and Pune. We also outsource our call centers in Malaysia which supports our bus ticketing operations in Singapore and Malaysia. For our overseas bus ticketing business, we also have our in-house call centers in Indonesia, Peru and Colombia. Our call centers in India operate 24 hours a day, seven days a week and customers can call these centers to consult with our sales representatives, receive comprehensive, real-time hotel and package information, and make travel bookings. All of our sales representatives in India participate up to four-week training program before commencing work and have an in-depth knowledge of their relevant local market. Our sales representatives are also trained and updated with our new services and products.

To achieve cost-efficiency and scalability, we utilize various third-party vendors in India to manage our call center service and we outsource our call center service for sales and service for all international flights (both inbound to India and outbound from India), and most of our hotel reservations and packages to such vendors. Our outsourcing service providers also handle our post-sales customer service support for all flights (domestic and international), hotel reservations and packages, and rail and bus ticketing, as well as back office fulfillment and ticketing services. We primarily outsource our call center operations and fulfillment process in India to iEnergizer IT Services, Radical Minds Technologies, Concentrix Daksh Services, and others as we believe that these providers are experienced, reputable and able to adhere to our customer service standards and enhance our service quality. Our external agents complete training programs and refresher training courses in order to understand our processes and systems.

All our call centers are equipped with our enterprise resource planning, or ERP, application, allowing our sales representatives and agents to make bookings and create packages, as well as attend to customer requests. These centers are also linked to our CRM system which enables us to monitor the performance of our sales representatives and outsourced agents on a round-the-clock basis. We also have software that enables us to log on to customer calls enabling us to perform random checks on our call centers on a real-time basis. Our system also enables us to monitor the number of waiting calls and limit customer-aborted calls on our hotlines due to unacceptably long waiting times. We have an in-house quality team, which monitors the quality of our call center transactions, including the tone and voice of our customers, in order to ensure high quality service is consistently

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offered to our customers. We also have a third-party partner who audits the inbound and outbound calls and emails of our call center agents.

Travel Stores

As of March 31, 2021, we had over 150 franchisee-owned travel stores operated under the Pan India name, which primarily sell packages under our MakeMyTrip brand. During the COVID-19 pandemic in 2020, we have also right sized some of our businesses in sync with our longer term growth strategy to transition out of high fixed costs offline sales channels as a result of which we have shut all our company owned travel stores and counters in airports in India.

At our franchisee-owned travel stores, customers can consult with our sales representatives, receive comprehensive, real-time flight, hotel and package information as well as information for other services and products, and make travel bookings, without prior appointment. Unlike agents in our travel agents’ network described below, agents in our franchisee-owned travel stores sell our products exclusively. These travel stores are also equipped with our ERP application and linked to our CRM system.

The customer experience in all our franchisee-owned travel stores is substantially similar because they are operated according to our guidelines, as required in our contractual arrangements with our franchisees. In addition to providing our franchisees with the use of our ERP application, links to our CRM system and a license to use our brand, we also make frequent on-site visits and provide other technical operational support to our franchisees. In exchange, we receive a fixed non-refundable fee and a share of revenues from all sales made by our franchisee-owned stores. The fee amounts and revenue-sharing rates are negotiable depending on the location of the store and other factors. In general, we encourage our franchisees to adapt their businesses to meet the demands and needs of their local market and customers.

Travel Agents’ Network

Our travel agents can access our MakeMyTrip, Goibibo and redBus B2B websites, which enable them to sell our full suite of online travel services to customers. Our B2B websites use a similar interface as our external customer-facing websites. We believe our network is attractive to travel agents as we provide access to products which such agents may not otherwise be able to access cost-effectively or at all. These travel agents earn commissions from us depending on the volume and type of travel services and products sold. Furthermore, our travel agents’ network allows us to expand our footprint in India and distribution network in a cost-effective manner. In fiscal year 2021, MMT India launched dedicated platform “myPartner” for travel agents, which enables travel agents to book hotels and air tickets on our platform, with direct access to our hotel and flight inventory. As of March 31, 2021, we had over 11,000 registered agents on our “myPartner” platform.

Technology and Infrastructure

General

We benefit from an advanced technology platform which we believe has a high level of reliability, security and scalability, and which has been designed to handle high transaction volumes across all our websites on shared infrastructure.

We operate our technology platform through external and internal data centers in India located in Mumbai, Chennai and Gurugram. Our Indian external data centers utilize AWS Mumbai region. Our internal data center runs independently and serves all the data needs of our internal operations, such as e-mail.

Our website utilizes AWS across multiple availability zones, which provides greater reliability through redundancy protection, including during peak traffic periods. This capability helps us to ensure business continuity and minimize potential damage in the event of a disruption.

To further support business continuity, our Indian external data centers are able to replicate and synchronize data from each other on a continuous basis, which effectively allows them to back up each other’s data. In addition, all data is backed up on a weekly basis on tapes. These tapes are kept at a safe and secure location outside the data centers.

Our technology infrastructure is monitored by an internal team and is assisted by an outsourced security monitoring and engineering support team that operate 24 hours a day, seven days a week. All our servers installed at our data centers and at our offices are also secured with firewalls.

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We have the ability to scale our technology platform up and down to meet our needs without incurring substantial costs through the use of virtual machines, cloud platforms and infrastructure when required. Our technology stack is also modular and can be easily modified for multiple lines of business.

We believe we have core technology advantages in multiple areas, including:

 

website logic that simplifies and improves our customers’ ability to book a trip most suited to their requirements, including providing extensive low-price options and alternative routings, and assisting customers in finding their destinations easily by using colloquial names or major landmarks;

 

availability on a variety of mobile platforms, including iOS and Android;

 

scalable search and caching technologies that return comprehensive results and allow us to provide more flight and hotel options to our customers without sacrificing search response times or creating added stress on our suppliers’ operating or cost infrastructure;

 

capability to combine various flight plus hotel options, offering our customers the ability to see multiple combinations of airlines and hotels to assemble a package, resulting in trips that are frequently less expensive than individually booked components and more flexible for our customers;

 

social engagement platform that allows our customers to connect to their virtual friends through our site, using various sharing options from external social networks; and

 

capability to monitor the more than 10,000 unique system, application, network, security and business metrics that make up our technology platform, including the capability to generate advanced reports and alerts related to this data.

Fully Integrated Technology Platform

Our CRM systems in India use an in-house developed CRM and telephony platform, which integrate our sales, customer service and fulfillment operations. Our CRM systems are designed to analyze customer needs for better servicing. They generate reports identifying areas of opportunity or weakness and thereby help us in improving our service and product quality. Our web-enabled centralized booking system in India enables our customers and B2B partners to search and book travel services and products we sell and provide on a real-time basis. We also have “Verified by VISA,” “MasterCard SecureCode,” “Diners ProtectBuy,” “UPI”, “RuPay PaySecure” and “American Express SafeKey” enabled payment gateways, which provides additional security for transactions via our Indian website using credit cards and debit cards issued by Indian institutions. We also offer payment options via net banking and other instruments. Telephone services are powered by Avaya and Ameyo.

Our system also allows us to provide high quality customer service by promptly processing customer inquiries and requests and by monitoring the performance of our sales and customer service representatives and our outsourced call center sales force on a round-the-clock basis. Our system also enables us to monitor the number of waiting calls and limit aborted calls on our hotlines due to long waiting time.

Our ERP application uses Microsoft Dynamics for MMT India, Ibibo India and certain other subsidiaries. These systems are integrated with our mid-office systems, which enable our agents to create and amend bookings as well as to attend to customer inquiries raised in our CRM systems.

Our MakeMyTrip, Goibibo and redBus platforms are hosted on AWS, which provides us the flexibility to scale horizontally. AWS provides a high degree of reliability, security and scalability all at the same time. For business continuity, these systems are backed up and snapshots are taken at regular intervals, including several times throughout the day. We have the ability to scale any of our applications depending on the traffic. This helps us in maintaining adequate capacity. Our technology architecture is modeled on web service architecture, which enables us to move swiftly and make changes on any APIs. We also have a New Relic monitoring system that tracks crucial metrics of our Goibibo and redBus applications. These provide information on system health, performance and security that is trackable in real time and can be data mined for troubleshooting.

We also use software from Omniture Web Analytics, SAS, Big Data Hive, Google Analytics Premium and PowerBI to assist us in analyzing our web-based business through various metrics, such as the rate of conversion of visitors to our websites to purchasing customers. We also use RedShift, a data warehousing system, to correlate data across multiple systems. Our In-house Campaign Manager software enables us to conduct real-time, targeted event-based campaigns on WhatsApp notifications and similar applications, email and SMS.

Our systems include automation for ticketing, monitoring of schedule changes and providing alerts to customers, as well as auto-cancelation of reservations made through GDSs or airlines’ central reservations

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systems. We are continually looking for opportunities to automate our processes in order to further increase our productivity and improve the scalability of our business.

Our core technology platform is scalable and can be scaled to handle increased traffic and complexity of products with limited additional investment.

Security

We are committed to protecting the security of our customers’ information. We maintain an information security team that is responsible for implementing and maintaining controls to prevent unauthorized users to access our systems. These controls include the implementation of information security policies and procedures, security monitoring software, encryption policies, access policies, password policies, physical access limitations, and detection and monitoring of fraud from internal staff. We have acquired a fraud detection system which uses transaction patterns and other data sources which seek to prevent fraudulent transactions in real-time for MMT India and Goibibo.

We rely on licensed encryption and authentication technology to effect secure transmission of confidential customer information, including credit card numbers, over the Internet. All sensitive data transmitted through our systems is encrypted using SSL 1024-bit encryption technology.

Our information security team also coordinates internal and external audits every six months. Our travel portals in India are compliant with the PCI-DSS (Payment Card Industry Data Security Standard) (a set of requirements for enhancing payment account security developed by the Payment Card Industry Security Standards Council, which include key credit card and financial services companies).

Marketing and Brand Awareness

We believe our online and offline marketing strategies increase our brand awareness, drive potential customers to our websites and mobile applications and improve the rate at which potential customers visiting our websites and mobile applications and become actual customers. Our marketing strategies have been in line with our objective of driving the shift from offline to online, especially in the hotels and packages and ground transport businesses and reaching the underpenetrated and fragmented Indian online hotels segment while strengthening our brands’ dominant leadership position in the space.

Our marketing channels on desktop and mobile web primarily include online advertising, such as paid search engine marketing and optimization with Google, social media advertising (such as on Facebook, Twitter, LinkedIn and YouTube) and display advertising on other websites, participation in meta search engines (such as hotels product ads by Google, TripAdvisor and Trivago), offline advertising leveraging print or broadcast media, such as television or radio, e-mails and short messages, and other marketing channels, such as through our call centers and franchisee stores. During the COVID-19 pandemic, we shifted our focus to targeted digital marketing campaigns instead of offline advertising. We have consistently invested in building our brand and expanding our reach to travelers in India as well as overseas, through mass media campaigns as well as through innovative digital marketing tools.  

Our marketing programs and initiatives include broad-based campaigns, promotional or seasonal offers, as well as, brand campaigns and brand ambassadors to drive brand building with our customers. Our advertising campaigns promote the competitive pricing of our offerings (including no cancellation charges or no advanced payment requirements) and wide inventory of travel offerings.

As part of our marketing efforts, we continue to scale up our existing strategic partnerships with major banks and credit card providers in India including American Express, Axis Bank, Citibank, HDFC Bank, ICICI Bank and SBI Credit Card, which helps us to access our strategic partners’ customer base. In fiscal year 2021, driving affordability was a key agenda for the group and regular EMI campaigns were aligned on both MakeMyTrip and Goibibo platforms to acquire new users and upsell to existing users. Our MakeMyTrip co-branded credit cards have ramped up significantly and the issued base stands at approximately 0.6 million as at March 31, 2021.

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Our marketing efforts have also included strategic partnerships with tourism boards, airports, airlines, attractions and theme parks in Indonesia, Singapore, Hong Kong, Australia, New Zealand, Dubai and elsewhere to help boost tourism to these destinations. These collaborations aim to drive destination-awareness and increase consumer engagement. We have been closely working with the different Indian state tourism boards such as Madhya Pradesh, Goa and Uttarakhand to host state-run hotel packages on our platforms and to build marketing strategies for promoting them. We have also advertised with brand partners such as Hotstar, Google Pay, Airtel, TikTok, Zomato in order to expand the reach of our brand and acquire new customer base from different parts of India.

MakeMyTrip and Goibibo also offer loyalty programs. MMT India offers the “MMT Black” loyalty program for select customers on an invite-only basis to promote repeat bookings and enhancing stickiness to the platform. MMT Black members earn rewards based on their spending on our apps and websites and these rewards can be used to get discounts on bookings on our website and mobile platforms and can also be exchanged for coupons and rewards from partner brands. In fiscal year 2021, we relaunched our premier invite-only “MMT Black” loyalty program with enhanced supply funded benefits such as special discounts and upgrades on participating hotel brands, tier based complimentary flights, holiday privileges and rewards on each booking on our app and websites. As of March 31, 2021, we had 1.0 million enrolments in MMT Black. MMT India also offers “MakeMyTrip Double Black”, which aims to encourage users to make early bookings, without concerns relating to subsequent cancellations.

Goibibo’s “GoTribe” loyalty program allows registered users to earn rewards and benefits on their travel bookings. In fiscal year 2021, Goibibo also relaunched its loyalty program “GoTribe” to reward high value customers and to ensure stickiness from the most loyal base. Members earn Tribe coins and benefits like special discounts and complimentary privileges on participating hotel brands, tier based complimentary flight seats on each booking on app or web. The Tribe coins can be used to convert to goCash+ or to claim Tribe coupons, which can be used for getting discounts in bookings. As of March 31, 2021, Goibibo had 0.6 million enrolments in GoTribe.

During the COVID-19 pandemic, we launched a comprehensive safety initiative called MySafety for MakeMyTrip, GoSafe for Goibibo and Safety+ for redBus. We also partnered with over 30 key travel industry leaders to launch a safety pledge, the goal of which is to reassure customers on safety and instil confidence to travel or stay. In addition, as part of our ongoing Safe Travel Pledge, we partnered with suppliers to launch a self-certification program for hotel property cleanliness called MySafety and GoSafe. Going forward, these certified properties will also have the option to be independently verified by an independent auditing firm to provide further assurances to customers. While the program is available for branded and independent hotels, we believe our independent hotel suppliers will especially benefit from the program in terms of customer confidence and trust.

Customer Service

Our customer focused approach is centered on ensuring a favorable user experience on our websites and mobile platforms as well as excellent customer service. Our intention is to provide customer support prior to, during and after travel. Our websites and mobile platforms are designed to provide a user-friendly experience and integrate valuable travel information, such as flight status information, user-generated travel reviews and destination guides, to help customers research and make travel decisions. We also monitor feedback from our customers using our CRM system and review and upgrade the features of our websites from time to time.

The key channels through which we implement our customer support and communicate with our customers are as follows:

Web-based Support. Our self-service web-support is available through free online accounts on our websites and allows customers to check the status of their domestic and international flight, train, bus or hotel bookings, cancel bookings and track the progress of their refunds. Customers who require assistance or have inquiries about certain products also have an option to contact our sales representatives through our website. We have dedicated personnel available 24 hours a day, seven days a week, who provide assistance to our customers on a real-time basis.

In fiscal year 2020, redBus launched redBuddy, an in-house developed self-help module to resolve customer issues across all the geographies. redBuddy is capable of handling all customer queries. It intelligently switches between automated responses by fetching relevant details from internal systems to handing over the chat to a live agent for better assistance. To make the system more user friendly, we have launched redBuddy in two regional languages in India, Hindi and Tamil. Apart from this, it is also available in Bahasa, Malay and Spanish as well to cater our international user base.

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Our platforms provide real time personalization which takes in account user’s context, behavior, device, location, time, past searches and journeys to show users the right set of flight and hotel recommendations based on their past behavior and also behavior of other similar users.

Call Centers. We provide our customers with comprehensive and real-time assistance through our call centers, which are available 24 hours a day, seven days a week. Currently, we outsource a portion of our customer service call center operations in India to iEnergizer IT Services, Radical Minds Technologies, Concentrix Daksh Services and others in India, whose employees have been trained by our respective outsourcing service providers and us. We had approximately 1,700 outsourced call center representatives as of March 31, 2021.

We also have a dedicated in-house escalation service, which operates 24 hours a day, seven days a week, and is responsible for addressing issues or complaints raised by our customers, as well as in-house call centers in India, Singapore, Malaysia, Indonesia and Latin America. We are able to log on to customer calls enabling us to perform random checks on our call centers on a real-time basis. Our system also enables us to monitor the number of waiting calls, the number of active call center agents, and the real-time activity status of agents. We have an in-house quality team, which monitors the quality of interaction across lines of business, including through analysis of the tone and voice of our customers, in order to ensure high quality service is consistently offered to our customers. All of our representatives participate in a formal training program before commencing work and have in-depth knowledge of their relevant local market. Our representatives also attend periodic training programs to familiarize themselves with our new services and products.

During the COVID-19 pandemic, we have been focusing on expanding our automated responses to post-sales queries in order to reduce reliance on call center support in the future. We have also significantly reduced our outsourced teams at our call centers and our offline team managing corporate events. We also right sized our headcount largely in our packages business by shifting to variable cost driven offline sales channels, away from high fixed cost offline channels and optimized in some other areas where business recovery seemed slower. Collectively, our cost actions will help us reduce fixed costs as we begin to rebuild our business following the pandemic and make us a leaner and more efficient organization going forward.

Travel Stores. Customers may also visit our more than 150 franchisee-owned travel stores in India and obtain assistance from our sales and customer service representatives.

Mobile Service. In addition to being able to make different types of travel bookings on their smartphones and mobile devices, customers can view their booking details, cancel bookings, request e-tickets, track refund status, check flight status, look for new deals and use location-based services to find nearby places of interest. These services are available through all our mobile applications and our mobile sites.

E-mail. Customers may also e-mail any inquiries or complaints, which we endeavor to address expeditiously.

Through our CRM system, we maintain a secured anonymized customer database containing information on the transaction history and preferences of each customer who has booked a travel product through us. We document all sales and customers service processes at our company using business process management system methodology, such that the entire value chain, starting from the customer’s requirement until the delivery of the relevant service or product, or refund, if applicable, is documented. We also monitor our customer transactions and have a dedicated in-house escalation service operating 24 hours a day, seven days a week, which is responsible for answering any complaints or issues raised by our customers.

We have a fulfillment process that we mainly outsource, which minimizes any travel disruption for our customers, with a team of personnel responsible for ensuring that customers’ hotel bookings are checked and reconfirmed prior to the date of travel.

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Supplier Relationships

We believe we have cultivated and maintain good relationships with our travel suppliers. We have a dedicated team to maintain and enhance our existing relationships, and develop new relationships, with travel suppliers. Our supplier relationship teams negotiate agreements or arrangements with suppliers for access to travel inventory for our services and products, and also monitor supplier-sponsored promotions. They also focus on relationship management with our suppliers. One of the key services we provide to our suppliers is the provision of customer feedback and preferences, which we obtain primarily through our CRM system, user-generated content on our websites and mobile platforms as well as through our call centers.

The table below sets forth our top five (in alphabetical order) airline suppliers for travel in India and overseas (based on gross bookings) and our top five (in alphabetical order) hotel suppliers (based on gross bookings) for fiscal year 2021.

 

Airlines

(Travel within India)

 

Airlines

(International Travel)

 

Hotels

(within India)

Air India

 

Air India

 

Accor Hotels

Go Air

 

Go Air

 

Lemon Tree Hotels

IndiGo

 

IndiGo

 

Marriott Hotels & Resorts

SpiceJet

 

United Airlines

 

Radisson Hotels

Vistara

 

Vistara

 

Taj Hotels, Resorts & Palaces

 

Airlines

We have access to real-time inventory of all major airlines operating in, from and to India either through a GDS (we use both Amadeus CRS and Galileo GDS) or through “direct connects” to our airline suppliers’ booking systems.

Most of these airlines offer us fares that match those offered by the airlines on their own websites as well as on other online travel websites. The fares paid by our customers include our service fee in addition to the fares charged by the airlines. We currently have commission arrangements with most India-based airlines, as well as major international airlines that service India, where part of our commission is linked to the number of sales facilitated by us or the revenue realized by these airlines on sales completed through us. Similarly, we earn fees from our GDS service providers on a per-segment basis for sales completed by us through the GDS that are linked to the volumes of sales completed by us. Further, we also earn commissions through sales of ancillary services that allow customers to select their preferred seats, book meals and check baggage using our website and mobile platforms.

Hotels

As of March 31, 2021, we provided our customers with access to over 77,500 domestic accommodations in India and more than 700,000 hotels and properties outside India. We also offer more than 23,000 alternative properties to broaden our customer reach. Our hotel supply team is responsible for negotiating agreements or arrangements with independent hotels, hotel chains and hotel management companies and securing competitive rates, promotions and access to inventory for listing on our websites as well as packaging of holidays. We select our hotel partners by their reputation and quality and monitor customer feedback on our websites as well as other channels in order to ensure that hotels listed on our websites maintain acceptable standards.

In our hotels and packages business, our revenue represents the total amount paid by our customers for these travel services and products and the cost of procuring the relevant services and products are classified as service cost. We also earn commissions from other hotel suppliers, depending on the volume of reservations made through us.

We obtain access to room inventory from our hotel suppliers through three methods: “direct connects,” “direct allocation” and, for most hotels outside India, through contracts with online travel agents and aggregators outside India. Substantially all of our hotel suppliers in India have a “direct allocation” arrangement with us whereby they allocate rooms directly to us either by managing their room inventory on an extranet provided by us, or through channel managers, or supported by us via telephone. We do not assume any inventory risk for such “direct allocation” as unsold inventory is released to the hotels within an agreed period of time. The remaining hotels in India are connected through direct connects. “Direct connect” is the method by which our booking systems are integrated with the central reservations systems of the hotels and reservations made are confirmed on

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a real-time basis, although this applies to a small proportion of our total hotels. Through our ongoing efforts to increase the automation of and otherwise improve our extranet, our hotel suppliers are now able to perform more of the necessary functions for executing transactions through our system without our direct involvement. We obtain inventory for most hotels outside India through contracts with other online travel agents and aggregators outside India.

We have also expanded our hotel offerings by providing alternate accommodations, which include villas, apartments, hostels, homestays and cottages. We do not assume any inventory risk and these properties allocate their inventory to us directly or through channel managers. We have also introduced calendar sync option, which allows alternative accommodation providers to update inventory by synchronizing their calendars. We allow customers to book these properties through all of our online platforms.

Buses

As of March 31, 2021, we provided our customers with access to over 25,000 privately owned services, approximately 42,000 government owned Road Transport Corporation services in India, approximately 8,000 services across Peru and Colombia and 11,400 services across South East Asia. We have a bus operator facing platform redBus Plus, which allows bus operators to update service information, creating campaigns, responding to customer feedback and analyze customer demand. redBus also provides bus ticketing API to multiple e-commerce websites across the spectrum and thus enables the widest possible distribution reach for bus operators.

In July 2018, we acquired a 100% equity interest of Bitla, which is India’s leading travel-focused technology provider. Bitla offers SaaS, Cloud and mobile-based solutions to help customers expand their business. Bitla’s technologies are widely used domestically and internationally by bus operators, bus GDSs, online ticketing portals, hoteliers, holiday tour operators and cargo and logistics companies. Bitla maintains an online bus ticketing ecosystem and manages a large inventory of direct buses and bus operators in India.

Competition

The market for travel services and products is highly competitive. We primarily compete with established and emerging providers of travel services and products, including other online travel agencies such as Yatra.com, Easemytrip.com, Airbnb.co.in, Booking.com, Cleartrip.com, Expedia.com, traditional travel agencies, tour operators, travel suppliers and intermediaries that provide travel services. Large, established internet search engines have also launched applications offering travel itineraries in destinations around the world, and meta-search companies who can aggregate travel search results also compete with us for customers. The Indian market is highly competitive, and current and new competitors may be able to launch new services at a lower cost. In the hotels and packages segment, we primarily compete with traditional travel players such as Thomas Cook, Travel Triangle and others in packages offerings, as well as online travel agencies in the case of standalone hotel bookings and new entrants. Such competitors may have greater financial resources than us, may seek to increase market share by offering heavy discounting and promotional schemes and may be able to negotiate better rates with suppliers.

Certain of our travel suppliers have also been steadily focusing on increasing online demand on their own websites and decreasing or eliminating their dependence on third-party distributors like us. For instance, many low-cost airlines may, subject to applicable regulations, reduce or eliminate commissions to agents such as us or restrict the amount of service fees we are able to charge customers. Suppliers who sell on their own websites typically do not charge a processing fee, and, in some instances, offer advantages such as their own bonus miles or loyalty points, which could make their offerings more attractive to customers than offerings like ours. See “Item 3. Key Information — D. Risk Factors — Risks Related to Us and Our Industry — The Travel Industry in India and Worldwide is Intensely Competitive, and We May Not Be Able to Effectively Compete in the Future.”

Intellectual Property

We have registered the domain names www.makemytrip.com, www.makemytrip.ae, www.makemytrip.com.sg, www.goibibo.com, and www.redbus.in, and have full legal rights over all these domain names for the period for which such domain names are registered. We primarily conduct our business under the “MakeMyTrip,” “Goibibo” and “redBus” brand names and logos. We have registered the trademark “MakeMyTrip,” “Goibibo” and “redBus” in India, Australia, Canada, certain member states of the European Union, Russia, Singapore, the USA and various other jurisdictions, and we have other trademark applications pending in these jurisdictions. We have also applied for patents in India for certain aspects of our technological systems.

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Our key logos are also registered trademarks in India, including “MakeMyTrip” “MMT Black,” “MMT Double Black,” “MakeMyTripMyBusiness,” “go-mmt”, “GoStays,” “GoIbibo,” “Ibibo,” “MAKEMY,” and “redbus.in.”

In fiscal year 2021, a series of new trademark applications were filed for some of which have also got registered. Additionally, to protect the marks of MakeMyTrip, Goibibo and redBus, we file objections before the trademark registry from time to time against deceptively similar trademarks.

We protect our logo, brand name, websites’ domain names and, to a more limited extent, our content by relying on copyrights, trademarks, trade secret laws and confidentiality agreements. See, also, “Item 3. Key Information — D. Risk Factors — Risks Related to Us and Our Industry —We Cannot Be Sure That Our Intellectual Property Is Protected from Copying or Use by Others, Including Current or Potential Competitors, and We May Be Subject to Third Party Claims for Intellectual Property Rights Infringement”.

Employees

As of March 31, 2021, we had 3,256 employees. The following tables show a breakdown of our employees as of the end of our past three fiscal years by function and location.

 

 

 

Number of Employees as of

March 31,

 

Division/Function

 

2019

 

 

2020

 

 

2021

 

Management

 

 

16

 

 

 

18

 

 

 

16

 

Product development

 

 

215

 

 

 

221

 

 

 

199

 

Sales and marketing

 

 

1,331

 

 

 

1,340

 

 

 

1,006

 

Technology development and technology support

 

 

1,052

 

 

 

1,253

 

 

 

1,240

 

Others (including operations, business

   development, administration, finance and

   accounting, legal and human resources)

 

 

836

 

 

 

1,128

 

 

 

795

 

Total

 

 

3,450

 

 

 

3,960

 

 

 

3,256

 

 

 

 

Number of Employees as of

March 31,

 

Location

 

2019

 

 

2020

 

 

2021

 

India

 

 

3,156

 

 

 

3,646

 

 

 

3,055

 

United States

 

 

3

 

 

 

3

 

 

 

3

 

Singapore

 

 

61

 

 

 

60

 

 

 

39

 

Malaysia

 

 

23

 

 

 

27

 

 

 

10

 

Thailand

 

 

107

 

 

 

107

 

 

 

60

 

United Arab Emirates

 

 

6

 

 

 

6

 

 

 

5

 

China

 

 

1

 

 

 

1

 

 

 

1

 

Colombia

 

 

8

 

 

 

9

 

 

 

7

 

Peru

 

 

63

 

 

 

70

 

 

 

42

 

Indonesia

 

 

22

 

 

 

31

 

 

 

34

 

Total

 

 

3,450

 

 

 

3,960

 

 

 

3,256

 

 

None of our employees are represented by a labor union. We believe that our relations with our employees are good. We contract with third parties for the provision of temporary employees from time to time based on the needs of our businesses for various functions, including administration, technology-related projects. As of March 31, 2021, we employed 560 temporary and contract employees.

After March 31, 2020, during the COVID-19 pandemic, we significantly reduced our outsourced teams at our call centers and our offline team managing corporate events. We also right sized our headcount largely in our packages business by shifting to variable cost driven offline sales channels, away from high fixed cost offline channels and optimized in some other areas where business recovery seemed slower.

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Insurance

We maintain and annually renew insurance for losses (but not business interruption) arising from fire, burglary as well as terrorist activities for our corporate office at Gurugram and other offices in India. We have a liability policy to insure our directors and officers from various liabilities arising out of the general performance of their duties. We have purchased public liability insurance, fidelity insurance and work injury compensation insurance for our group entities and have also obtained cyber and crime insurance for operations in India.

Regulations

We are subject to various laws and regulations in India arising from our operations in India, including travel agent requirements and the operation of our MakeMyTrip, Goibibo and redBus call centers.

MMT India requires licenses from state tourism departments to act as a travel agent/tour operator in certain states in India. MMT India has received such licenses from the Ministry of Tourism, Government of India for its registered office in the National Capital Territory of Delhi. In addition, Luxury Tours and ibibo Group Pte. Ltd. holds a travel agent’s licenses from the Singapore Tourism Board. We also have inbound and outbound licenses for ITC Group issued by Department of Tourism, Thailand.

MMT India holds a license from the Reserve Bank of India to act as a Full-Fledged Money Changer (single branch), which requires that MMT India maintain minimum net owned funds of Rs.2.5 million (approximately $0.03 million).

Under the Indian Information Technology Act, 2000, as amended, we are subject to civil liability to compensate for wrongful loss or gain to any person arising from negligence in implementing and maintaining reasonable security practices and procedures with respect to sensitive personal data or information that we possess, deal with or handle in our computer systems, networks, databases and software. India has also implemented privacy laws, including the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, which impose limitations and restrictions on the collection, use and disclosure of personal information. In December 2019, the Personal Data Protection Bill, 2019 was tabled in the Indian Parliament by the Government of India and has currently been referred to a joint parliamentary committee. This bill proposes to provide mechanisms for the protection of personal data and establish a government authority for data protection.

 

The Consumer Protection Act, 2019, along with the Consumer Protection (E-Commerce) Rules, 2020, became effective in 2020 and replaced the Consumer Protection Act, 1986, as amended. The new law and rules regulate matters relating to consumer rights, unfair trade practices and false or misleading advertising, and also establish regulatory authorities, including to address complaints, conduct investigations and adjudicate disputes. The rules impose obligations on marketplace and inventory e-commerce entities and sellers relating to the conduct of business and disclosure of information. In addition, the government has recently in June 2021 invited comments on draft amendments to the Consumer Protection (E-Commerce) Rules, 2020, which include various compliance requirements, including registration of e-commerce entities, restrictions on certain sales and marketing activities and disclosure requirements.

We obtained necessary licenses to operate our domestic and international call centers as “Other Service Providers” in Gurugram and Bengaluru from the Department of Telecommunications, Ministry of Communications, Government of India.

Our operations in India currently do not benefit from tax holidays under any applicable laws or regulations.

The Government of India’s consolidated foreign direct investment policy, or the FDI Policy, and the Foreign Exchange Management Act, 1999, and the rules and regulations thereunder, each as amended, or FEMA, have certain requirements with respect to downstream investments by Indian companies that are owned or controlled by foreign entities and with respect to foreign investment into India and transfer of ownership or control of Indian companies in sectors with caps on foreign investment from resident Indian persons or entities to foreigners, as well as such transactions between foreigners. These requirements currently include restrictions on pricing, valuation of shares and sources of funding for such investments, and may, in certain cases, require prior notice to or approval of the Government of India. In addition, pursuant to amendments in April 2020 to the FDI policy and the FEMA rules, prior government approval will be required for any non-debt investment into India by non-resident entities from countries that share a land border with India or where the beneficial owner of such an investment is situated in or is a citizen of any such country, as well as for any transfer of any such proposed or existing non-debt investment, directly or indirectly, that would result in ownership by any such non-resident

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entity or beneficial owner. The list of land border countries includes Afghanistan, Bangladesh, Bhutan, the People’s Republic of China, Myanmar, Nepal and Pakistan. This approval requirement applies to investments in all sectors, including those that previously did not require such approval, such as travel and tourism.  The term “beneficial owner” has not yet been defined for purposes of the FDI Policy and the FEMA. If we are deemed to be a non-resident entity or an entity with a beneficial owner restricted by these amendments, prior government approval will be required for investments in non-debt instruments in our direct and indirect Indian subsidiaries and group entities, including MMT India and Ibibo India, as well as for any such proposed investments or acquisitions by us or our affiliates, including MMT India, Ibibo India and affiliates which are not resident in India. Investments in our ordinary shares, including upon conversion of our Class B shares or our 2028 Notes, and our and Class B shares would be deemed to be non-debt investments into our Indian subsidiaries, including MMT India and Ibibo India. Accordingly, under the current FDI Policy and the FEMA rules, any proposed holder of our ordinary shares or Class B shares that is a non-resident entity from a country that shares a land border with India or where the beneficial owner of such an investment is situated in or is a citizen of any such country would need to have obtained prior government approval in India, and any holder or beneficial owner of our 2028 Notes will not be able to convert such notes into ordinary shares without such approval. The Government of India has made and may continue to make revisions to the FDI Policy and the FEMA rules, which may impose additional requirements with respect to any holder’s ability to acquire our ordinary shares, including upon conversion of our Class B shares or our 2028 Notes, and/or requirements for acquisition of our ordinary shares or Class B shares upon a transfer thereof. Further, under the FEMA, we are restricted from lending to or borrowing from our Indian subsidiaries and our Indian subsidiaries are restricted from lending or borrowing in foreign currencies. We are also required to complete FEMA filings with respect to past investments in order to make further investments in India. Under the FEMA, the Reserve Bank of India has the power to impose monetary penalties, including of up to three times the value of a FEMA contravention where quantifiable, and confiscate the shares at issue. Further, the Government of India has made and may continue to make revisions to the FDI policy on e-commerce in India, including in relation to business model, inventory, pricing and permitted services. The Department of Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India invited comments on a draft National e-Commerce Policy in 2019, which addresses various topics, including data and e-commerce regulation. The timing or impact of this policy, which remains in draft form, is not yet certain. Such changes may require us to make changes to our business in order to comply with Indian law.

The Competition Act, 2002, as amended, or the Competition Act, regulates practices that could have an appreciable adverse effect on competition in India. Under the Competition Act, any arrangement, understanding or action, whether formal or informal, which causes or is likely to cause an appreciable adverse effect on competition in India is void and may result in substantial penalties and compensation to be paid to persons shown to have suffered losses. Any agreement among competitors which directly or indirectly determines purchase or sale prices, results in bid rigging or collusive bidding, limits or controls production, supply, markets, technical development, investment or the provision of services, or shares the market or source of production or provision of services in any manner, including by way of allocation of geographical area or types of goods or services or number of customers in the market, is presumed to have an appreciable adverse effect on competition. Further, the Competition Act prohibits the abuse of a dominant position by any enterprise either directly or indirectly, including by way of unfair or discriminatory pricing or conditions in the sale of goods or services, using a dominant position in one relevant market to enter into, or protect, another relevant market, and denial of market access, and such practices are subject to substantial penalties and may also be subject to compensation for losses and orders to divide the enterprise. Acquisitions, mergers and amalgamations that exceed certain revenue and asset thresholds (combinations) require the prior approval of the Competition Commission. Any such combinations that have, or are likely to have, an appreciable adverse effect on competition in India are prohibited and void. There can be no assurance that we will be able to obtain approval for such future transactions on satisfactory terms, or at all.

See “Item 3. Key Information — D. Risk Factors — Risks Related to Us and Our Industry — Changing Laws, Rules and Regulations and Legal Uncertainties in India, Including Adverse Application of Corporate and Tax Laws, May Adversely Affect Our Business and Financial Performance.”

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C. Organizational Structure

The following diagram illustrates our corporate structure and the place of formation and ownership interest of each of our key operating subsidiaries, as of the date of this Annual Report.

 

 

Notes:

(1)

The operating subsidiaries of MakeMyTrip (India) Pvt. Ltd. include Quest2Travel.com India Private Limited.

(2)

The operating subsidiaries of Ibibo Group Holdings (Singapore) Pte. Ltd. include Ibibo India, Bitla, Ibibo Group Pte. Limited, Singapore and other insignificant subsidiaries. Ibibo India is the ibibo Group’s key Indian operating subsidiary.

(3)

The ITC Group consists of ITC Bangkok Co., Ltd. (Thailand) and other insignificant subsidiaries.

(4)

In July 2020, MakeMyTrip FZ-LLC (UAE) incorporated a wholly-owned subsidiary in Dubai named MakeMyTrip Travel & Tourism LLC.

 

D. Property, Plant and Equipment

Our primary facility is our principal executive office located in Gurugram, India, which serves as the principal place of business for our MMT India and Ibibo India operations. Our principal executive offices cover approximately 109,000 square feet and is under lease primarily from fiscal year 2017 to fiscal year 2029. Further, we have leased one facility covering 46,000 square feet in Bengaluru and another facility covering 14,000 square feet in Mumbai.

As of March 31, 2021, we had over 150 franchisee-owned travel stores, operated under the Pan India name, which primarily sell packages under our MakeMyTrip brand. Outside of India, we lease offices in South-East Asia, Dubai, the USA and Latin America. During the COVID-19 pandemic, we have also right sized some of our businesses in sync with our longer term growth strategy to transition out of high fixed costs offline sales channels as a result of which we have shut all our company owned travel stores in India. We have also shut down portions of our principal executive offices for MMT India and Ibibo India in Gurugram and our other facility in Bengaluru.

ITEM 4A.

UNRESOLVED STAFF COMMENTS

Not Applicable.

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ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our business, financial condition and results of operations should be read in conjunction with “Item 3. Key Information — A. Selected Consolidated Financial Data” and our consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in “Item 3. Key Information — D. Risk Factors” and elsewhere in this Annual Report. Actual results could differ materially from those contained in any forward-looking statements.

In this Annual Report, references to “customers” are to our end customers or travelers and references to “suppliers” are to our travel suppliers. We consider both travelers and travel suppliers to be our customers.

Overview

We are a leading online travel company in India. Through our primary websites, www.makemytrip.com, www.goibibo.com and www.redbus.in, and mobile platforms, travelers can research, plan and book a wide range of travel services and products in India as well as overseas. Our services and products include air ticketing, hotels and packages, bus tickets, rail tickets, car hire, experiences and ancillary travel requirements such as facilitating access to third-party travel and other insurance products and visa processing. In order to meet the requirements of the growing Indian middle-class travel market where Internet penetration is low, we also utilize other technology-enhanced distribution channels, including call centers, franchisee-owned travel stores in India, as well as our travel agents’ network in India. Our customers are able to make bookings on our MakeMyTrip, Goibibo and redBus websites and on mobile platforms through our mobile applications, including Indian domestic and international flights, hotels and holiday packages and Indian bus offerings through our iOS and Android applications. Smartphones and mobile devices have and will continue to be an integral part of how our customers shop for and purchase our products in the coming years.

We generate revenue through three main lines of business, air ticketing, hotels and packages and bus ticketing. Our sales of air tickets, bus tickets and hotel rooms are primarily made through our websites and our mobile applications. Our customers can book standard packages on our MakeMyTrip websites and mobile platforms, but sales of packages within or outside India are often concluded through our call centers and travel agents’ network. We also generate revenue through the online sale of rail and metro tickets, cab services, experiences, visa services, brand alliance fees and by facilitating access to travel and other insurance products, as well as advertising revenue from third-party advertisements on our websites.

In our air ticketing business, our three main sources of revenue are (1) commissions and incentive payments from airline suppliers for tickets booked by customers through our distribution channels, (2) service fees we charge our customers and (3) fees from our GDS service providers. Revenue from our air ticketing business generally represents the commissions, incentive payments and fees we earn as an agent on a “net” basis.

In our hotels and packages business, revenue (including revenue on air tickets sold as part of packages) is generally accounted for on a “gross” basis, representing the total amount paid by our customers for these travel services and products. The cost of procuring the relevant services and products for sale to our customers in this business is classified as service cost. Our hotels and packages revenue also include commissions and convenience fees earned from travelers for the sale of hotel rooms (without packages), and commissions we earn as an agent from other online travel agents and aggregators from whom we procure hotel rooms for our customers for most hotels outside India, which are accounted for on a “net” basis. We earn commissions in a similar manner for certain non-hotel products related to our packages. Our hotels and packages business tends to yield higher margins than our air ticketing business, which we believe reflects the greater value that our travel services add and the more complex nature of our hotels and packages services as compared to our air ticketing business. We are focused on expanding our hotels and packages business and shifting our revenue mix accordingly.

In our bus ticketing business, our main sources of revenue are revenue from commissions or fees on the sale of bus tickets, including from bus operators. We also receive commissions from aggregators from whom we procure inventory for certain bus tickets, when their inventory is booked through us. Income from bus ticketing, including commissions and fees earned from bus operators and convenience fees earned from travelers is recognized on a net basis as an agent on the date of journey as the performance obligation is satisfied on the date of journey by the traveler.

As certain parts of our revenue are recognized on a “net” basis and other parts of our revenue are recognized on a “gross” basis, we evaluate our financial performance in each of our reportable segments based on Adjusted Margin, which is a segment profitability measure, as we believe that Adjusted Margin reflects the value addition of the travel services that we provide to our customers. The presentation of this segment profitability information is not meant to be considered in isolation or as a substitute for our consolidated financial results prepared in accordance with IFRS as issued by the IASB. Our Adjusted Margin may not be comparable to similarly titled measures reported by other companies due to potential differences in the method of calculation.

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The following table reconciles our revenue (an IFRS measure) to Adjusted Margin (a segment profitability measure):

 

 

 

Air Ticketing

 

 

Hotels and Packages

 

 

Bus Ticketing

 

 

Others

 

 

 

 

Fiscal Year Ended

March 31,

 

 

Fiscal Year Ended

March 31,

 

 

Fiscal Year Ended

March 31,

 

 

Fiscal Year Ended

March 31,

 

 

 

 

2019

 

 

2020

 

 

2021

 

 

2019

 

 

2020

 

 

2021

 

 

2019

 

 

2020

 

 

2021

 

 

2019

 

 

2020

 

 

2021

 

 

 

 

(in thousands except percentages)

Revenue as

   per IFRS

 

$

166,714

 

 

$

174,361

 

 

$

57,013

 

 

$

237,524

 

 

$

235,814

 

 

$

67,976

 

 

$

53,745

 

 

$

65,009

 

 

$

24,895

 

 

$

28,028

 

 

$

36,345

 

 

$

13,556

 

 

Add: Customer inducement costs recorded as a reduction

   of revenue

 

 

68,632

 

 

 

75,779

 

 

$

23,513

 

 

 

274,915

 

 

 

265,706

 

 

 

18,652

 

 

 

13,950

 

 

 

17,688

 

 

 

667

 

 

 

861

 

 

 

1,985

 

 

 

76

 

 

Less: Service Cost as per

   IFRS

 

 

1,193

 

 

 

420

 

 

$

293

 

 

 

160,824

 

 

 

141,404

 

 

 

19,146

 

 

 

8,870

 

 

 

7,060

 

 

 

2,712

 

 

 

58

 

(1)

 

383

 

(1)

 

66

 

(1)

Adjusted Margin

 

$

234,153

 

 

$

249,720

 

 

$

80,233

 

 

$

351,615

 

 

$

360,116

 

 

$

67,482

 

 

$

58,825

 

 

$

75,637

 

 

$

22,850

 

 

$

28,831

 

 

$

37,947

 

 

$

13,566

 

 

% of total

   Adjusted

   Margin

 

 

34.8

%

 

 

34.5

%

 

 

43.6

%

 

 

52.2

%

 

 

49.8

%

 

 

36.6

%

 

 

8.7

%

 

 

10.5

%

 

 

12.4

%

 

 

4.3

%

 

 

5.2

%

 

 

7.4

%

 

 

(1)

Loyalty program costs amounting to $2.5 million, $5.1 million and $0.09 million have been excluded from service cost for the fiscal years 2019, 2020 and 2021, respectively, relating to “Others”.

 

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Key Operating Metrics

Our operating results are affected by certain key metrics that represent overall transaction activity and subsequent financial performance generated by our travel services and products. Three of the most important metrics, which are critical in determining the ongoing growth of our business, are Adjusted Margin, gross bookings and Adjusted Margin %.

Revenue from our air ticketing business is generally accounted for on a “net” basis (representing the commissions, incentive payments and fees we earn) and recognized at the time of issuance of air tickets. We account for our air ticketing revenue in this manner as we typically act as an agent and do not assume any performance obligation after the confirmation of the issuance of tickets. However, on a few occasions, we pre-purchase air ticket inventory in our Hotels and Packages business order to enjoy special negotiated rates and revenue from the sale of such tickets is accounted for on a “gross” basis (representing the price of the tickets paid by our customers) as we assume inventory risk on such pre-purchased tickets. The cost of such air tickets is classified as service cost.

Revenue from our hotels and packages business (including air tickets sold as part of packages) is generally accounted for on a “gross” basis, representing the total amount paid by our customers for these travel services and products, as we control the services before such services are transferred to the traveler. The cost of procuring the relevant services and products for sale to our customers in this business is classified as service cost. However, our hotels and packages revenue also include commissions and convenience fees earned from travelers for the sale of hotel rooms (without packages), and commissions we earn as an agent from other online travel agents and aggregators from whom we procure hotel rooms for our customers for most hotels outside India, which are accounted for on a “net” basis. We earn commissions in a similar manner for certain non-hotel products related to our packages. Our hotels and packages revenue is recognized on the check-in date for hotel reservations and the date of departure for packages.

 

Revenue from bus ticketing, including commissions and fees earned from bus operators and convenience fees earned from the traveler is recognized on a net basis as an agent on the date of journey as the performance obligation is satisfied by us on the date of journey by the traveler.

As certain parts of our revenue are recognized on a “net” basis and other parts of our revenue are recognized on a “gross” basis, we evaluate our financial performance in each of our reportable segments based on Adjusted Margin, as we believe this reflects the value addition of the travel services that we provide to our customers.

Gross bookings represent the total amount paid by our customers for the travel services and products booked through us, including taxes, fees and other charges, and are net of cancellations, and refunds.

Adjusted Margin % is defined as Adjusted Margin as a percentage of gross bookings and represent the commissions, fees, incentive payments and other amounts earned in our business. We follow Adjusted Margin % trends closely across our various lines of business to gain insight into the profitability of our various businesses.

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The following table sets forth our unit metrics, gross bookings and Adjusted Margin % for our air ticketing business, hotels and packages business and bus ticketing business during last three fiscal years.

 

 

 

Fiscal Year Ended March 31,

 

 

 

2019

 

 

2020

 

 

2021

 

 

 

(in thousands, except percentages)

 

Unit metrics

 

 

 

 

 

 

 

 

 

 

 

 

Air Ticketing  - Flights segments

 

 

39,485

 

 

 

42,054

 

 

 

15,019

 

Hotels and Packages - Room nights

 

 

26,611

 

 

 

29,647

 

 

 

8,538

 

Standalone Hotels - Online - Room nights

 

 

25,911

 

 

 

29,043

 

 

 

8,435

 

Bus Ticketing - Travelled tickets

 

 

61,464

 

 

 

78,582

 

 

 

26,717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross bookings:

 

 

 

 

 

 

 

 

 

 

 

 

Air Ticketing

 

$

3,214,545

 

 

$

3,581,267

 

 

$

980,841

 

Hotels and Packages

 

 

1,515,464

 

 

 

1,626,732

 

 

 

376,444

 

Bus Ticketing

 

 

716,135

 

 

 

885,736

 

 

 

278,157

 

 

 

$

5,446,144

 

 

$

6,093,735

 

 

$

1,635,442

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Margin %:

 

 

 

 

 

 

 

 

 

 

 

 

Air Ticketing

 

 

7.3

%

 

 

7.0

%

 

 

8.2

%

Hotels and Packages

 

 

23.2

%

 

 

22.1

%

 

 

17.9

%

Bus Ticketing

 

 

8.2

%

 

 

8.5

%

 

 

8.2

%

Factors Affecting Our Results of Operations

Changes in Our Business Mix and Adjusted Margin %. Changes in the Indian air travel industry have affected, and will continue to affect, the revenue per transaction for travel agents, including our company. In particular, volatility in global economic conditions, travel disruptions due to the COVID-19 pandemic and jet fuel prices in recent years, as well as increased liquidity constraints, have caused our airline partners to pursue cost reductions in their operations, including reducing distribution costs. Measures taken by airlines to reduce such costs have included reductions in travel agent commissions. Many international airlines, which fly to India, have also either significantly reduced or eliminated commissions to travel agents. Unlike full-service airlines, low-cost airlines do not generally utilize GDSs for their ticket inventory. As a result, travel agents selling air tickets for low-cost airlines generally do not earn fees from GDSs.

Adverse changes to the overall business and financial climate for the airline industry in India due to various factors including, but not limited to, rising fuel costs, high taxes, significant depreciation of the Indian Rupee as compared to the US dollar making travel for Indian consumers outside India more expensive, and increased liquidity constraints, resulted in airlines in India reducing the base commissions paid to travel agencies. Over the last few years, the domestic airlines in India continued to reduce the base commissions paid to travel agencies and we spent significantly to promote transactions on our mobile platforms in India and to promote our international hotels. These factors have caused us to record net losses in the past and in the current year. Any consolidation in the airline industry involving our suppliers may also adversely affect our existing relationships and arrangements with such suppliers. In addition, many large hotel chains and online travel agencies have launched initiatives, such as increased discounting and incentives, to encourage consumers to book accommodations through their websites. Discounting and couponing coupled with a high degree of consumer shopping behavior is particularly common in Asian markets, while brand loyalty in such markets is less important. In some cases, our competitors are willing to make little or no profit on a transaction, or offer travel services at a loss, in order to gain market share. During fiscal years 2019 and 2020, we made significant investments in our ongoing customer acquisition programs, such as cash incentives and select loyalty program incentive promotions, to accelerate growth in our standalone hotel booking business and in response to increased competition in the domestic travel market in India. This was the primary factor that resulted in our net loss of $(167.9) million and $(447.5) million (of which $(302.9) million was the result of an impairment of goodwill and provision for litigations) in fiscal years 2019 and 2020, respectively. Further in fiscal year 2021, we curtailed our marketing and sales promotions expenses in response to lower travel demand due to the COVID-19 pandemic and reported a net loss was $(56.0) million.

The hotels and packages business tends to yield higher margins than the air ticketing business, reflecting the greater value added in respect of the travel services that we provide in the hotels and packages segment as well as the diversity and more complex nature of hotels and packages services as compared with air tickets. We are focused on expanding our hotels and packages business and, accordingly, changing our revenue mix towards our hotels and packages segment.

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In fiscal year 2021, our air ticketing Adjusted Margin % increased to 8.2% from 7.0% in fiscal year 2020. The increase in Adjusted Margin % was primarily attributable to incremental incentives from our air ticketing suppliers to drive travel growth in fiscal year 2021. In fiscal year 2020 prior to the COVID-19 pandemic, air ticketing- flight segments and gross bookings were on a growth trajectory largely driven by the expansion of the travel market in India, including increased domestic travel and the opening of new airports under the Government of India’s initiative program “UDAN” which is focused on broadening the air travel sector, bringing new entrants into the air travel market and expanding the Indian economy. As of March 31, 2021, 57 new airports and more than 349 new routes were opened and operational under the said UDAN scheme. In fiscal year 2020, our air ticketing Adjusted Margin % decreased to 7.0% from 7.3% in fiscal year 2019. The marginal decline in Adjusted Margin % was primarily attributable to lower supplier incentives earned due to the decline in air travel demand as a result of the COVID-19 pandemic in fiscal year 2020.

In fiscal year 2021, our Adjusted Margin % in the hotels and packages business decreased to 17.9% from 22.1% in fiscal year 2020, primarily due to margin reductions for certain categories of hotels to support our hotel service providers during the COVID-19 pandemic and also due to a lower share of high-margin budget hotels. In fiscal year 2020, our Adjusted Margin % in the hotels and packages business decreased to 22.1% from 23.2% in fiscal year 2019, primarily due to a decrease in margins from our suppliers in line with a shift in our pricing strategy in the hotels and packages business.

Gross bookings for hotels and packages decreased from $1,626.7 million in fiscal year 2020 to $376.4 million in fiscal year 2021, due to the continued impact of the COVID-19 pandemic in the fiscal year 2021, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020. Adjusted Margin from our hotels and packages business accounted for 52.2%, 49.8% and 36.6% of our total Adjusted Margin in fiscal years 2019, 2020 and 2021, respectively.

Our Adjusted Margin % in the bus ticketing business was 8.2%, 8.5% and 8.2% in fiscal years 2019, 2020 and 2021, respectively, which reflects the continued offline to online shift within this travel segment, partially offset by the impact of the COVID-19 pandemic, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020.

Seasonality in the Travel Industry. We experience seasonal fluctuations in the demand for travel services and products offered by us. We tend to experience higher revenues from our hotels and packages business in the second and fourth calendar quarters of each year, which coincide with the summer holiday travel season and the year-end holiday travel season for our customers in India and other markets. In our air ticketing business, we may have higher revenues in a particular quarters arising out of periodic discounted sales of tickets by our suppliers. Our bus ticketing business is less impacted by seasonality. These seasonal trends may be affected by the COVID-19 pandemic and its ongoing impact on the travel industry.

Marketing and Sales Promotion Expenses. Competition in the Indian online travel industry has intensified and the industry is expected to remain highly competitive for the foreseeable future. Increased competition may cause us to increase our marketing and sales promotion expenses in the future in order to compete effectively with new entrants and existing players in the market.

We also incur costs associated with customer inducement and acquisition programs, including cash incentives and select loyalty program incentive promotions, which we offer from time to time on various booking platforms. Post adoption of IFRS 15 from April 1, 2018, such customer inducement costs for acquiring customers and promoting transactions across various booking platforms such as upfront cash incentives and select loyalty programs cost, when incurred are recorded as a reduction or deferral of revenue. When the incentives offered to the traveler are higher than the income earned from the customers, the excess (i.e., the incentive given to a traveler less income earned from the customers) on an individual transaction basis is classified under marketing and sales promotion expenses. We may also increase our marketing and sales promotion expenses as a result of our expansion into new markets and such expenses may not be offset by increased revenue particularly at the initial commencement of business in these new markets.

Trends and Changes in the Indian Economy and Travel Industry. Our financial results have been, and are expected to continue to be, affected by trends and changes in the Indian economy and travel industry, particularly the Indian online travel industry. An expanding and evolving travel market, coupled with greater internet, smartphone and other mobile device penetration, is expected to drive robust growth in online travel bookings in India. As consumers shift to researching and booking travel online, travel suppliers have adapted their offerings and deepened their relationships with online marketing and booking channels, such as online travel agencies, to generate revenue. Online travel agencies provide travel suppliers with scale and distribution into new and existing

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markets and 24/7 customer service and localization services, including language and payment capabilities. These trends and changes include:

 

growth in the Indian economy and the middle-class population in India, as well as increased tourism expenditure in India;

 

increased travel connectivity in India;

 

increased internet penetration (particularly mobile based penetration) in India;

 

increased adoption of the Internet for commerce in India;

 

competition from new and existing market entrants, particularly in the Indian online travel industry;

 

capacity and liquidity constraints in the airline industry in India;

 

the willingness of travelers to use online travel services instead of traditional offline hotel booking services; and

 

increased use of smartphones and mobile devices in India.

In addition, the COVID-19 pandemic has had a significant negative impact on the travel industry in India, including our business, and around the world. For more information, see “Risk Factors – Risks Relating to Us and Our Industry – The COVID-19 pandemic has had, and is expected to have, a material adverse effect on the travel industry and our business, financial condition, results of operations and cash flows.”

US Dollar-Indian Rupee Exchange Rate. The presentation currency of our financial statements is the US dollar. However, the functional currency of our key operating subsidiaries in India, MMT India and Ibibo India, is the Indian Rupee. We generate a substantial portion of our revenue in Indian Rupees and substantially all of our costs are borne in Indian Rupees. A majority of our assets and liabilities are also denominated in Indian Rupees.

The financial statements of all our subsidiaries are translated to our presentation currency using relevant exchange rates in accordance with IFRS. In particular, the assets and liabilities of our foreign operations are translated to US dollars at exchange rates as of the relevant reporting date, and the income and expenses of our foreign operations are translated to US dollars at the average of the exchange rates applicable during the relevant reporting period. Foreign exchange gains and losses resulting from the settlement of transactions and from the re-measurement of monetary items at year-end exchange rates are recognized in the profit or loss of the period in which they arise. When the US dollar strengthens against the Indian Rupee, our revenue and costs in Indian Rupees converted to US dollars decrease. When the US dollar weakens, our revenue and costs in Indian Rupees converted to US dollars increase.

In the past few years, there have been periods of weakness in the Indian Rupee compared to the US dollar. In fiscal year 2021, the average value of the Indian Rupee depreciated 4.3% against the US dollar as compared to the average value of the Indian Rupee in fiscal year 2020. In fiscal year 2020, the average value of the Indian Rupee depreciated 1.4% against the US dollar as compared to the average value of the Indian Rupee in fiscal year 2019. We had a net foreign exchange gain of $4.6 million in fiscal year 2021, mainly due to the appreciation of the Indian Rupee against the US dollar as at March 31, 2021 by 2.1% as compared to March 31, 2020.

 

 

Our Revenue, Service Cost and Other Revenue and Expenses

Revenue

We commenced operations in 2000 with a focus on the non-resident Indian market in the United States, primarily servicing its demand for United States to India air tickets. We started our Indian business with the launch of our Indian MakeMyTrip website in September 2005 and acquired the ibibo Group in January 2017. Over time, we have expanded our hotels and packages business, expanded internationally and introduced other non-air services and products such as the sale of bus and rail tickets, car hire, experiences and ancillary travel requirements such as facilitating access to third-party travel and other insurance products and visa processing. We also generate advertising revenue from third-party advertisements on our websites including revenue from brand alliances. The key travel services we offer are booking of air tickets, hotels and packages and bus tickets. Below is a description of the key components of our revenue.

Air Ticketing. We earn commissions from airlines suppliers for tickets booked by customers through our distribution channels as well as incentive payments linked to the number of sales facilitated by us. We either deduct commissions at the time of payment of the fare to our airline suppliers or collect our commissions on a regular basis from our airline suppliers, whereas incentive payments are collected from our airline suppliers on a

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periodic basis. Incentives earned from airlines are recognized on the basis of performance targets agreed with the relevant airline and when performance obligations have been completed. We charge our customers a service fee for booking airline tickets. We receive fees from our GDS service providers based on the volume of sales completed by us through the GDS. Revenue from air tickets sold as part of packages is eliminated from our air ticketing revenues and added to our hotels and packages revenue.

Hotels and Packages. Revenue from our hotels and packages business generally represents the total amount paid by our customers for these services and products as well as revenue from air tickets sold as part of packages. Our hotels and packages revenue also include commissions and convenience fees earned from travelers for the sale of hotel rooms (without packages), and commissions we earn as an agent from other online travel agents and aggregators from whom we procure hotel rooms for our customers for most hotels outside India, which are accounted for on a “net” basis. We earn commissions in a similar manner for certain non-hotel products related to our packages. As revenue in our hotels and packages business is accounted for on a “gross” basis, revenue from air tickets sold as part of packages is grossed up to include the fare paid by customers as well as all commissions and fees charged by us, and added to our hotels and packages revenue.

Bus ticketing. Income from bus ticketing, including commissions and fees earned from bus operators and convenience fees earned from the traveler is recognized on a net basis as an agent on the date of journey as the performance obligation is satisfied on the date of journey by the traveler.

Other Revenue. Our other revenue primarily comprises fees for the sale of rail tickets, car hire, experiences, fees from third party for our facilitation of service offerings, and third-party advertising on our websites and brand alliance fees.

Our business model requires us to act as either an “agent” or the “principal” for the products we sell. Below is a description of our business model where we either act as an “agent” or the “principal.”

 

We earn a majority of our revenue in the air ticketing and hotels business, where we predominantly act as an agent of the airlines and hotels. The airlines or the hotels provide the eventual service on such bookings. We facilitate the transaction for a commission and do not assume any performance obligation relating to the service. Income from the sale of airline tickets and hotel room nights is recognized as an agent on a net commission earned basis, as we do not assume any performance obligation relating to the service.

 

In our packages business, we create packages by bundling air tickets, hotel room nights and other travel services which are then offered as “MakeMyTrip packages.” Accordingly, we act as the principal for such packages since the risks and responsibilities are assumed by us, including the responsibility for delivery of services. For example, if the airline cancels a flight included in the package, we are responsible for providing an alternate flight. Accordingly, in case of MakeMyTrip packages, revenue is accounted for on a ‘gross basis’. The amount collected from the customer is reflected as revenue on a gross basis, and the amount paid to the various suppliers whose services are utilized is reflected as ‘cost of service’.

Similarly, if we pre-purchases air tickets inventory for our hotels and packages business in order to avail negotiated rates and assume inventory risk, then sales of such inventory are accounted for on a ‘gross’ basis, and the amount spent to pre-purchase the air ticket is accounted for as cost of service.

We earn a majority of our revenue from the primary provider of service on transactions where we act as an agent. Our customer in this case is the hotel or the airline or bus operator to whom services are being provided by us, and we do not assume any performance obligation on the products offered by them. We offer the promotional offers and incentives described elsewhere in this document based on competitive pressures from time to time and in order to encourage a higher number of end-users to experience our booking platforms with a view to gaining market share. Accordingly, in order to effectively represent the underlying business model, revenue and associated costs are presented separately rather than being netted off.

 

Revenue is recognized net of cancellations, refunds, discounts, incentives and taxes. However, when the discount and other incentives offered to the traveler are higher than the income earned from the customers, the excess (i.e., the discount/incentive given to a traveler less income earned from the customers) on an individual transaction basis is classified under marketing and sales promotion expenses.

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Upon adoption of the new revenue recognition accounting standard, IFRS 15, Revenue from contracts with customers, for periods beginning April 1, 2018, customer inducement costs for acquiring customers and promoting transactions across various platforms such as upfront cash incentives and select loyalty programs costs which were earlier recorded as marketing and sales promotion expenses are now being recorded as a reduction of revenue. See “– Critical Accounting Policies – Revenue Recognition.”

Service Cost

Service cost primarily consists of costs paid to hotel and package suppliers for the acquisition of relevant services and products for sale to customers, and includes the procurement cost of hotel rooms and other local services such as sightseeing costs for packages and local transport costs. Service costs also include other costs of providing services for our bus ticketing business; it does not include any component of personnel cost, depreciation or other operating costs. As revenue from our air ticketing business is generally recognized on a “net” basis, there is typically no service cost associated with our air ticketing business.

The following table sets forth revenue recorded on a “gross” basis and on a “net” basis as well as service costs within our air ticketing business, our hotels and packages business, our bus ticketing business and our other revenue during last three fiscal years.

 

 

 

Air Ticketing

 

 

Hotels and Packages

 

 

Bus Ticketing

 

 

Others

 

 

 

 

Fiscal Year Ended

March 31,

 

 

Fiscal Year Ended

March 31,

 

 

Fiscal Year Ended

March 31,

 

 

Fiscal Year Ended

March 31,

 

 

 

 

2019

 

 

2020

 

 

2021

 

 

2019

 

 

2020

 

 

2021

 

 

2019

 

 

2020

 

 

2021

 

 

2019

 

 

2020

 

 

2021

 

 

 

 

(in thousands)

Revenue on

   gross basis

 

$

 

 

$

 

 

$

 

 

$

188,834

 

 

$

163,457

 

 

$

21,844

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Revenue on

   net basis

 

 

166,714

 

 

 

174,361

 

 

 

57,013

 

 

 

48,690

 

 

 

72,357

 

 

 

46,132

 

 

 

53,745

 

 

 

65,009

 

 

 

24,895

 

 

 

28,028

 

 

 

36,345

 

 

 

13,556

 

 

Revenue as per

   IFRS

 

$

166,714

 

 

$

174,361

 

 

$

57,013

 

 

$

237,524

 

 

$

235,814

 

 

$

67,976

 

 

$

53,745

 

 

$

65,009

 

 

$

24,895

 

 

$

28,028

 

 

$

36,345

 

 

$

13,556

 

 

Add: Customer inducement costs recorded as a reduction

   of revenue

 

 

68,632

 

 

 

75,779

 

 

 

23,513

 

 

 

274,915

 

 

 

265,706

 

 

 

18,652

 

 

 

13,950

 

 

 

17,688

 

 

 

667

 

 

 

861

 

 

 

1,985

 

 

 

76

 

 

Less: Service

   Cost as per IFRS

 

 

1,193

 

 

 

420

 

 

 

293

 

 

 

160,824

 

 

 

141,404

 

 

 

19,146

 

 

 

8,870

 

 

 

7,060

 

 

 

2,712

 

 

 

58

 

(1)

 

383

 

(1)

 

66

 

(1)

Adjusted Margin

 

$

234,153

 

 

$

249,720

 

 

$

80,233

 

 

$

351,615

 

 

$

360,116

 

 

$

67,482

 

 

$

58,825

 

 

$

75,637

 

 

$

22,850

 

 

$

28,831

 

 

$

37,947

 

 

$

13,566

 

 

 

(1)

Loyalty program costs amounting to $2.5 million, $5.1 million and $0.09 million have been excluded from service cost for the fiscal years 2019, 2020 and 2021, respectively, relating to “Others”.

Personnel Expenses

Personnel expenses primarily consist of wages and salaries and other short-term benefits, employee welfare expenses, contributions to mandatory retirement provident funds as well as other expenses related to the payment of retirement benefits, and equity settled share based payments.

 

 

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Marketing and Sales Promotion Expenses

Marketing and sales promotion costs consist of internet, television, radio and print media advertisement costs as well as event-driven promotion costs for our products and services. These costs include online video and display advertising on websites, television and in print, search engine marketing, referrals from meta-search and travel research websites and other media costs such as public relations and sponsorships. We also incur costs associated with customer inducements and acquisitions programs, including cash incentives and select loyalty program incentive promotions, which we offer from time to time on various booking platforms. Marketing and sales promotion costs are recognized when incurred. The rationale for the significant increase in such expenses is detailed below.

Since 2016, the Indian travel industry has seen a significant shift to online transactions driven by significant growth in the smartphones user base. In the past, most of our customers booked travel services using our websites through their desktop or laptop. Keeping in view the changing trend of the platform being used by customers for online search and bookings (i.e. increasingly moving towards mobile site or mobile applications), we created direct engagement programs to attract and retain customers. Accordingly, in fiscal year 2016 we introduced various marketing and promotional schemes such as cash incentives and loyalty programs to acquire and retain online customers in India. In addition, the ibibo Group, which we acquired in January 2017, also had a variety of similar marketing and promotional schemes such as cash incentives and loyalty programs offered under the “Goibibo” and “redBus” brands.

While internet penetration in India has been increasing steadily since 2016, we believe that it still has substantial room for growth. As internet penetration increases, Indian consumers are increasingly using the internet to research and purchase products, including travel. The use of mobile devices in India is expected to continue to grow. With the proliferation of smartphones and tablets, mobile has become a prominent tool for travelers to search, discover and purchase travel services. For example, our standalone hotel bookings made over our mobile platforms was more than 80% in fiscal year 2021 of total online bookings.

We have offered these customer inducement and acquisition programs from time to time on our various booking platforms. Below are further details regarding the cash back incentives, upfront cash incentives and e-wallet loyalty programs that we offer:

 

Cash back incentives: Under this scheme, the end-customers are offered certain predefined cash back based on the terms offered at the time of sale. We enter into specific agreements with various banks for joint promotional offers pursuant to which the cost of cash back promotional incentive is shared between the bank and us and is agreed before rolling out such schemes to the end-customers. On eligible transactions, an instant cash-back discount is given to the end-customer at the time of payment or a cash is credited in the end customer’s credit card or bank account by bank as per the terms communicated at the time of the transaction. We share details of eligible bookings made under the promotional offer with the respective banks with whom such promotions were offered. The relevant bank reconciles the details shared with transactions recorded on their platform.

It is our obligation to pay the end-customer on the basis of a promotional offer for an instant cash-back discount. In the case of instant cash-back discounts, after the completion of the offer period, we send an invoice to the relevant bank to recover the portion of the cost which has to be borne by the bank. The bank then verifies the invoice with its bookings under the respective promotional offers based on the agreement entered and pays the eligible cash back amount to us.

It is the relevant bank’s obligation to pay the end-customer on the basis of a promotional offer for a cash credit to end customer’s credit card or bank account. In the case of cashback to card offers, after completion of the offer period, the bank sends an invoice to us to recover the portion of the cost which has to be borne by us. We verify the invoice with our bookings under the respective promotional offers based on the agreement entered with bank and pay the eligible cash back amount to the bank.

 

Upfront cash incentives: Under this scheme, an upfront e-cash incentive is offered to end-customers at the time of booking on eligible online transactions as part of our customer inducement and retention strategy, primarily in the air ticketing and hotels business. The cash incentive to be offered on each sale is predetermined by us and the end-customer is required to select from among the various promotional offers. Upon such selection, the customer becomes eligible for an upfront cash incentive. The quantum of this incentive is based on the gross value of the transaction in order to induce the end-customer and is not linked to the commission earned by us as an agent from the hotels or airlines or service fee earned from the customers.

 

E-wallet loyalty program: As part of our loyalty program and to drive repeat behavior, we have created a captive E-wallet program on our Indian websites and mobile applications. Under this program, we give cash back on eligible online transactions to our customers as part of our inducement and retention plan and to effectively promote cross-sales across different business segments. The cash back is given in our customers’ E-wallet account, which can only be used for future bookings to be made with us, subject to certain monetary restrictions and other terms and conditions.

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At the time of sale, we offer cash back to customer in E-wallet. The cash back to be offered on each sale is predetermined by us, and the customer is required to select from among the various promotional offers. Upon such selection, the customer becomes eligible for the cash back in our E-wallet. Our liability is to honor the promotional offer and credit the amount in customer’s E-wallet which can be used by the customer in future bookings in accordance with the terms and conditions relating to utilization of the balance in E-wallet, which also has an expiration date.

These customer inducement costs were previously recorded as marketing and sales promotion costs but upon adoption of revenue recognition accounting standard, IFRS 15, Revenue from contracts with customers, for periods beginning April 1, 2018, these customer inducement costs are recorded as a reduction of revenue since these customer inducement costs are associated with our programs for acquiring customers and promoting transactions across various booking platforms. While most of these customer inducement costs are recorded as a reduction in revenue, however, when the discount and other incentives offered to the customer are higher than the income earned from such customer, the excess (i.e., the discount/incentive given to a customer less income earned from such customer) on an individual transaction basis is classified under marketing and sales promotion expenses and not recorded as a reduction in revenue.

We also run certain other loyalty programs as part of our routine loyalty traction mechanism to incentivize our customers to buy additional services in future. We have offered these loyalty programs for many years. Under such loyalty programs, the rewards awarded to a customer in a sales transaction represent incentives offered to such customers from value derived from the sales transaction.

Other Operating Expenses

Other operating expenses primarily consist of, among other things, charges by payment gateway providers, website hosting charges, fees paid to our outsourcing service providers for our call center service and other functions and legal and professional expenses.

Depreciation, Amortization and Impairment

Depreciation consists primarily of depreciation expense recorded on property, plant and equipment, such as computers, office equipment, furniture and fixtures, buildings (owned), buildings (right-of-use), leasehold improvements and motor vehicles. Amortization expense consists primarily of amortization recorded on intangible assets including technology-related development expenses, software and intangible assets including customer relationship and brand/trade mark acquired in a business combination. Impairment expenses consist of losses on account of certain intangibles assets no longer being used in business.

 

Impairment of goodwill

Goodwill is tested annually for impairment. An impairment loss is recognized if the carrying amount of a cash generating unit, or CGU, exceeds its recoverable amount. The recoverable amount of a CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assumptions of the time value of money and the risks specific to the asset or CGU. Impairment losses are recognized in profit or loss. An impairment loss in respect of goodwill is not reversed.

Finance Income and Costs

Finance income comprises interest income on funds invested, foreign currency gains (net) and change in financial liability.

Finance costs comprise interest expense on borrowings, foreign currency losses (net), change in financial liability, impairment losses recognized on financial assets, including trade and other receivables and cost related to public offerings.  Foreign currency gains and losses are reported on a net basis. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss using the effective interest method.

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Interest income and cost is recognized as it accrues in profit or loss, using the effective interest method.  

 

The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

 

the gross carrying amount of the financial asset; or

 

the amortised cost of the financial liability.

Foreign Currency Translation

We report our consolidated financial statements in US dollars, which is the functional and presentation currency of our holding company and certain of our subsidiaries. The functional currency of each of our subsidiaries is the currency in which each subsidiary primarily generates and expends cash. The financial statements of all our subsidiaries with functional currencies other than US dollars are translated to our holding company’s presentation currency using relevant exchange rates in accordance with IFRS. In particular, the assets and liabilities of our foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to US dollars at exchange rates as of the relevant reporting date, and the income and expenses of our foreign operations are translated to US dollars at the average of the exchange rates applicable during the relevant reporting period. Adjustments resulting from the translations of financial statements of our subsidiaries, except for subsidiaries whose functional currency is US dollars, from their functional currency to our presentation currency are accumulated and reported as other comprehensive income, which is a separate component of our shareholders’ equity called ‘Foreign Currency Translation Reserve’ (‘FCTR’). However, if the operation is a non-wholly owned subsidiary, then the relevant proportionate share of the translation difference is allocated to non-controlling interest and reported in non-controlling interest. When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit or loss as part of the profit or loss on disposal. See also “— Quantitative and Qualitative Disclosures about Market Risk — Foreign Exchange Risk.”

Critical Accounting Policies

Certain of our accounting policies require the application of judgment by our management in selecting appropriate assumptions for calculating financial estimates, which inherently contain some degree of uncertainty. Our management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the reported carrying values of assets and liabilities and the reported amounts of revenues and expenses that may not be readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following are the critical accounting policies and related judgments and estimates used in the preparation of our consolidated financial statements. Our management has discussed the application of these critical accounting estimates with our board of directors and audit committee. For more information on each of these policies, see “Note 3 — Significant Accounting Policies” in the notes to our consolidated financial statements included in this Annual Report.

Revenue Recognition

 

The Group has initially applied IFRS 15 from April 1, 2018. Information about the Group’s accounting policies relating to revenue from contracts with customers is provided below.

 

The Group provides travel products and services to leisure and corporate travelers in India and abroad. The revenue from rendering these services is recognized in the profit or loss upon transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services. This is generally the case: 1) on the date of departure for tours and packages, 2) date of check-in for hotel booking business, 3) on the issuance of the ticket in the case of sale of airline tickets and 4) date of journey in case of sale of bus tickets. The Group considers both the traveler and travel supplier to be its customers.

 

Income from the sale of airline tickets including commission earned is recognized as an agent on a net basis when the traveler books the airline ticket as the performance obligation is satisfied by the Group on issuance of an airline ticket to the traveler.

 

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Income from hotel reservations including commission and convenience fees earned from travelers is recognized on a net basis as an agent on the date of check-in as the performance obligation is satisfied by the Group on the date of check-in by the traveler.

 

Income from tours and packages, including income on airline tickets sold to the travelers as a part of tours and packages is accounted on gross basis as the Group controls the services before such services are transferred to the traveler.

 

Income from hotels and packages also includes amounts received from hotel suppliers against online promotions of hotels brands on our website.

 

Income from bus ticketing, including commissions and fees earned from bus operators and convenience fees earned from the traveler is recognized on a net basis as an agent on the date of journey as the performance obligation is satisfied by the Group on the date of journey by the traveler.

 

Revenue relating to contracts with travel suppliers which include incentive payments are accounted for as variable consideration when the amount of revenue to be recognized can be estimated to the extent that it is probable that a significant reversal of any incremental revenue will not occur.

 

Income from other sources of the Group, primarily comprising advertising revenue, fees for facilitating access to its internet-based platforms to travel and other insurance products from insurance companies and brand alliance fees is being recognized as the services are being performed as per the terms of the contracts with respective supplier.

 

Income from rail tickets reservation is recognized as an agent on a net commission earned basis on the date of journey as the performance obligation is satisfied by the Group on the date of journey by the traveler.

 

Income from sale of airline tickets, hotel reservations, bus ticketing and rail ticketing is recorded on net basis (i.e., the amount billed to a traveler less amount paid to a supplier), except for certain category of transactions as discussed above, as the supplier is primarily responsible for providing the underlying travel services and the Group does not control the service provided by the supplier to the traveler.

 

The Company provides loyalty programs under which participating customers earn loyalty points on current transactions that can be redeemed for future qualifying transactions. Under its customer loyalty programs, the Group allocates a portion of the consideration received to loyalty points that are redeemable against any future purchases of the Group’s services. This allocation is based on the relative stand-alone selling prices. The amount allocated to the loyalty program is deferred, and is recognized as revenue when loyalty points are redeemed or expire.

 

Revenue is recognized net of cancellations, refunds, discounts, incentives and taxes. However, when the discount and other incentives offered to the traveler are higher than the income earned from the customers, the excess (i.e., the discount/incentive given to a traveler less income earned from the customers) on an individual transaction basis is classified under marketing and sales promotion expenses.

 

In the event of cancellation of airline tickets, revenue recognized in respect of commissions earned by the company on such tickets is reversed and is netted off from the revenue earned during the fiscal period at the time the cancellation is made by the customers. The revenue from the sale of tours and packages, hotel reservations and bus ticketing is recognized on the customer’s departure, check-in date and date of journey, respectively. Cancellations, if any, do not impact revenue recognition since revenue is recognized upon the availment of services by the customer.

 

Significant judgements

 

Contracts with travel suppliers can include incentive payments, which are estimated at inception and are adjusted at the end of each reporting period as additional information becomes available only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Determining the amount of such incentives from travel suppliers requires judgement.

 

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Under its customer loyalty programs, the Group allocates a portion of the consideration received to loyalty points that are redeemable against any future purchases of the Group’s services. This allocation is based on the relative stand-alone selling prices. Judgment is required to determine the standalone selling price for each distinct performance obligation.

 

Recognition of revenue from travel suppliers on gross/net basis requires judgement basis the underlying travel services provided.

Revenue - Policy applicable before April 1, 2018

 

The Group provides travel products and services to leisure and corporate travelers in India and abroad. The revenue from rendering these services is recognized in the profit or loss at the time when significant risk and rewards are transferred to the customer. This is generally the case: 1) on the date of departure for tours and packages, 2) date of check in for hotel booking business, 3) on the issuance of the ticket in the case of sale of airline tickets and 4) date of journey in case of sale of bus tickets. The Group considers both travelers and travel suppliers to be its customers.

 

Income from the sale of airline tickets is recognized as an agent on a net commission earned basis, as the Group does not assume any performance obligation post the confirmation of the issuance of an airline ticket to the customer.

 

Incentives from airlines are recognized when the performance obligations under the incentive schemes are achieved.  

 

Income from hotel reservations including commission and convenience fees earned from travelers is recognized on a net basis as an agent on the date of check-in as the Group does not assume any performance obligation post the issuance of hotel confirmation voucher to the customer. Performance linked incentives from hotels are recognized as income on achievement of performance obligations.

 

Income from tours and packages, including income on airline tickets sold to customers as a part of tours and packages is accounted on gross basis as the Group is determined to be the principal in the arrangement i.e., the risks and responsibilities are taken by the Group including the responsibility for delivery of services. Income from tours and packages also includes amounts received from hotel vendors against online promotions of hotels brands on our website.

 

Income from bus ticketing, including commissions and fees earned from bus operators and convenience fees from customers is recognized on a net basis as an agent on the date of journey as the Group does not assume any performance obligation post the confirmation of the issuance of the ticket to the customer.

 

Income from other sources, primarily comprising advertising revenue, income from rail tickets reservation and commission from providing the option of purchasing travel and other insurance products from third-party insurers, is recognized as the services are being performed. Income from rail tickets reservation is recognized as an agent on a net commission earned basis, as the Group does not assume any performance obligation post the confirmation of the issuance of the ticket to the customer.

 

Revenue is recognized net of cancellations, refunds, discounts and taxes. In the event of cancellation of airline tickets, revenue recognized in respect of commissions earned by the company on such tickets is reversed and is netted off from the revenue earned during the fiscal period at the time the cancellation is made by the customers. The revenue from the sale of tours and packages and hotel reservations is recognized on the customer’s departure and check-in dates, respectively. Cancellations, if any, do not impact revenue recognition since revenue is recognized upon the availment of services by the customer.

 

The Company provides loyalty programs under which participating customers earn loyalty points on current transactions that can be redeemed for future qualifying transactions. Revenue is allocated between the loyalty program and the other components of the sale when such loyalty programs are offered as concessional offers. The amount allocated to such loyalty program is deferred, and is recognized as revenue when the Group fulfills its obligations to supply the discounted products/services under the terms of the program or when it is no longer probable that the points under the program will be redeemed.

 

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Further, when loyalty program are run as part of the Group’s customer inducement / acquisition activities with the intent of acquiring customers and promoting transactions across various booking platforms, the related cost for providing discounted products/services is recognized as marketing and sales promotion expense instead of as deferral of revenue.

Service Cost

Service cost primarily consists of costs paid to hotel and package suppliers for the acquisition of relevant services and products for sale to customers, and includes the procurement cost of hotel rooms and other local services such as sightseeing costs for packages and local transport costs. Service cost also include other cost of providing services for our bus ticketing business; it does not include any component of personnel cost, depreciation or other operating costs.

Service costs are recognized when incurred, which coincides with the recognition of the corresponding revenue.

Marketing and Sales Promotion Costs

Marketing and sales promotion costs comprise of internet, television, radio and print media advertisement costs as well as event driven promotion cost for Group’s products and services.. These costs include online video and display advertising on websites, television, print formats, search engine marketing, referrals from meta-search and travel research websites and any other media costs such as public relations and sponsorships.

Additionally, the Group also incurs customer inducement costs for acquiring customers and promoting transactions across various booking platforms such as upfront cash incentives and select loyalty programs cost, which when incurred were recorded as marketing and sales promotion costs before April 1, 2018. Post adoption of IFRS 15 from April 1, 2018, such customer inducement costs for acquiring customers and promoting transactions across various booking platforms such as upfront cash incentives and select loyalty programs cost, when incurred are recorded as a reduction / deferral of revenue. In addition, when the incentives offered to the traveler are higher than the income earned from the customers, the excess (i.e., incentive given to a traveler less income earned from the customers) on an individual transaction basis is classified under marketing and sales promotion expenses.

 

Provisions and Contingent Liabilities

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assumptions of the time value of money and the risks specific to the liability. The unwinding of discount is recognized as finance cost.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

A provision for onerous contract is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.

Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Group. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote.

Depreciation, Amortization and Impairment

Depreciation, amortization and impairment costs are based on the estimated useful lives of the assets.

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Accounting Estimates

While preparing our financial statements, we make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent liabilities as of the date of our financial statements and the reported amount of revenues and expenses for the relevant reporting period. As additional information becomes available or periodically, in accordance with relevant accounting principles or policies, we reassess our estimates. Such revisions in our estimates could materially impact our results of operations and our financial position. We believe that the estimates used in the preparation of our consolidated financial statements are prudent and reasonable. Actual results could differ from these estimates. Certain of our accounting policies require higher degree of judgment than others in their application. We consider the policies discussed below to be critical to an understanding of our financial statements as their application places the most significant demands on management’s judgment.

 

 

Estimates relating to the impact of the COVID-19 pandemic

The COVID-19 pandemic has had a significant negative impact on the travel industry in India, including our business, and around the world. For more information, see “Risk Factors – Risks Relating to Us and Our Industry – The COVID-19 pandemic has had, and is expected to have, a material adverse effect on the travel industry and our business, financial condition, results of operations and cash flows.”

During the preparation of the consolidated financial statements, our management has made estimates and assumptions about the impact of the COVID-19 pandemic on critical and significant accounting estimates including fair valuation of financial assets and impairment of goodwill. Although our management believes that these estimates are reasonable and they are based upon our management’s best knowledge of current events and actions, actual results could differ from these estimates. Any changes in estimates are adjusted prospectively in our Group’s consolidated financial statements.

Business Combinations, Goodwill and Intangible Assets

The Group accounts for business combinations using the acquisition method as at the acquisition date, when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group. In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs. The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. The cost of acquisition also includes the fair value of contingent or deferred consideration, if any. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at fair value at the date of acquisition. Transaction costs incurred in connection with a business combination are expensed as incurred, except if related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to remuneration of employees or former owners of the acquiree for future services. Such amounts are recognized in profit or loss as compensation cost.

Goodwill represents excess of the cost of acquisition over our share in the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. If the excess is negative, a bargain purchase gain is recognized immediately in the profit or loss. Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.

Intangible assets acquired in a business combination are measured at fair value as of the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and impairment losses, if any.

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Intangible assets acquired in a business combination are amortized on a straight-line basis over their estimated useful lives that reflect the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives are as follows:

 

 

Technology related development costs

 

2-5 years

 

Software

 

3-5 years

 

Customer – related intangible assets (Customer Relationship)

 

7-10 years

 

Contract – related intangible assets (Non-Compete)

 

5-6 years

 

Marketing – related intangible assets (Brand / Trade Mark)

 

7-10 years

 

Financial assets classified as measured at Fair Value Through Profit Or Loss (“FVTPL”) (March 31, 2018: Available for Sale financial assets)

 

The fair value of the entitlement on future proceeds from sale of stake acquired in a business combination has been determined by assigning probabilities to Binomial Lattice Model and Discounted Cash Flow method. Measurement inputs include discount rate, expected term, volatility, expected dividend yield and share price movement trend. Further, fair value of the right to receive equity stake in a travel entity acquired in a business combination has been determined based on revenue multiple for comparative companies.

 

Impairment

 

 

i) 

Non-derivative financial assets

 

Financial instruments and contract assets

 

The Group recognizes loss allowances for ECLs on:

 

 

financial assets measured at amortized cost;

 

debt investments measured at FVOCI; and

 

contract assets.

The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured as 12-month ECLs:

 

 

debt securities that are determined to have low credit risk at the reporting date; and

 

other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

The Group has elected to measure loss allowances for trade receivables and contract assets at an amount equal to lifetime ECLs.

 

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information.

 

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

 

The Group considers a financial asset to be in default when:

 

 

the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realizing security (if any is held); or

 

the financial asset is more than 90 days past due.

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The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

 

Measurement of ECLs

 

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

 

ECLs are discounted at the effective interest rate of the financial asset.

 

Credit-impaired financial assets

 

At each reporting date, the Group assesses whether financial assets carried at amortized cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Presentation of allowance for ECL in the statement of financial position

 

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

 

For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognized in OCI.

 

Write-off

 

 

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For customers, the Group makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

ii) Non-derivative financial assets - Policy applicable before April 1, 2018

 

A financial asset not carried at fair value through profit or loss, including an interest in equity accounted investee, is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

 

Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not otherwise consider, indications that a debtor or issuer will enter bankruptcy, the disappearance of an active market for a security.

 

The Group considers evidence of impairment for receivables for each specific asset. All individually significant receivables are assessed for specific impairment.

 

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in profit or loss and reflected in an allowance account against receivables. Interest on the impaired asset continues to be recognized through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Impairment losses on available-for-sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortization, and the current fair value, less any impairment loss recognized previously in profit or loss. Changes in cumulative

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impairment losses attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognized, then the impairment loss is reversed, with the amount of the reversal recognized in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognized in other comprehensive income.

An impairment loss in respect of an equity-accounted is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognized in profit or loss, and is reversed if there has been a favorable change in estimates used to determine the recoverable amount.

 

iii)

Non-financial assets

 

The carrying amounts of the Group’s non-financial assets, primarily property, plant and equipment, technology related development cost, software and other intangible assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment. An impairment loss is recognized if the carrying amount of an asset or cash generating unit (CGU) exceeds its recoverable amount.

 

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assumptions of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Subject to an operating segment ceiling test, CGUs to which goodwill has been allocated are aggregated to that level at which impairment testing is performed which reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to the group of CGUs that are expected to benefit from the synergies of the combination.

 

Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.

 

An impairment loss in respect of goodwill is not reversed. For other assets an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Share-based Payment Transactions

Our employees receive remuneration in the form of equity instruments for rendering services over a defined vesting period. The value of equity instruments granted to our employees is measured by reference to the fair value of the instrument at the relevant date of grant. We record an expense for the value of such equity instruments granted and record an increase to our equity.

The equity instruments generally vest in tranches over the vesting period. The fair value determined at the grant date is expensed over the vesting period of the respective tranches. We recognize share-based compensation net of an estimated forfeiture rate and expectation of non-market performance conditions to be met, therefore only recognize compensation cost for those shares expected to vest over the vesting period of the award.

We are required to estimate share-based compensation expense net of estimated forfeitures and expectation of non-market conditions to be met. In determining the estimated forfeiture rates for share-based awards, we periodically conduct an assessment of the actual number of equity awards that have been forfeited to date as well as those expected to be forfeited in the future. We consider many factors when estimating expected forfeitures, including the type of award, the employee class and historical experience. If our actual forfeiture rate is materially different from our estimate, the share-based compensation expense could be significantly different from what we have recorded in the current period.

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Estimated Useful Lives of Property, Plant and Equipment and Technology-related Development Cost

Property, Plant and Equipment. In accordance with International Accounting Standards, or IAS, 16, “Property, Plant and Equipment,” we estimate the useful lives of property, plant and equipment in order to determine the amount of depreciation expense to be recorded during any reporting period. If technological changes were to occur more rapidly than anticipated or in a different form than anticipated, the useful lives assigned to these assets may have to be shortened, resulting in the recognition of increased depreciation expense in future periods. Likewise, if anticipated technological or other changes occur more slowly than expected, the useful lives could be extended. This could result in a reduction of depreciation expense in future periods.

Technology-related Development Cost. Technology-related development costs representing all directly attributable development costs and including vendor invoices towards costs of design, configuration, coding, installation and testing of our websites and mobile platforms are capitalized until implementation. Upon implementation, the asset is amortized to expense over its estimated useful life. Ongoing technology-related post-implementation costs of operation and application maintenance are charged to expense as incurred. In accordance with IAS 38 “Intangible Assets,” technology-related development costs also include costs incurred on development related to internally generated intangible assets which have been capitalized on meeting the criteria of technical feasibility, future economic benefit, marketability and being separately identifiable.

Other Intangible Assets

Other intangible assets comprise software that are acquired by the Group and intangible assets including customer relationship, brand/trade mark and non-compete acquired in a business combination. Software has finite useful lives and is measured at cost less accumulated amortization and accumulated impairment losses. Cost includes any directly attributable expenses necessary to make the assets ready for use. Intangible assets acquired in a business combination are measured at fair value as of the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and impairment losses, if any.

Subsequent expenditure is capitalized only when it is probable that future economic benefits derived from the cost incurred will flow to the enterprise and the cost of the item can be reliably determined. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

Amortization of assets, other than goodwill, is calculated over the cost of the assets, or other amount substituted for cost, less its residual value. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Amortization methods, useful lives and residual values are reviewed at each financial year-end and adjusted as appropriate.

Income Tax

Income tax comprises current and deferred tax. Income tax expense is recognized in our profit or loss, except to the extent it relates to items directly recognized in equity, in which case it is recognized in equity.

Current Income Tax. As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. We are subject to tax assessments, wherever applicable, in these jurisdictions. A tax assessment can involve complex issues, which may only be resolved over extended time periods. Although we have considered all these issues in estimating our income taxes, there could be an unfavorable resolution of such issues that may affect our results of operations.

Current income tax for our current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the taxable income for that period. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

The amount of income tax we pay is subject to evaluation of assessment proceedings by income tax authorities, which may result in adjustments to our carried forward tax losses. Our estimate of the potential outcome for any uncertain tax issue is highly judgmental. We believe we have adequately provided for any reasonably foreseeable outcome related to these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, tax examinations are closed or when statutes of limitation on potential assessments expire. As a result, our effective tax rate may fluctuate significantly.

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Deferred Income Tax. We recognize deferred income tax using the balance sheet approach. Deferred tax is recognized on temporary differences as of the relevant reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. We recognize a deferred tax asset only to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences and tax loss carry forwards can be utilized.

We consider many factors when assessing the likelihood of future realization of our deferred tax assets, including our recent earnings experience by jurisdiction, expectations of future taxable income, and the carry forward periods available to us for tax reporting purposes, as well as other relevant factors. Due to inherent complexities arising from the nature of our businesses, future changes in income tax law or variances between our actual and anticipated operating results, we assess the likelihood of future realization of our deferred tax assets based on our judgments and estimates. Therefore, actual income taxes could materially vary from these judgments and estimates.

The measurement of deferred tax assets involves judgment regarding the deductibility of costs not yet subject to taxation and estimates regarding sufficient future taxable income to enable utilization of unused tax losses in different tax jurisdictions. All deferred tax assets are subject to review of probable utilization. If, however, unexpected events occur in the future, that would prevent us from realizing all or a portion of our net deferred tax assets, an adjustment would result in a charge to income in the period in which such determination was made.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities which intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities simultaneously.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Compound financial instruments

 

Compound financial instruments issued by MakeMyTrip comprise the 2028 Notes. The 2028 Notes are convertible at the option of the holder based upon an initial conversion rate of 25.8035 ordinary shares per $1,000 principal amount of 2028 Notes (equivalent to a conversion price of approximately $38.75 per ordinary share), which conversion rate is subject to certain adjustments in connection with a make-whole fundamental change or any conversion rate adjustments (in each case, as described in the indenture relating to the 2028 Notes) and does not vary with changes in fair value. The liability component of compound financial instruments is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured. Interest related to the financial liability is recognised in profit or loss.

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Results of Operations

The following table sets forth a summary of our consolidated statement of profit or loss, both actual amounts and as a percentage of total revenue, for the periods indicated.

 

 

 

Fiscal Year Ended March 31,

 

 

 

2019

 

 

2020

 

 

2021

 

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

 

 

(in thousands, except percentages)

 

Revenue

 

$

486,011

 

 

 

100.0

 

 

$

511,529

 

 

 

100.0

 

 

$

163,440

 

 

 

100.0

 

Other Income

 

 

220

 

 

 

0.00

 

 

 

1,063

 

 

 

0.2

 

 

 

3,672

 

 

 

2.2

 

Service cost

 

 

(173,412

)

 

 

(35.7

)

 

 

(154,320

)

 

 

(30.2

)

 

 

(22,308

)

 

 

(13.6

)

Personnel expenses

 

 

(113,567

)

 

 

(23.4

)

 

 

(129,836

)

 

 

(25.4

)

 

 

(105,661

)

 

 

(64.6

)

Marketing and sales promotion expenses

 

 

(192,080

)

 

 

(39.5

)

 

 

(166,603

)

 

 

(32.6

)

 

 

(22,741

)

 

 

(13.9

)

Other operating expenses

 

 

(133,295

)

 

 

(27.4

)

 

 

(185,401

)

 

 

(36.2

)

 

 

(51,075

)

 

 

(31.3

)

Depreciation and amortization

 

 

(26,817

)

 

 

(5.5

)

 

 

(33,682

)

 

 

(6.6

)

 

 

(33,010

)

 

 

(20.2

)

Impairment of goodwill

 

 

 

 

 

 

 

 

(272,160

)

 

 

(53.2

)

 

 

 

 

 

 

Results from operating activities

 

 

(152,940

)

 

 

(31.5

)

 

 

(429,410

)

(1)

 

(83.9

)

 

 

(67,683

)

 

 

(41.4

)

Finance income

 

 

6,459

 

 

 

1.3

 

 

 

3,362

 

 

 

0.7

 

 

 

12,100

 

 

 

7.4

 

Finance costs

 

 

(11,329

)

 

 

(2.3

)

 

 

(21,433

)

 

 

(4.2

)

 

 

(4,798

)

 

 

(2.9

)

Impairment in respect of an equity-

   accounted investee

 

 

(9,926

)

 

 

(2.0

)

 

 

 

 

 

 

 

 

 

 

 

 

Share of loss of equity-accounted investees

 

 

(887

)

 

 

(0.2

)

 

 

(65

)

 

 

(0.0

)

 

 

(168

)

 

 

(0.1

)

Profit (Loss) before tax

 

 

(168,623

)

 

 

(34.7

)

 

 

(447,546

)

(1)

 

(87.5

)

 

 

(60,549

)

 

 

(37.0

)

Income tax benefit

 

 

740

 

 

 

0.2

 

 

 

29

 

 

 

0.0

 

 

 

4,507

 

 

 

2.8

 

Profit (Loss) for the year

 

 

(167,883

)

 

 

(34.5

)

 

 

(447,517

)

(1)

 

(87.5

)

 

 

(56,042

)

 

 

(34.3

)

 

 

(1)

Includes one-time impact of impairment of goodwill of $272.2 million and provision for litigations of $30.8 million in fiscal year 2020.

 

Fiscal Year 2021 Compared to Fiscal Year 2020

 

Revenue. We generated revenue of $163.4 million in the fiscal year 2021, a decrease of 68.0% over revenue of $511.5 million in the fiscal year 2020, primarily as a result of a decrease of 67.3% in our revenue from our air ticketing business, a decrease of 71.2% in our revenue from hotels and packages business, a decrease of 61.7% in our revenue from bus ticketing business and a decrease of 62.7% in our other revenue. The decrease in revenue was primarily due to the continued impact of the COVID-19 pandemic in the fiscal year 2021, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020.

 

Air Ticketing. Revenue from our air ticketing business decreased by 67.3% to $57.0 million in the fiscal year 2021 from $174.4 million in the fiscal year 2020. Adjusted Margin from our air ticketing business decreased by 67.9% to $80.2 million in the fiscal year 2021, from $249.7 million in the fiscal year 2020. Adjusted Margin – air ticketing includes customer inducement costs of $23.5 million in the fiscal year 2021 and $75.8 million in the fiscal year 2020, recorded as a reduction of revenue. These customer inducement costs added back to Adjusted Margin is intended to reflect the way we view our ongoing business. Under IFRS, these customer inducement costs are required to be recorded as a reduction of revenue. This decrease in Revenue and Adjusted Margin – air ticketing was due to a decrease in gross bookings of 72.6% primarily driven by 64.3% decrease in the number of air ticketing flight segments year over year, primarily due to the continued impact of the COVID-19 pandemic in the fiscal year 2021, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020. Further, our Adjusted Margin % (defined as Adjusted Margin as a percentage of gross bookings) was 8.2% in the fiscal year 2021 compared to 7.0% in the fiscal year 2020. The increase in Adjusted Margin % was due to incremental incentives from our air ticketing suppliers to drive travel growth in the fiscal year 2021.

Hotels and Packages. Revenue from our hotels and packages business decreased by 71.2% to $68.0 million in the fiscal year 2021, from $235.8 million in the fiscal year 2020. Adjusted Margin from our hotels and packages business decreased by 81.3 % to $67.5 million in the fiscal year 2021 from $360.1 million in the fiscal year 2020. Adjusted Margin – hotels and packages includes customer inducement costs of $18.7 million in the fiscal year 2021 and $265.7 million in the fiscal year 2020, recorded as a reduction of revenue. These customer inducement

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costs added back to Adjusted Margin are intended to reflect the way we view our ongoing business. Under IFRS, these customer inducement costs are required to be recorded as a reduction of revenue. This decrease in Revenue and Adjusted Margin – hotels and packages was due to a decrease in gross bookings of 76.9% primarily driven by 71.2% decrease in the number of hotel-room nights year over year, primarily due to the continued impact of the COVID-19 pandemic in the fiscal year 2021, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020. Our Adjusted Margin % in the fiscal year 2021 was 17.9% as compared to 22.1% in the fiscal year 2020. The decrease was primarily due to margin reductions for certain categories of hotels to support our hotel service providers during the COVID-19 pandemic and also due to lower share of high-margin budget hotels.

Bus Ticketing. Revenue from our bus ticketing business decreased by 61.7% to $24.9 million in the fiscal year 2021, from $65.0 million in the fiscal year 2020. Adjusted Margin from our bus ticketing business decreased by 69.8% to $22.9 million in the fiscal year 2021 from $75.6 million in the fiscal year 2020. Adjusted Margin – bus ticketing includes customer inducement costs of $0.7 million in the fiscal year 2021 and $17.7 million in the fiscal year 2020, recorded as a reduction of revenue. These customer inducement costs added back to Adjusted Margin is intended to reflect the way we view our ongoing business. Under IFRS, these customer inducement costs are required to be recorded as a reduction of revenue. This decrease in Revenue and Adjusted Margin – bus ticketing was due to a decrease in gross bookings of 68.6% driven by 66.0% decrease in the number of bus tickets travelled year over year, primarily due to the continued impact of the COVID-19 pandemic in the fiscal year 2021, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020. Our Adjusted Margin % of 8.2% in the fiscal year 2021 remained at similar level of 8.5% in the fiscal year 2020.

Other Revenue. Our other revenue decreased by 62.7% to $13.6 million in the fiscal year 2021, from $36.3 million in the fiscal year 2020. Our Adjusted Margin – others decreased to $13.6 million in the fiscal year 2021 from $37.9 million in the fiscal year 2020. This decrease in Revenue and Adjusted Margin – others was primarily due to lower insurance income, advertisement income and other ancillary revenues primarily due to the continued impact of the COVID-19 pandemic in the fiscal year 2021, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020, which was partially offset by higher brand alliance income in the fiscal year 2021. Adjusted Margin – others include customer inducement costs of $0.1 million in the fiscal year 2021 and $2.0 million in the fiscal year 2020, recorded as a reduction of revenue. These customer inducement costs added back to Adjusted Margin is intended to reflect the way we view our ongoing business. Under IFRS, these customer inducement costs are required to be recorded as a reduction of revenue.

Other Income. Other income increased to $3.7 million in the fiscal year 2021 from $1.1 million in the fiscal year 2020 primarily due to the rent waivers related to our leasehold premises due to the COVID-19 pandemic in the fiscal year 2021.

Service Cost. Service cost decreased to $22.3 million in fiscal year 2021 from $154.3 million in fiscal year 2020. The decrease in service cost reflects continued impact of the COVID-19 pandemic in the fiscal year 2021, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020.

 

Personnel Expenses. Personnel expenses decreased by 18.6% to $105.7 million in the fiscal year 2021 from $129.8 million in the fiscal year 2020 due to cost saving measures (including salary reductions) that we have implemented in response to market conditions beginning in April 2020 and reducing our headcount largely in our packages business in the first quarter of fiscal year 2021. Our personnel expenses were further reduced due to reduction in share based compensation costs in the fiscal year 2021, partially offset by annual wage increases implemented in the fourth quarter of fiscal year 2021.

 

Marketing and sales promotion expenses. Marketing and sales promotion expenses decreased by 86.4% to $22.7 million in the fiscal year 2021 from $166.6 million in the fiscal year 2020. The decrease in marketing and sales promotion expenses was due to the significant curtailment of these variable costs on account of our strategy of optimizing marketing and sales promotion spends and cancellation of all discretionary marketing and sales promotion spends such as events and brand building due to the impact of the COVID-19 pandemic. Our marketing expenses primarily include online video and display advertising on websites, television and in print, search engine marketing, referrals from meta-search and travel research websites and other media costs such as public relations and sponsorships.

 

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Additionally, we have incurred customer inducement costs recorded as a reduction of revenue and certain loyalty program costs of $43.0 million in the fiscal year 2021 and $366.2 million in the fiscal year 2020. The details are as follows:

 

 

 

Fiscal year ended March 31,

 

 

 

2020

 

 

2021

 

 

 

(in thousands)

 

Marketing and sales promotion expenses as per IFRS

 

$

166,603

 

 

$

22,741

 

Customer inducement costs recorded as a reduction of revenue

 

 

361,158

 

 

 

42,908

 

Certain loyalty program costs related to Others revenue

 

 

5,053

 

 

 

91

 

 

Other Operating Expenses. Other operating expenses decreased by 72.5% to $51.1 million in the fiscal year 2021 from $185.4 million in the fiscal year 2020, primarily due to a decrease in payment gateway charges and outsourcing fees as a result of fewer bookings due to lower travel demand and nation-wide lockdown implemented in India due to the COVID-19 pandemic. We have also significantly reduced our outsourced teams at our call centers and various other general and administrative expenses in response to market conditions, which led to a further decrease in our operating expenses. Our operating expenses were further reduced due to a one-time provision for litigations of $30.8 million made in the fiscal year 2020 for a dispute related to a prior acquisition.

Depreciation and Amortization. Our depreciation and amortization expenses were $33.0 million in the fiscal year 2021 in comparison to $33.7 million fiscal year 2020.

Impairment of goodwill. Our goodwill impairment charge was nil in the fiscal year 2021. In the fiscal year 2020, we recorded a goodwill impairment charge of $272.2 million as a result of the significant negative impact related to COVID-19 pandemic on the travel industry and our stock price and market capitalization, we concluded that sufficient indicators existed to require us to perform a quantitative assessment of goodwill and, following that assessment, we recorded an impairment charge of our goodwill amounting to $272.2 million, primarily related to our Goibibo business, which we acquired in fiscal year 2017.

 

Results from Operating Activities. As a result of the foregoing factors, our results from operating activities were a loss of $67.7 million in the fiscal year 2021 as compared to a loss of $429.4 million in the fiscal year 2020. Our Adjusted Operating Loss was $18.0 million in the fiscal year 2021 as compared to an Adjusted Operating Loss of $69.9 million in the fiscal year 2020. For a description of the components and calculation of “Adjusted Operating Profit (Loss)” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure “Results from operating activities”, see — “Certain Key Performance Indicators and Non-IFRS Measures” elsewhere in this Annual Report.

 

Finance Income. Our finance income increased to $12.1 million in fiscal year 2021 from $3.4 million in fiscal year 2020, primarily as a result of net foreign exchange gain, interest from income tax refund and term deposits placed with banks in fiscal year 2021.

 

Finance Costs. Our finance costs decreased to $4.8 million in fiscal year 2021 as compared to $21.4 million in fiscal year 2020, primarily due to foreign exchange loss in fiscal year 2020 as compared to foreign exchange gain in fiscal year 2021 mainly as a result of the appreciation of the Indian Rupee against the U.S. dollar as compared to March 31, 2020.

Loss for the year. As a result of the foregoing factors, our loss for the fiscal year 2021 was $56.0 million as compared to a loss of $447.5 million in the fiscal year 2020. Our Adjusted Net Loss was $9.2 million in the fiscal year 2021, as compared to Adjusted Net Loss of $86.5 million in the fiscal year 2020. For a description of the components and calculation of “Adjusted Net Profit (Loss)” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure “Loss for the year”, see — “Certain Key Performance Indicators and Non-IFRS Measures” elsewhere in this Annual Report.

Diluted loss per share. Diluted loss per share was $0.52 for the fiscal year 2021 as compared to diluted loss per share of $4.26 in the fiscal year 2020. Our Adjusted Diluted Loss per share was $0.09 in the fiscal year 2021, as compared to Adjusted Diluted Loss per share of $0.82 in the fiscal year 2020. For a description of the components and calculation of “Adjusted Diluted Earnings (Loss) per Share” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure “diluted earnings (loss) per share”, see — “Certain Key Performance Indicators and Non-IFRS Measures” elsewhere in this Annual Report.

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Fiscal Year 2020 Compared to Fiscal Year 2019

 

Revenue. We generated revenue of $511.5 million in the fiscal year 2020, an increase of 5.3% over revenue of $486.0 million in the fiscal year 2019, primarily as a result of an increase of 4.6% in our revenue from our air ticketing business, an increase of 21.0% in our revenue from bus ticketing business and an increase of  29.7% in other revenue, partially offset by decrease of 0.7% in our hotels and packages business in fiscal year 2020. Our revenue for fiscal year 2020 reflects increases in revenue in each of our business segments during the first three quarters of fiscal year 2020, which were partially offset by the impact of the COVID-19 pandemic in the quarter ended March 31, 2020, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020.

Air Ticketing. Revenue from our air ticketing business increased by 4.6% to $174.4 million in the fiscal year 2020 from $166.7 million in the fiscal year 2019. Adjusted Margin from our air ticketing business increased by 6.6% to $249.7 million in the fiscal year 2020, from $234.2 million in the fiscal year 2019. Adjusted Margin – air ticketing includes customer inducement costs of $75.8 million in the fiscal year 2020 and $68.6 million in the fiscal year 2019, recorded as a reduction of revenue. These customer inducement costs added back to Adjusted Margin, is intended to reflect the way we view our ongoing business. Under IFRS, these customer inducement costs are required to be recorded as a reduction of revenue. The increase in revenue and Adjusted Margin - air ticketing was due to an increase in gross bookings of 11.4% primarily driven by a 6.5% increase in the number of air ticketing flight segments year over year, mainly driven by growth in our outbound air ticketing business, partially offset by a decrease in gross booking in the quarter ended March 31, 2020 due to the impact of the COVID-19 pandemic, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020. Our Adjusted Margin % (defined as Adjusted Margin as a percentage of gross bookings) slightly declined to 7.0% in the fiscal year 2020 as compared to 7.3% in the fiscal year 2019 primarily due to the decline in air travel demand due to the impact of the COVID-19 pandemic in the quarter ended March 31, 2020.

Hotels and Packages. Revenue from our hotels and packages business decreased by 0.7% to $235.8 million in the fiscal year 2020, from $237.5 million in the fiscal year 2019. The marginal decrease in revenue from our hotels and packages business is primarily due to the impact of the COVID-19 pandemic in the quarter ended March 31, 2020, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020. Our Adjusted Margin – hotels and packages increased by 2.4% to $360.1 million in the fiscal year 2020 from $351.6 million in the fiscal year 2019. Adjusted Margin - hotels and packages includes customer inducement costs of $265.7 million in the fiscal year 2020 and $274.9 million in the fiscal year 2019, recorded as a reduction of revenue. These customer inducement costs added back to Adjusted Margin, is intended to reflect the way we view our ongoing business. Under IFRS, these customer inducement costs are required to be recorded as a reduction of revenue. The marginal increase in Adjusted Margin from our hotels and packages business is primarily due to an increase in gross bookings increased by 7.3% driven by 11.4% increase in the number of hotel room-nights year over year and also due to reduction in customer inducement costs which are recorded as a reduction of revenue post adoption of IFRS 15. The increase in Adjusted Margin from our hotels and packages business is partially offset by a decrease in gross bookings in the quarter ended March 31, 2020 due to the impact of the COVID-19 pandemic. Our Adjusted Margin % was 22.1% in the fiscal year 2020 and 23.2% in the fiscal year 2019. The decrease in Adjusted Margin % was primarily due to a decrease in margins from our suppliers in line with a shift in our pricing strategy in the hotels and packages business.

Bus Ticketing. Revenue from our bus ticketing business increased by 21.0% to $65.0 million in the fiscal year 2020, from $53.7 million in the fiscal year 2019. Adjusted Margin from our bus ticketing business increased by 28.6% to $75.6 million in the fiscal year 2020 from $58.8 million in the fiscal year 2019. Adjusted Margin – bus ticketing includes customer inducement costs of $17.7 million in the fiscal year 2020 and $14.0 million in the fiscal year 2019, recorded as a reduction of revenue. These customer inducement costs added back to Adjusted Margin, is intended to reflect the way we view our ongoing business. Under IFRS, these customer inducement costs are required to be recorded as a reduction of revenue. The increase in revenue and Adjusted Margin - bus ticketing was due to an increase in gross bookings by 23.7% driven by a 27.9% increase in the number of bus tickets travelled year over year, which reflects the continued offline to online shift within this travel segment, partially offset by the impact of the COVID-19 pandemic, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020. Our Adjusted Margin % increased to 8.5% in the fiscal year 2020 from 8.2% in the fiscal year 2019.

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Other Revenue. Our other revenue increased by 29.7% to $36.3 million in the fiscal year 2020, from $28.0 million in the fiscal year 2019. Our Adjusted Margin – others has increased to $37.9 million in the fiscal year 2020 from $28.8 million in the fiscal year 2019. The increase in other revenue and Adjusted Margin – others was primarily due to higher revenues from advertisement income and other ancillary revenues in the fiscal year 2020, partially offset by the impact of the COVID-19 pandemic, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020. Adjusted Margin – others includes customer inducement costs of $2.0 million in the fiscal year 2020 and $0.9 million in the fiscal year 2019, recorded as a reduction of revenue. These customer inducement costs added back to Adjusted Margin, is intended to reflect the way we view our ongoing business. Under IFRS, these customer inducement costs are required to be recorded as a reduction of revenue.

Other Income. Our other income increased to $1.1 million in fiscal year 2020 from $0.2 million in fiscal year 2019 primarily due to gain on disposal of an equity-accounted investee.

Service Cost. Service cost decreased to $154.3 million in fiscal year 2020 from $173.4 million in fiscal year 2019.The decrease in service cost reflects the impact of the COVID-19 pandemic, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020.

Personnel Expenses. Personnel expenses increased by 14.3% to $129.8 million in the fiscal year 2020 from $113.6 million in the fiscal year 2019. This increase was primarily due to an annual increase in wages and a one-time accelerated personnel cost of $2.5 million in the second quarter of fiscal year 2020 due to the amendment of the share purchase agreement related to a prior acquisition. Excluding employee share-based compensation costs for both fiscal years 2020 and 2019, and one-time accelerated personnel cost as explained above in fiscal year 2020, personnel expenses increased by 24.1% year over year, reflecting that our annual increase in wages generally kept pace with the growth of our business.

Marketing and sales promotion expenses. Marketing and sales promotion expenses decreased by 13.3% to $166.6 million in the fiscal year 2020 from $192.1 million in the fiscal year 2019. The decrease in marketing and sales promotion expenses reflects the impact of our significant curtailment of these variable costs due to the impact of the COVID-19 pandemic, as well as our gradual reduction in marketing and sales promotion activities. Our marketing expenses primarily includes online video and display advertising on websites, television and in print, search engine marketing, referrals from meta-search and travel research websites and other media costs such as public relations and sponsorships.

Additionally, we have incurred customer inducement costs recorded as a reduction of revenue and certain loyalty program cost of $366.2 million in the fiscal year 2020 and $360.8 million in the fiscal year 2019. These costs primarily include significant customer acquisition costs such as cash back incentives, upfront cash incentives and loyalty program costs incurred to accelerate growth on our various booking platforms. The details are as follows:

 

 

 

Fiscal year ended March 31,

 

 

 

2019

 

 

2020

 

 

 

(in thousands)

 

Marketing and sales promotion expenses as per IFRS

 

$

192,080

 

 

$

166,603

 

Customer inducement costs recorded as a reduction of revenue

 

 

358,358

 

 

 

361,158

 

Certain loyalty program costs related to Others revenue

 

 

2,467

 

 

 

5,053

 

 

Other Operating Expenses. Other operating expenses increased by 39.1% to $185.4 million in the fiscal year 2020 from $133.3 million in the fiscal year 2019, primarily due to a provision for litigations of $30.8 million for a dispute related to our acquisition of the Hotel Travel Group in 2012 (see also “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Other Proceedings— Dispute with former shareholders of Hotel Travel Group”) and due to an increase in payment gateway charges, website hosting charges and outsourcing fees in line with the growth in our business in the first three quarters of fiscal year 2020, partially offset by a decrease in payment gateway charges on account of less bookings due to lower travel demand due to the impact of the COVID-19 pandemic in the month of March 2020. Other operating expenses for fiscal year 2020 also include merger and acquisition related expenses of $0.9 million, comprising legal and professional expenses and certain non-routine transactions, whether or not consummated.

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Depreciation, amortization and impairment. Our depreciation, amortization and impairment expenses were $33.7 million in the fiscal year 2020 post adoption of IFRS 16 on April 1, 2019 wherein depreciation has been recorded on right-of-use assets and interest on lease liabilities instead of rent expense on leasehold properties in the fiscal year ended 2020. Depreciation, amortization and impairment expense in the fiscal year 2019 was $26.8 million.

 

Impairment of goodwill. Our goodwill impairment charge was $272.2 million in the fiscal year 2020. In the fourth quarter of fiscal year 2020, as a result of the significant negative impact related to the COVID-19 pandemic on the travel industry, our stock price and market capitalization, we performed a quantitative assessment of goodwill and, following that assessment, we recorded an impairment charge of our goodwill amounting to $272.2 million, primarily related to our Goibibo business, which we had acquired in fiscal year 2017. Goodwill impairment charge in the fiscal year 2019 was nil.

Results from Operating Activities. As a result of the foregoing factors, our results from operating activities were a loss of $429.4 million in the fiscal year 2020 as compared to a loss of $152.9 million in the fiscal year 2019. Our Adjusted Operating Loss was $69.9 million in the fiscal year 2020 as compared to an Adjusted Operating Loss of $98.8 million in the fiscal year 2019. For a description of the components and calculation of “Adjusted Operating Profit (Loss)” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure “Results from operating activities”, see “— Certain Key Performance Indicators and Non-IFRS Measures” elsewhere in this Annual Report.

Finance Income. Our finance income decreased to $3.4 million in fiscal year 2020 from $6.5 million in fiscal year 2019, primarily as a result of higher interest from income tax refund and term deposits placed with banks in fiscal year 2019.

Finance Costs. Our finance costs increased to $21.4 million in fiscal year 2020 as compared to $11.3 million in fiscal year 2019, primarily due to higher foreign exchange loss in fiscal year 2020 mainly as a result of the depreciation of the Indian Rupee against the U.S. dollar as compared to March 31, 2019.

Loss for the year. As a result of the foregoing factors, our loss in the fiscal year 2020 was $447.5 million as compared to a loss of $167.9 million in the fiscal year 2019. Our Adjusted Net Loss was $86.5 million in the fiscal year 2020 as compared to an Adjusted Net Loss of $103.7 million in the fiscal year 2019. For a description of the components and calculation of “Adjusted Net Profit (Loss)” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure “Loss for the year”, see “— Certain Key Performance Indicators and Non-IFRS Measures” elsewhere in this Annual Report.

Diluted loss per share. Diluted loss per share was $4.26 in the fiscal year 2020 as compared to diluted loss per share of $1.61 in the fiscal year 2019. Our Adjusted Diluted Loss per share was $0.82 in the fiscal year 2020 as compared to Adjusted Diluted Loss per share of $1.00 in the fiscal year 2019. For a description of the components and calculation of “Adjusted Diluted Earnings (Loss) per Share” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure “diluted earnings (loss) per share”, see “— Certain Key Performance Indicators and Non-IFRS Measures” elsewhere in this Annual Report.

Liquidity and Capital Resources

Historically, our sources of liquidity have principally been proceeds from the sale of our convertible preferred shares, ordinary shares and convertible notes, bank overdrafts and working capital facilities and cash flows from operations. Our cash requirements have mainly been for working capital as well as capital expenditures and acquisitions. On February 9, 2021, we issued the 2028 Notes. The 2028 Notes are convertible based upon an initial conversion rate of 25.8035 of our ordinary shares per $1,000 principal amount of 2028 Notes (equivalent to a conversion price of approximately $38.75 per ordinary share). The 2028 Notes will mature on February 15, 2028, unless earlier repurchased, redeemed or converted.

 

As of March 31, 2021, the balance of cash and cash equivalents and term deposits on our balance sheet was $449.9 million. This includes net proceeds of $224.0 million from the issuance of the 2028 Notes in the quarter ended March 31, 2021.  

Our primary sources of liquidity were $295.0 million of cash and cash equivalents and $154.9 million in term deposits with various banks, which are available on demand. A portion of such term deposits are used to secure bank guarantees, bank overdraft facility, and other facilities, which support our business.

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Our trade and other receivables primarily comprise commissions, incentive or other payments owing to us from airline suppliers, receivables from our corporate and retail customers to whom we typically extend credit periods, security deposits paid primarily for our leased premises as well as interest accrued but not due on our term deposits. Our trade and other receivables decreased from $56.1 million as of March 31, 2020 to $27.3 million as of March 31, 2021, primarily as a result of a decrease in receivables from airlines and corporate customers during fiscal year 2021. Our other current assets primarily consist of deposits and advances to our suppliers to secure better prices and availability of bookings in future periods. Our other current assets decreased from $53.4 million as of March 31, 2020 to $51.1 million as of March 31, 2021, primarily due to reduction in advances given to our supplier for future bookings due to lower demand resulting from the impact of the COVID-19 pandemic.

 

As of March 31, 2021, MMT India and Ibibo India had the following facilities available from various banks:

 

 

an overdraft facility for MMT India and Ibibo India of Rs. 1,660 million (approximately $22.7 million) and Rs. 590 million (approximately $8.1 million), respectively, to meet our working capital requirements, secured primarily by term deposits, with a sub-limit in MMT India and Ibibo India of Rs. 350 million (approximately $4.8 million) and Rs. 120 million (approximately $1.6 million), respectively, for working capital demand loans, and Rs. 150 million (approximately $2.1 million) for issuing bank guarantees for operational requirements from Ibibo India;

 

 

working capital demand loans for MMT India and Ibibo India of Rs. 750 million (approximately $10.2 million) and Rs. 250 million (approximately $3.4 million), respectively, to meet our working capital requirements, with one way inter-changeability for issuing IATA bank guarantees of up to Rs. 670 million (approximately $9.1 million) and Rs. 220 million (approximately $3.0 million) in MMT India and Ibibo India, respectively, secured against exclusive charge over all the assets of MMT India excluding vehicles and a corporate guarantee from MakeMyTrip Limited; and

 

 

a commercial card and combined credit facility for MMT India and Ibibo India of Rs. 207 million (approximately $2.8 million) and Rs. 138 million (approximately $1.9 million), respectively, to meet our working capital requirements, secured against a demand promissory note and a letter of continuity.

 

As of March 31, 2021, no amount was outstanding under our working capital and overdraft facilities.

 

From time to time, we are also required by certain international and Indian airlines, hotels and packages suppliers, as well as certain aggregators from whom we obtain hotel inventory and other travel suppliers, to provide bank guarantees/letters of credit to secure our obligations to them.

 

 

Bank guarantee limits for MMT India and Ibibo India of Rs. 750 million (approximately $10.2 million) and Rs. 250 million (approximately $3.4 million), respectively, for issuing IATA bank guarantee, with one way inter-changeability for issuing bank guarantees for operational requirements for up to Rs.100 million (approximately $1.4 million) in MMT India, secured against exclusive charge on all the assets excluding vehicles along with corporate guarantee from MakeMyTrip Limited.

 

 

A bank guarantee limit of Rs. 300 million for MMT India (approximately $4.1 million) for issuing bank guarantees for operational requirements against exclusive charge on all the assets of MMT India excluding vehicles along with corporate guarantee from MakeMyTrip Limited.

 

As of March 31, 2021, we had Rs. 600 million (approximately 8.2 million) and Rs. 150 million (approximately $2.1 million) were outstanding towards the issuance of IATA Bank Guarantee in MMT India and Ibibo India respectively.

 

As of March 31, 2021, Rs. 52 million (approx. $0.7 million) were outstanding towards issuance of bank guarantee towards various other travel and hotel and packages suppliers.

 

No demand had been made against any of these guarantees.

 

 

Ibibo India has obtained certificates of deposits for Rs. 8.7 million (approximately $0.1 million) for availing credit card facilities from HDFC and Amex Bank Corp respectively; and towards issuing bank

90


 

 

guarantees to state transport corporations from Yes Bank and ICICI bank against 100% cash margin as fixed deposits.

 

 

ITC Group obtained certificates of deposits of $0.2 million, for the purposes of providing guarantees to various international airlines. Further ITC Group also had corporate card limits of $0.1 million from various banks.

 

 

Luxury Tours obtained certificates of deposit of $0.3 million for purpose of providing guarantees to various hotels and packages suppliers. Further, Luxury Tours also had corporate card limits and overdraft facility of $0.3 million from various banks.

 

 

Q2T obtained bank guarantees of Rs. 0.8 million (approximately $0.01 million) from Punjab National Bank and State Bank of India for providing guarantees to IATA and payment gateway facility. Further, Q2T also had an overdraft facility of Rs. 95 million (approximately $1.3 million) from HDFC Bank.

 

 

MMT Inc. had obtained letters of credit of $0.1 million for the purposes of providing guarantees to various international airlines.

 

In addition, we have secured credit and guarantee facilities of $70.0 million from an affiliate of our largest shareholder. As of March 31, 2021, this credit facility remained undrawn. Apart from the foregoing borrowings and vehicle loans of Rs. 53.8 million (approximately $0.7 million) we have no outstanding bank loans or financial guarantees or similar commitments to guarantee our payment obligations or those of third parties.

We believe that our current cash and cash equivalents including term deposits, cash flow from operations and our working capital facilities will be sufficient to meet our anticipated regular working capital requirements and our needs for capital expenditures, for the next 12 months.

We may, however, require additional cash resources due to changing business conditions or other future developments, including the near-term and long-term impact of the COVID-19 pandemic on our business and any investments or acquisitions we may decide to pursue.

The following table sets forth the summary of our cash flows for the periods indicated:

 

 

 

Fiscal Year Ended March 31,

 

 

 

 

2019

 

 

 

2020

 

 

 

2021

 

 

 

 

(in millions)

 

 

Net cash generated from/(used in)

   operating activities

 

$

(78.9

)

 

 

$

(112.7

)

 

 

$

64.5

 

 

Net cash generated from/(used in)

   investing activities

 

 

70.0

 

 

 

 

73.8

 

 

 

 

(118.8

)

 

Net cash generated from/(used in)

   financing activities

 

 

(0.3

)

 

 

 

(11.0

)

 

 

 

219.4

 

 

Net increase/(decrease) in cash and

   cash equivalents

 

 

(9.2

)

 

 

 

(49.9

)

 

 

 

165.1

 

 

Cash and cash equivalents at beginning

   of year

 

 

187.6

 

 

 

 

178.0

 

 

 

 

129.9

 

 

Effect of exchange rate fluctuations on

   cash held

 

 

(0.4

)

 

 

 

1.8

 

 

 

 

0.1

 

 

Cash and cash equivalents at end of year

 

178.0

 

(1)

 

 

129.9

 

(2)

 

 

295.1

 

(3)

 

Notes:

(1)

Excludes $134.1 million of term deposits not classified as “cash and cash equivalents.” As of March 31, 2019, we did not have any amounts outstanding under our overdraft facilities.

(2)

Excludes $38.0 million of term deposits not classified as “cash and cash equivalents.” As of March 31, 2020, we did not have any amounts outstanding under our overdraft facilities.

(3)

Excludes $154.9 million of term deposits not classified as “cash and cash equivalents.” As of March 31, 2021, we did not have any amounts outstanding under our overdraft facilities.

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Net Cash Generated From/(Used In) Operating Activities

Our net cash generated in operating activities was $64.5 million in fiscal year 2021, as compared to net cash used in operating activities of $112.7 million in fiscal year 2020, an increase of $177.2 million in fiscal year 2021. Our net loss adjusted for depreciation and amortization and other non-cash items was $0.6 million in fiscal year 2021 as compared to $51.8 million in fiscal year 2020. Further, in fiscal year 2021, there was a decrease in our working capital of $65.1 million as compared to an increase in our working capital of $60.9 million in fiscal year 2020. The decrease in working capital in fiscal year 2021 was primarily due to an increase of $13.7 million in other liabilities and trade and other payables, and contract liabilities, net refund of income tax of $12.4 million and an increase of $38.3 million in trade and other receivables and other assets.

Our net cash used in operating activities was $112.7 million in fiscal year 2020, as compared to net cash used in operating activities of $78.9 million in fiscal year 2019, an increase of $33.8 million in fiscal year 2020. Our net loss adjusted for depreciation, amortization and impairment and other non-cash items was $51.8 million in fiscal year 2020 as compared to $86.1 million in fiscal year 2019. Further, in fiscal year 2020, there was an increase in our working capital of $60.9 million as compared to a decrease in working capital of $7.2 million in fiscal year 2019. The working capital increased in fiscal year 2020 was primarily due to a decrease of $82.1 million in trade and other payables, and contract liabilities and an increase of $13.6 million in trade and other receivables, contract assets and other assets.

Our net cash used in operating activities was $78.9 million in fiscal year 2019, as compared to net cash used in operating activities of $125.5 million in fiscal year 2018, a decrease of $46.6 million in fiscal year 2019. Our net loss adjusted for depreciation, amortization and impairment and other non-cash items was $86.1 million in fiscal year 2019 as compared to $141.4 million in fiscal year 2018. Further, in fiscal year 2019, there was a decrease in our working capital of $7.2 million as compared to a decrease in working capital of $16.0 million in fiscal year 2018. The working capital decrease in fiscal year 2019 was primarily due to an increase of $3.5 million in trade and other payable, and contract liabilities and an increase of $10.2 million in trade and other receivables, contract assets and other assets.

Net Cash Generated From/(Used In) Investing Activities.

In fiscal year 2021, cash used in investing activities was $118.9 million. We redeemed term deposits with banks amounting to $39.1 million (computed using average exchange rates for the period) for investment and working capital purposes and received interest mainly on our term deposits of $6.0 million. We also invested $155.5 million (computed using average exchange rates for the period) in term deposits with banks, and $8.1 million primarily in technology-related development costs.

In fiscal year 2020, cash generated from investing activities was $73.8 million. We redeemed term deposits with banks amounting to $124.1 million (computed using average exchange rates for the period) for investment and working capital purposes and received interest mainly on our term deposits of $4.3 million. We also invested $28.0 million (computed using average exchange rates for the period) in term deposits with banks, $14.6 million in acquisition of subsidiary, $3.5 million in property plant and equipment and $9.2 million in software and technology-related development costs.

In fiscal year 2019, cash generated from investing activities was $70.0 million. We redeemed term deposits with banks amounting to $205.4 million (computed using average exchange rates for the period) for investment and working capital purposes and received interest on our term deposits of $5.5 million. We received cash of $17.1 million in connection with the proceeds from settlement of entitlement from related party. We also invested $137.2 million (computed using average exchange rates for the period) in term deposits with banks, $11.2 million in acquisition of subsidiary, $3.3 million in property plant and equipment and $6.2 million in software and technology-related development costs.

Net Cash Generated From/(Used In) Financing Activities.

In fiscal year 2021, cash generated from financing activities was $219.4 million, primarily net proceeds of $224.0 million from the issuance of our 2028 Notes. We also made payment of $4.6 million for lease liabilities and vehicle loans.

 

In fiscal year 2020, cash used in financing activities was $11.0 million, primarily as a result of payment of lease liabilities of $6.2 million. We made payments of $2.0 million as interest and our other finance charges and $3.2 million for acquisition of non-controlling interest.

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In fiscal year 2019, cash used in financing activities was $0.3 million, primarily as a result of cash proceeds of $0.3 from issuance of shares on exercise of share options. We also made payments of $0.7 million as interest and our other finance charges.

Capital Expenditures

We incurred capital expenditures of $9.7 million, $12.8 million and $8.8 million in fiscal years 2019, 2020 and 2021, respectively. As of March 31, 2021, we had committed capital expenditures of $0.08 million for fiscal year 2021, substantially all of which we expect to spend in India. In addition, we expect to spend an additional approximately $12.0 million to $15.0 million on capital expenditures during fiscal year 2022. Our capital expenditures have principally consisted of costs related to our technology platform and infrastructure, upgrading of/additions to our websites and mobile platforms, purchases of workstations, computers, computer software, leasehold improvements and others. In the future, we may also incur capital expenditures to expand our products and services offerings, including through strategic acquisitions.

Off-Balance Sheet Arrangements

As of March 31, 2021, MMT India and Ibibo India has obtained Rs. 652.3 million (approximately $8.9 million) and Rs. 150.0 million (approximately $2.1 million), respectively, in bank guarantees, primarily from IndusInd Bank in favor of IATA and other suppliers, against any payment default by us to all airlines participating in IATA’s bill settlement plan. Additionally, Ibibo India has obtained certificates of deposits for Rs. 7.8 million (approximately $0.1 million) for utilizing credit card and other facilities from HDFC, ICICI and Amex Bank Corp respectively; and Redbus India has obtained a bank guarantee facility of Rs. 0.9 million (approximately $0.01 million) towards issuing bank guarantees to state transport corporations from Yes Bank and ICICI Bank. Further, MMT Inc. has pledged amounts totaling $0.1 million in account for the purposes of providing letters of credit to various international airlines and the ITC Group also pledged fixed deposits amounting $0.2 million, for the purposes of providing guarantees to various international airlines. Additionally, ITC Group has corporate card limits of $0.1 million. Luxury Tours has obtained bank guarantees and corporate card limits totaling $0.5 million for the purpose of providing guarantees to various hotels and packages suppliers and availing credit card facilities, which are secured by certificates of deposit of $0.3 million. Further, Quest2Travel has obtained a certificate of deposits for Rs. 0.8 million (approximately $ 0.01 million) for the purpose of providing bank guarantees in favor of IATA, other suppliers and payment gateway facilities. Apart from the foregoing, we do not have any outstanding off-balance sheet derivative financial instruments, guarantees, interest rate swap transactions or foreign currency forward contracts. We do not engage in trading activities involving non-exchange traded contracts.

Contractual Obligations

The following table sets forth our contractual obligations as of March 31, 2021. Other than the obligations specified below, we do not have any other long term contractual obligations:

 

 

 

Payment Due by Period

 

Contractual

Obligations

 

Total

 

 

Less than 1

year

 

 

1-3 years

 

 

3-5 years

 

 

More than

5 years

 

 

 

(in thousands)

 

Secured bank loan(1)

 

$

824

 

 

$

360

 

 

$

432

 

 

$

32

 

 

 

 

Principal

 

 

735

 

 

 

309

 

 

 

395

 

 

 

31