F-1/A 1 u00846b2fv1za.htm MAKEMYTRIP LIMITED MakeMyTrip Limited
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As filed with the Securities and Exchange Commission on May 20, 2011.
 
Registration No. 333-172572
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Pre-Effective Amendment No. 2
 
Form F-1
 
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
MakeMyTrip Limited
 
(Exact name of Registrant as specified in its charter)
 
         
Mauritius
  4700   13-4125456
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)
 
103 Udyog Vihar, Phase 1
Gurgaon, Haryana 122016, India
(91-124) 439-5000
 
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
 
MakeMyTrip.com Inc.
60 East 42nd Street
Suite 411
New York, NY 10165
(212) 760 1511
 
 
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
Copies to:
     
Michael W. Sturrock, Esq.
Rajiv Gupta, Esq.
Latham & Watkins LLP
9 Raffles Place
42-02 Republic Plaza
Singapore 048619
(65) 6536-1161
  Matthew D. Bersani, Esq.
Shearman & Sterling LLP
12/F Gloucester Tower
The Landmark, 15 Queens Road
Central, Hong Kong
(852) 2978-8000
 
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  o
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
CALCULATION OF REGISTRATION FEE
                         
            Proposed Maximum
    Proposed
     
Title of Each Class of
    Amount To Be
    Aggregate Offering
    Maximum Aggregate
    Amount of
Securities to be Registered(1)     Registered     Price Per Share(2)     Offering Price(2)     Registration Fee
Ordinary shares, par value $0.0005 per share
    6,900,000     $26.22     $180,918,000     $21,005(3)
                         
(1) Includes (a) ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of the distribution or within 40 days after the later of the effective date of this registration statement and the date the securities are first bona fide offered to the public, and (b) additional ordinary shares that are issuable upon the exercise of the underwriters’ option to purchase additional shares to cover over-allotments, if any.
(2) Estimated solely for the purposes of computing the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based on the average of the high and low prices on May 18, 2011, as reported by the Nasdaq Global Market.
(3) The company has previously paid $24,161.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a) may determine.


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The information in this prospectus is not complete and may be changed. Neither we nor the selling shareholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
 
PROSPECTUS (Subject to Completion)
Issued May 20, 2011
 
6,000,000 SHARES
 
MakeMyTrip Limited
 
ORDINARY SHARES
 
 
 
 
MakeMyTrip Limited is offering 1,600,000 ordinary shares and the selling shareholders identified in this prospectus are offering 4,400,000 ordinary shares.
 
 
 
 
MakeMyTrip Limited’s ordinary shares are listed on the Nasdaq Global Market under the symbol “MMYT.” On May 18, 2011, the reported last sale price of the ordinary shares on the Nasdaq Global Market was $26.51 per share.
 
 
 
 
Investing in our ordinary shares involves risks.  See “Risk Factors” beginning on page 8.
 
 
 
 
PRICE $           A SHARE
 
 
 
 
                 
        Underwriting
      Proceeds to
    Price to
  Discounts and
  Proceeds to
  Selling
    Public   Commissions   Company   Shareholders
 
Per Share
  $   $   $   $
Total
  $        $        $        $     
 
MakeMyTrip Limited and certain selling shareholders have granted the underwriters the right to purchase up to an additional 900,000 shares to cover over-allotments.
 
The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
 
The underwriters expect to deliver the shares to purchasers on          , 2011.
 
 
 
 
MORGAN STANLEY DEUTSCHE BANK SECURITIES
                     PACIFIC CREST SECURITIES
OPPENHEIMER & CO.
 
          , 2011


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    F-1  
 Ex-5.1 Opinion of Conyers Dill and Pearman (Mauritius) Limited
 Ex-8.1 Opinion of Conyers Dill and Pearman (Mauritius) Limited as to certain Mauritian tax matters.
 Ex-8.2 Opinion of Latham and Watkins LLP as to certain US tax matters.
 Ex-23.3 Consent of KPMG, independent registered public accounting firm.
 
 
You should rely only on the information contained in this prospectus. We and the selling shareholders have not authorized anyone to provide you with information different from that contained in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We and the selling shareholders are not, regardless of the time of delivery of this prospectus or the time of sale of our ordinary shares, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. We and the selling shareholders are offering to sell ordinary shares and seeking offers to buy ordinary shares, only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the ordinary shares.
 
We have not taken any action to permit a public offering of the ordinary shares outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the offering of the ordinary shares and the distribution of this prospectus outside of the United States.
 
Until          , 2011 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade ordinary shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.


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CONVENTIONS WHICH APPLY TO THIS PROSPECTUS
 
In this prospectus, we refer to information regarding the travel service industry and our competitors from market research reports, analyst reports and other publicly available sources, including from PhoCusWright Inc., or PhoCusWright, an independent travel industry research company founded and controlled by Mr. Philip C. Wolf, one of our directors. See “Related Party Transactions — Transactions with PhoCusWright” for details of our transactions with PhoCusWright. We also refer to data from The Economic Times, a daily business newspaper in India, and the United States Central Intelligence Agency “World Factbook,” or CIA World Factbook.
 
We conduct our business principally through our Indian subsidiary, MakeMyTrip (India) Private Limited, or MMT India. In this prospectus, 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.
 
In this prospectus, 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, and references to “Mauritius” are to the Republic of Mauritius. 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 prospectus contains translations of certain Indian Rupee amounts into US dollars at specified rates. Except as otherwise stated in this prospectus, all translations from Indian Rupees to US dollars are based on the noon buying rate of Rs. 44.24 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 April 30, 2011. No representation is made that the Indian Rupee amounts referred to in this prospectus 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.
 
On July 22, 2010, we effected a 20-for-one share split with respect to all our ordinary and preferred shares, as well as a 20-for-one adjustment with respect to the number of ordinary shares underlying our share options and a corresponding adjustment to the exercise prices of such options. At the same time, the par value of our shares was changed from $0.01 per share to $0.0005 per share. Consequently, all share information and per share data included in this prospectus has been presented on a post-share split basis, unless otherwise specifically stated or the context otherwise requires. In connection with our initial public offering in August 2010, all of our preferred shares were converted into ordinary shares upon the completion of our initial public offering.
 
Unless otherwise indicated, the consolidated financial statements and related notes as of and for the fiscal years ended March 31, 2009, 2010 and 2011 included elsewhere in this prospectus 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 and December 31. References to a year other than a “fiscal” year are to the calendar year ended December 31.
 
We also refer in various places within this prospectus to “revenue less service cost,” which is a non-IFRS measure that is calculated as revenue less costs for the acquisition of relevant services and products for sale to customers and more fully explained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The presentation of this non-IFRS 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.


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PROSPECTUS SUMMARY
 
The following summary is qualified in its entirety by the more detailed information and consolidated financial statements and notes thereto appearing elsewhere in this prospectus. You should read the following summary together with the more detailed information regarding our company and the ordinary shares being sold in this offering and our consolidated financial statements and notes thereto appearing elsewhere in this prospectus. This prospectus includes forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.”
 
Our Business
 
We are the largest online travel company in India, based on gross bookings for 2009, according to PhoCusWright. Through our primary website, www.makemytrip.com, and other technology-enhanced 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 tickets, hotels, packages, rail tickets, bus tickets, car hire and ancillary travel requirements such as facilitating access to travel insurance.
 
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. During the initial years of our operations, we invested significant capital in our infrastructure as well as in sales and marketing efforts to build our brand and gain recognition, and we recorded net losses for all our completed fiscal years. In fiscal year 2008, our second full fiscal year since we commenced our Indian business, we recorded a net loss of $(18.9) million. We reduced our net loss in fiscal years 2009 and 2010, recording a net loss of $(7.3) million and $(6.2) million, respectively, and recorded a net profit of $4.8 million in fiscal year 2011. We also reduced our operating loss in fiscal years 2009 and 2010, recording an operating loss of $(10.6) million and $(6.0) million, respectively, and recorded an operating profit of $4.1 million in fiscal year 2011. Excluding the effects of employee share-based compensation costs, we would have recorded an operating loss of $(10.2) million in fiscal year 2009, an operating profit of $0.8 million in fiscal year 2010 and an operating profit of $4.6 million in fiscal year 2011; and we would have recorded a net loss of $(6.9) million in fiscal year 2009, a net profit of $0.6 million in fiscal year 2010 and a net profit of $5.4 million in fiscal year 2011.
 
We believe the strength of our brand, 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 tickets market in India, while driving increased bookings of the international outbound air tickets market. In fiscal year 2010, 1.6 million transactions for domestic air tickets in India were booked through us, and we generated $31.1 million in revenue less service cost from our air ticketing business. In fiscal year 2011, 2.6 million transactions for domestic air tickets in India were booked through us, and we generated $47.6 million in revenue less service cost from our air ticketing business. We leverage our strength in air travel to grow into non-air travel and other segments of the travel industry, specifically hotels and packages. Revenue less service cost from our hotels and packages business totaled $8.0 million in fiscal year 2010, accounting for 19.8% of our total revenue less service cost, and $10.9 million in fiscal year 2011, accounting for 17.9% of our total revenue less service cost.
 
We have designed our websites to provide our customers with a user-friendly experience. We had an average of over 2.7 million unique visitors per month in fiscal year 2011. In fiscal year 2010, 2.0 million transactions were executed through our websites, accounting for approximately 94.5% of our total transactions, and in fiscal year 2011, 3.6 million transactions were executed through our websites, accounting for approximately 96.0% of our total transactions. We recently launched a booking engine on our website that allows our customers to search and book some of our domestic holiday packages online. We also added a new “Flight plus Hotel” tab on our website to describe the potential cost savings from booking bundled packages compared to booking flights and hotels separately. Furthermore, we recently launched our BlackBerry application, which allows customers to book domestic flights in India though and automatically synchronizes the flight details with the calendar on their BlackBerry devices. We have built an advanced and secure technology platform, which integrated our sales, customer service and fulfillment operations. Our technology platform is scalable and can be upgraded to handle increased traffic and complexity of products with limited additional investment. As reported by The Economic Times on February 6, 2011, the Indian middle class is expected to grow over three times from 160 million people


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currently to 547 million people by 2026. In order to meet the requirements of this growing Indian middle class travel market where Internet penetration is relatively low, we also utilize other technology-enhanced distribution channels, including call centers and travel stores in India, as well as our travel agents’ network in India.
 
We provide 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 4,500 hotels in India and a wide selection of hotels outside India, Indian Railways and several major Indian bus operators. On the other hand, we believe we are a cost-effective distribution channel for our suppliers, providing reach to a large and expanding customer base in India as well as non-resident Indians.
 
In our air ticketing business, we generate revenue through commissions and incentive payments from airlines, service fees charged to our customers and fees from our global distribution system, or GDS, service provider. A GDS service provider facilitates the reservation and confirmation of airline tickets on its system. Travel agents typically utilize a GDS to book air tickets and receive fees for their use of such system. We currently use Amadeus GDS. 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 evaluate our financial performance based on revenue less service cost, which is a non-IFRS measure, as we believe that revenue less service cost reflects more accurately the value addition of the travel services that we provide to our customers. Our total revenue less service cost increased from $16.5 million in fiscal year 2008 to $61.1 million in fiscal year 2011.
 
We believe the overall Indian travel industry will experience continued growth due to income growth in India and the increased spending by Indians on travel and recreation. According to Internet World Stats, in 2010, Internet penetration was only 8.5% in India as compared with 77.3% in the United States. We therefore believe that the Indian online travel industry is well-positioned for long-term growth and that our well-recognized brand, leadership in the online travel market in India and broad and technology-enhanced distribution channels position us well to capitalize on these growth opportunities.
 
Furthermore, MMT India was ranked second overall and first in the professional services industry in a ranking published on June 21, 2010 of “India’s Best Companies to Work For 2010” by the Great Place to Work Institute, an independent global research and consulting firm, and The Economic Times, a daily business newspaper in India.
 
Our Strengths
 
We have the following competitive strengths:
 
  •  the largest online travel company in India with a well-recognized brand;
 
  •  comprehensive selection of service and product offerings;
 
  •  broad distribution network;
 
  •  advanced, secure and scalable technology platform;
 
  •  customer-focused approach; and
 
  •  experienced management team.
 
Our Strategy
 
We believe that the relatively low but fast growing Internet penetration in India, coupled with income growth in India provide us with significant growth opportunities. Our objective is to grow profitably by building on our current leadership position to become India’s dominant travel company. The key elements of our strategy include:
 
  •  expand our hotels and packages business;
 
  •  expand our service and product portfolio to enhance cross-selling opportunities;
 
  •  expand our travel agents’ network;
 
  •  enhance our service platforms by investing in technology;


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  •  expand into new geographic markets; and
 
  •  pursue selective strategic partnerships and acquisitions.
 
Risk Factors
 
Our business is subject to numerous risks and uncertainties that may materially affect our business, financial condition, results of operations and prospects, as more fully described in the section entitled “Risk Factors,” immediately following this prospectus summary. These include:
 
  •  our ability to maintain our existing arrangements with our travel suppliers, the lack of formal agreements with many of our travel suppliers and the ability of many of our suppliers to terminate their arrangements with us at short notice or without notice;
 
  •  our history of operating losses;
 
  •  our reliance on third-party systems and service providers, including outsourcing service providers;
 
  •  our reliance on information technology;
 
  •  changes in the Indian travel industry, including our ability to effectively compete in this industry;
 
  •  impediments to the execution and success of our growth strategy; and
 
  •  our susceptibility to adverse changes in the political, economic and regulatory environment in India that could materially harm our business.
 
Corporate Structure
 
The following diagram illustrates our corporate structure and the place of formation and ownership interest of each of our subsidiaries, as of the date of this prospectus.
 
(FLOW CHART)
 
 
Note: (1) Remaining 0.01% ownership interest held by Deep Kalra, our Group Chairman and Group Chief Executive Officer. See “Business — Regulations” for more information.
 
(2) On May 9, 2011 we acquired approximately 79% of the fully-diluted share capital of Luxury Tours & Travel Pte Ltd. We have agreed to acquire the remaining shares in Luxury Tours & Travel Pte Ltd in three tranches over a three-year earn-out period ending June 2014.
 
 
Corporate Information
 
We are a public company limited by shares incorporated in Mauritius. We were incorporated as International Web Travel Private Limited, a private company limited by shares, on April 28, 2000 and subsequently changed our name to MakeMyTrip Limited and converted to a public company on June 23, 2010. Our registered office is located at the offices of Multiconsult Limited at Rogers House, 5 President John Kennedy Street, Port Louis, Mauritius. Our principal executive offices are located at 103 Udyog Vihar, Phase 1, Gurgaon, Haryana 122016, India, and our telephone number at this location is (91-124) 439-5000. Our principal website address is www.makemytrip.com. The information contained on our websites does not form part of this prospectus. Our agent for service of process in the United States is MakeMyTrip.com Inc., located at 60 East 42nd Street, Suite 411, New York, NY 10165.


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THE OFFERING
 
Ordinary shares offered:
 
  By us 1,600,000 ordinary shares(1)
 
  By the selling shareholders 4,400,000 ordinary shares(1)
 
  Total 6,000,000 ordinary shares(1)
 
Ordinary shares outstanding before this offering 35,099,639 ordinary shares
 
Ordinary shares to be outstanding after this offering 36,759,519 ordinary shares(1)(2)
 
Offering price The public offering price is $           per ordinary share.
 
Over-allotment option 900,000 ordinary shares
 
Use of proceeds We will receive net proceeds of approximately $           million from this offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds received by us from this offering to expand our operations by acquiring or investing in strategic businesses or assets that complement our service and product offerings, to invest in enhancements to our technology, as well as for working capital and other general corporate purposes. At this time, we have not entered into any agreement or commitment with respect to any material acquisitions or investments. See “Use of Proceeds.”
 
We will not receive any of the proceeds from the sale of ordinary shares by the selling shareholders.
 
Lock-up We, the selling shareholders and Tiger Global Private Investment Partners, or Tiger Global, one of our shareholders, have agreed with the underwriters, with certain exceptions, not to sell or transfer any ordinary shares or securities convertible into or exercisable for ordinary shares for a period of 90 days after the date of this prospectus. See “Underwriting.”
 
Risk factors See “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our ordinary shares.
 
Payment and settlement The ordinary shares are expected to be delivered against payment on          , 2011. The ordinary shares will be deposited with a custodian for, and registered in the name of a nominee of, The Depository Trust Company, or DTC, in New York, New York. In general, beneficial interests in the ordinary shares will be shown on, and transfers of those beneficial interests will be effected only through, records maintained by DTC and its direct and indirect participants.
 
Nasdaq Global Market symbol MMYT.
 
Notes: (1) Unless otherwise specifically stated, the information throughout this prospectus does not take into account the possible issuance of additional ordinary shares to the underwriters pursuant to their option to purchase additional ordinary shares to cover over-allotments.
(2) The number of ordinary shares outstanding immediately after this offering:
is based on 35,099,639 ordinary shares outstanding as of March 31, 2011, assuming the issuance of 59,880 ordinary shares upon the exercise of share options held by certain of our selling shareholders for sale in this offering, effective upon the completion of this offering; and
excludes 1,450,307 ordinary shares issuable upon the exercise of share options outstanding as of March 31, 2011 (not taking into account the 59,880 ordinary shares issuable upon the exercise of share options by certain of our selling shareholders for sale in this offering, effective upon the completion of this offering).


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SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
 
The following summary consolidated statement of comprehensive income and loss data for fiscal years 2009, 2010 and 2011, and the summary consolidated statement of financial position data as of March 31, 2010 and March 31, 2011, have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The financial data set forth below should be read in conjunction with, and are qualified by reference to, “Selected Consolidated Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this prospectus. 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  
    2009     2010     2011  
    (in thousands, except per share data and number of shares)  
 
Consolidated Statement of Comprehensive Income (Loss) Data:
                       
Revenue:
                       
Air ticketing
  $ 19,225.1     $ 32,119.5     $ 47,622.7  
Hotels and packages
    48,622.8       50,287.9       74,558.0  
Other revenue
    703.8       1,152.8       2,540.7  
                         
Total revenue
    68,551.7       83,560.2       124,721.4  
                         
Service cost:
                       
Procurement cost of hotels and packages services
    (43,069.2)       (42,292.2)       (63,650.9)  
Purchase of air ticket coupons
    (491.8)       (985.5)        
Personnel expenses
    (9,679.8)       (16,562.0)       (14,399.0)  
Other operating expenses
    (24,369.9)       (28,160.5)       (40,698.9)  
Depreciation and amortization
    (1,558.7)       (1,569.7)       (1,910.6)  
                         
Results from operating activities
    (10,617.6)       (6,009.8)       4,061.9  
                         
Net finance income (costs)
    3,244.1       (188.8)       (1,923.9)  
                         
Profit (Loss) before tax
    (7,373.5)       (6,198.6)       2,138.0  
                         
Income tax benefit (expense)
    25.3       (8.4)       2,691.7  
                         
Profit (Loss) for the year
  $ (7,348.2)     $ (6,207.0)     $ 4,829.7  
                         
Earnings (Loss) per ordinary share:
                       
Basic
  $ (0.42)     $ (0.35)     $ 0.17  
Diluted
  $ (0.55)     $ (0.35)     $ 0.15  
Weighted average number of ordinary shares outstanding:
                       
Basic
    17,437,120       17,521,120       28,320,901  
Diluted
    20,403,420       17,521,120       34,950,246  
Proforma earnings (loss) per ordinary Share (unaudited):
                       
Basic(1)
  $ (0.38)     $ (0.18)     $ 0.16  
Diluted(1)
  $ (0.38)     $ (0.18)     $ 0.15  
Proforma weighted average number of ordinary shares outstanding (unaudited):
                       
Basic(1)
    29,761,580       29,845,580       32,993,361  
Diluted(1)
    29,761,580       29,845,580       34,929,282  


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Note: (1) In December 2006, August 2007 and May 2008, we issued Series A, Series B and Series C preferred shares, respectively, that were converted into ordinary shares effective upon the completion of our initial public offering on August 17, 2010. Our proforma earnings (loss) per ordinary share (basic and diluted) and proforma weighted average number of ordinary shares outstanding (basic and diluted) have been calculated assuming that the conversion of all our outstanding preferred shares occurred on a “hypothetical basis” on April 1, 2007 for our Series A and Series B preferred shares and April 1, 2008 for our Series C preferred shares. All our preferred shares were converted into ordinary shares effective upon the completion of our initial public offering on August 17, 2010.
 
The following table sets forth a summary of our consolidated statement of financial position:
 
  •  as of March 31, 2010 and March 31, 2011 on an actual basis; and
 
  •  as of March 31, 2011 on an as adjusted basis to reflect (1) the issuance of 59,880 ordinary shares upon the exercise of share options held by certain of our selling shareholders for sale in this offering, effective upon the completion of this offering; and (2) the issuance and sale by us of 1,600,000 ordinary shares offered in this offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, and further assuming no exercise by the underwriters of the over-allotment option and no other change to the number of ordinary shares sold by us as set forth on the cover page of this prospectus.
 
                         
    As of March 31
    2010   2011   2011
    Actual   Actual   As Adjusted
    (in thousands)
 
Consolidated Statement of Financial Position Data:
                       
Trade and other receivables
  $ 12,449.5     $ 12,857.2     $ 12,857.2  
Term deposits
    14,471.4       16,941.9       16,941.9  
Cash and cash equivalents
    9,341.5       51,730.3          
Total assets
    50,633.5       112,939.6          
Total equity (deficit) attributable to equity holders of our company
    (24,955.4)       76,275.9          
Loans and borrowings
    40,966.9       209.6       209.6  
Trade and other payables
    26,467.0       29,694.7       29,694.7  
Total liabilities
    75,584.5       36,663.8       36,663.8  
Total equity (deficit) and liabilities
  $ 50,633.5       112,939.6          


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Other Data:
 
The following table sets forth for the periods indicated, certain selected consolidated financial and other data:
 
                         
    Fiscal Year Ended March 31  
    2009     2010     2011  
    (in thousands, except percentages)  
 
Number of transactions:
                       
Air ticketing
    1,250.8        1,766.9        2,824.6  
Hotels and packages
    81.4        109.7        175.9  
Revenue less service cost(1):
                       
Air ticketing
  $ 18,733.3      $ 31,134.0      $ 47,622.7  
Hotels and packages
    5,553.6        7,995.7        10,907.1  
Other revenue
    703.8        1,152.8        2,540.7  
                         
    $ 24,990.7      $ 40,282.5      $ 61,070.5  
                         
Gross bookings(2):
                       
Air ticketing
  $ 260,945.1      $ 408,603.1      $ 647,846.9  
Hotels and packages
    52,365.7        57,273.1        94,608.2  
Net revenue margins(3):
                       
Air ticketing
    7.2%       7.6%       7.4%  
Hotels and packages
    10.6%       14.0%       11.5%  
 
 
Notes: (1) 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 based on revenue less service cost, which is a non-IFRS measure, as we believe that revenue less service cost reflects more accurately the value addition of the travel services that we provide to our customers. The presentation of this non-IFRS 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 revenue less service cost 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 revenue less service cost (a non-IFRS measure):
 
                                                                                                 
    Air Ticketing     Hotels and Packages     Other Revenue     Total  
    Fiscal Year Ended March 31     Fiscal Year Ended March 31     Fiscal Year Ended March 31     Fiscal Year Ended March 31  
    2009     2010     2011     2009     2010     2011     2009     2010     2011     2009     2010     2011  
    (in thousands)  
 
                                                                                                 
Revenue
  $ 19,225.1     $ 32,119.5     $ 47,622.7     $ 48,622.8     $ 50,287.9     $ 74,558.0     $ 703.8     $ 1,152.8     $ 2,540.7     $ 68,551.7     $ 83,560.2     $ 124,721.4  
                                                                                                 
Less:
                                                                                               
                                                                                                 
Service cost
    491.8       985.5             43,069.2       42,292.2       63,650.9                         43,561.0       43,277.7       63,650.9  
                                                                                                 
                                                                                                 
Revenue less service cost
  $ 18,733.3     $ 31,134.0     $ 47,622.7     $ 5,553.6     $ 7,995.7     $ 10,907.1     $ 703.8     $ 1,152.8     $ 2,540.7     $ 24,990.7     $ 40,282.5     $ 61,070.5  
                                                                                                 
 
(2) 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.
 
(3) Net revenue margins is defined as revenue less service cost as a percentage of gross bookings.


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RISK FACTORS
 
You should carefully consider the risks described below before making an investment decision. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations.
 
Our business, financial condition or results of operations could be materially and adversely affected by any of these risks. The trading price and value of our ordinary shares could decline due to any of these risks, and you may lose all or part of your investment.
 
This prospectus also 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 certain factors, including the risks faced by us described below and elsewhere in this prospectus.
 
Risks Related to Us and Our Industry
 
If We Are Unable to Maintain Existing, and Establish New, Arrangements with Our 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 (our GDS service provider) and Indian Railways, as well as our ability to establish and maintain relationships with new travel suppliers, including hotels, bus operators and car hire companies. A substantial portion of our revenue less service cost is derived from fees and commissions negotiated with travel suppliers for bookings made through our websites or 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 new arrangements with these parties on favorable terms, if at all, 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.
 
No assurance can be given that our agreements or arrangements with our travel suppliers or GDS service provider will continue or that our travel suppliers or GDS service provider will not reduce or eliminate fees or commissions or attempt to charge us for content, terminate our contracts and seek to recover signing bonuses or default on or dispute their payment obligations towards us, any of which could reduce our revenue and net revenue margins 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.
 
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, including low-cost airlines and many hotels 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, providing our counterparties with a right to terminate at short notice or without notice. Many of our airline suppliers with whom we have contracts are able to either terminate or alter the terms of their contracts with us at will or by providing a few days’ notice. For example, 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 by IRCTC without prior notice and at its sole discretion. Termination 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 Experience Operating Losses in the Future.
 
We sustained operating losses in our fiscal years through March 31, 2010. While we had operating profit in fiscal year 2011, we cannot assure you that we can avoid operating losses in the future. We expect that our operating expenses will increase and the degree of increase in these expenses will be largely based on anticipated organizational growth and revenue trends. As a result, any decrease or delay in generating additional sales volumes and revenue could result in substantial operating losses.


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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 certain third-party computer systems, service providers and software companies, including the GDS used by full service airlines, and electronic central reservation systems used by low-cost airlines, certain hotels which are directly-connected to us, Indian Railways and bus operators. In particular, we rely on third parties to:
 
  •  assist in conducting searches for airfares and process air ticket bookings;
 
  •  process hotel reservations;
 
  •  process credit card 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.
 
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 most of our domestic Indian hotel reservations and packages. We also outsource our call center service for post-sales customer service support for all flights (domestic and international), domestic Indian 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 agreement with Intelenet Global Services Private Limited, or Intelenet Global Services, which provides call center services for our Indian domestic air ticketing and international air ticketing business, as well as post-sales customer service support for air tickets, is for a renewable term of three years but may be terminated by either party on two months’ notice. The agreements with iEnergizer IT Services Private Limited, or iEnergizer IT Services, and Motif India Infotech Private Limited, or Motif India Infotech, may be terminated by either party on 90 days’ notice after the first year in the term of such agreements. 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 providers 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 and disrupt and adversely affect our business, results of operations and financial condition.
 
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.
 
We depend on the use of sophisticated information technology and systems, which we have customized in-house, for search and reservation for flights and hotels, as well as payments, refunds, customer relationship


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management, communications and administration. As our operations grow in both size and scope, we must continuously improve and upgrade our systems and infrastructure to offer our customers enhanced services, features and functionality, while maintaining the reliability and integrity of our systems and infrastructure in a cost-effective manner. Our future success also depends on our ability to upgrade our services and infrastructure ahead of rapidly evolving consumer demands while continuing to improve the performance, features and reliability of our service in response to competitive offerings.
 
We may not be able to maintain or replace our existing systems or introduce new technologies and systems as quickly as our competitors, in a cost-effective manner or at all. We may also be unable to devote adequate financial resources to develop or acquire new technologies and systems in the future.
 
We may not be able to use new technologies effectively, or we may fail to adapt our websites, transaction processing systems and network infrastructure to consumer requirements or emerging industry standards. If we face material delays in introducing new or enhanced solutions, our customers may forego the use of our services in favor of those of our competitors. Any of these events could have a material adverse effect on our operations.
 
We currently license from third-parties some of the technologies incorporated into our websites. 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.
 
The Travel Industry for India and India-Related Travel Is Intensely Competitive, and We May Not Be Able to Effectively Compete in the Future.
 
The Indian travel market is intensely competitive. 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. We currently compete with both established and emerging providers of travel services and products, including other online travel agencies, such as cleartrip.com, expedia.co.in, travelocity.co.in and yatra.com, as well as traditional travel agencies, tour operators, travel suppliers and operators of travel industry reservation databases. Certain of our competitors have also launched websites in other countries to better cater to Indian and other customers located in those areas. For example, cleartrip.com recently launched website operations in the United Arab Emirates. Large, established Internet search engines have also recently launched applications offering travel itineraries in destinations around the world, and meta-search companies who can aggregate travel search results also compete against us for customers. 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 net revenue margins in order to compete effectively and maintain or gain market share.
 
Further, we may also face increased competition from new entrants in our industry. 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 such as 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. 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. 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, our business could be materially and adversely affected.


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Some of Our Airline Suppliers (Including Our GDS Service Provider) 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 from our GDS service provider. Our airline suppliers may reduce or eliminate the commissions and incentive payments they pay to us. To the extent any of our airline suppliers reduce or eliminate the commissions or incentive payments they pay to us, our revenue may be reduced unless we are able to adequately mitigate such reduction by increasing the service fee we charge to our customers in a sustainable manner. However, any increase in service fees may also result in a loss of potential customers. Further, our arrangement with the airlines that supply air tickets to us may limit the amount of service fee that we are able to charge our customers. Our business would also be negatively impacted if competition or regulation in the Indian travel industry causes us to have to reduce or eliminate our service fees.
 
We Rely on the Value of Our Brand, and Any Failure to Maintain or Enhance Consumer Awareness of Our Brand Could Have a Material Adverse Effect on Our Business, Financial Condition and Results of Operations.
 
We believe continued investment in our brand, “MakeMyTrip,” is critical to retain and expand our business. We believe that our brand is well respected and recognized in the Indian travel market, particularly in the air ticketing segment. However, we are relatively new in the hotels and packages segment, and may not enjoy the same brand recognition in this business. We have invested in developing and promoting our brand since our inception 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. Our marketing costs may also increase as a result of inflation in media pricing (including search engine keywords). There is no assurance that we will be able to successfully maintain or enhance consumer awareness of our brand. 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 brand 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. See also “— We Cannot Be Sure That Our Intellectual Property Is Protected from Copying or Use by Others, Including Current or Potential Competitors.”
 
We May Not Be Successful in Implementing Our Growth Strategies.
 
Our growth strategy involves expanding our hotels and packages business, travel agents’ network and our service offerings. Further, one of our strategies is to enhance our service platforms by investing in technology, and expanding into new geographic markets. Our success in implementing our growth strategies are affected by:
 
  •  our ability to increase the number of suppliers, especially our 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 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 build or acquire the required technology;
 
  •  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;
 
  •  our ability to compete effectively with existing and new entrants to the Indian travel industry, including both online travel companies as well as traditional travel agents and tour providers;
 
  •  the growth of the Internet as a medium for commerce in India; and
 
  •  changes in our regulatory environment.
 
Many of these factors are beyond our control and there can be no assurance that we will succeed in implementing our strategy. Separately, our growth strategy also involves expanding into new geographic markets


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which will involve additional risks. See “— Our International Operations, Some of Which Are New to Us, Involve Additional Risks.”
 
We May Not Be Successful in Pursuing Strategic Partnerships and Acquisitions, and Future Partnerships and Acquisitions May Not Bring Us Anticipated Benefits.
 
Part of our growth strategy is the pursuit of strategic partnerships and acquisitions. There can be no assurance that we will succeed in implementing this strategy 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. This strategy may also subject us to uncertainties and risks, including acquisition and financing costs, potential ongoing and unforeseen or hidden liabilities, diversion of management resources and cost of integrating acquired businesses. We could face difficulties integrating the technology of acquired businesses with our existing technology, and employees of the acquired business into various departments and ranks in our company, and it could take substantial time and effort to integrate the business processes being used in the acquired businesses with our existing business processes. Moreover, there is no assurance that such partnerships or acquisitions will achieve our intended objectives or enhance our revenue.
 
In March 2010, we acquired certain assets of Travis Internet Private Limited, an online bus ticketing company, including the website www.ticketvala.com, which gives us the ability to provide our bus suppliers with access to a real time bus reservations technology platform. We intend to leverage this platform to enable more bus operators to be directly-connected to our booking system with such technology, but there is no assurance that we will be able to successfully leverage this new platform to further expand our bus offering.
 
On May 9, 2011, we acquired approximately 79% of Luxury Tours & Travel Pte Ltd, a Singapore-based travel agency, 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 Southeast Asia. We have agreed to acquire the remaining shares in Luxury Tours & Travel Pte Ltd in three tranches over a three-year earn-out period. We intend to leverage this acquisition to build a position of strength in Southeast Asia through relationships with local hotels and vendors, but there is no assurance that we will be able to successfully leverage this acquisition to further grow our business in the region.
 
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, on a few occasions, we pre-purchase air ticket inventory in order to enjoy special negotiated rates and we assume inventory risk on such tickets. If we are unable to sell these tickets as anticipated either at all, or at expected rates, our revenue and business may be adversely affected. We also generally do not guarantee a minimum number of room reservations to our hotel suppliers. However, in a few instances, particularly when we anticipate high volumes of room reservations, we may enter into arrangements with one or more of our hotel suppliers where we guarantee a minimum number of room reservations through us at an agreed rate, in order to obtain favorable terms or discounts. We may use this “guaranteed” model increasingly for future transactions with hotels as our business expands. Although we have generally been able to obtain extensions from our hotel suppliers where we have been unable to sell our minimum guaranteed number of rooms, there can be no assurance that we will be able to obtain similar extensions in the future. Such guarantees may result in losses to us if we are unable to fulfill our commitment to the hotels or if we are unable to obtain similar extensions.
 
Certain of Our Businesses or Services Have Only Recently Been Introduced and, As a Result, It May Be Difficult to Evaluate Their Performance and Prospects.
 
Some of the services and products offered by us were introduced recently. For example, we started our bus ticketing business in May 2008 and our rail ticketing business in June 2009. As a result, these businesses have a limited operating history and it may be difficult to evaluate their performance and prospects.
 
Our International Operations, Some of Which Are New to Us, 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 also launched our website in the United Arab Emirates in December 2009 and launched our website in Canada in July 2010, following, among other things, the


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registration of our websites’ domain names (www.makemytrip.ae and www.makemytrip.ca) with the relevant registry as well as the procurement of additional servers to handle the increased traffic from these international websites. Our website in Canada is currently owned by a company which we have registered in Canada. We are evaluating the transfer of legal ownership of this company to us by September 2011. 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 also intend to expand our business in other markets, particularly those with a significant non-resident Indian population as well as those with proximity to India or favored by Indian travelers. For example, on May 9, 2011, we acquired approximately 79% of Luxury Tours & Travel Pte Ltd, a Singapore-based travel agency. Adapting our practices and models effectively to the supplier and customer preferences of new markets could be difficult and costly and could divert management and personnel resources. We could also face additional regulatory requirements in our 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 new markets.
 
In addition, we are subject to additional risks in our new 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.
 
We utilize Internet search engines such as Googletm and Yahoo!tm India, including through the purchase of travel-related keywords, to drive traffic to our websites. These search engines frequently update and change the logic that determines the placement and display of results of a user’s search, such that the purchased or optimal placement of links to our websites may be negatively affected. In addition, a significant amount of our business is directed to our websites through pay-per-click and display advertising campaigns on the Internet and search engines whose pricing and operating dynamics can rapidly change, both technically and competitively. If major search engines such as Googletm or Yahoo!tm India, which we utilize for a significant amount of our search engine traffic, change the logic used on their websites for search results in a manner that negatively affects the search engine ranking, paid or unpaid, of our websites or those of our third-party distribution partners, we may experience a decline in traffic on our websites and our business may be adversely affected.
 
System Interruption in Our Information Systems and Infrastructure May Harm Our Business.
 
We rely significantly on computer systems to 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. If we were to experience frequent or persistent system failures, our reputation and brand could be harmed.
 
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


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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 Are Exposed to Risks Associated with Online Security and Credit Card Fraud.
 
The secure transmission of confidential information over the Internet is essential in maintaining customer and supplier confidence in us. Security breaches, whether instigated internally or externally on our system or other Internet-based systems, could significantly harm our business. We currently require customers to guarantee their transactions with their credit cards online. We rely on licensed encryption and authentication technology to effect secure transmission of confidential customer information, including credit card numbers, over the Internet. However, advances in technology or other developments could result in a compromise or breach of the technology that we use to protect customer and transaction data. We incur substantial expense to protect against and remedy security breaches and their consequences. However, our security measures may not prevent security breaches and we may be unsuccessful in or incur additional costs by implementing our remediation plan to address these potential exposures.
 
We also 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. The online payment gateway for certain of our sales made through our mobile platform or through international credit cards is not secured by “Verified by VISA” or “MasterSecure,” and we may be liable for accepting fraudulent credit cards on our websites. 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.
 
Declines or Disruptions in the Travel Industry Could Adversely Affect Our Business and Financial Performance.
 
Our business and financial performance are affected by the health of the Indian as well as worldwide travel industry, including changes in supply and pricing. Events specific to the travel industry that could negatively affect our business include continued fare increases, travel-related strikes or labor unrest, such as the recent strikes and other similar actions at Air India, fuel price volatility and bankruptcies or liquidations of our suppliers. For example, recent events in the Middle East have resulted in an adverse impact on travel to that region. Such events have also contributed to an increase in crude oil prices which may have an adverse impact on the travel industry globally, including our business.
 
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 natural disasters such as tsunamis or earthquakes or when travel might involve health-related risks, such as the Influenza, H1N1 virus, avian flu and Severe Acute Respiratory Syndrome, or other epidemics or pandemics. For example, a recent earthquake and tsunami in Japan may adversely impact the travel industry in Asia. Such concerns 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, particularly air travel and hotel stays, for these or any other reasons, our business, financial condition and results of operations would be adversely affected.


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Our Business and Results of Operations Could Be Adversely Affected by Global Economic Conditions.
 
Consumer purchases of discretionary items generally decline during recessionary periods 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 net revenue margins, and have a material adverse effect on our financial condition and results of operations.
 
In the second half of calendar year 2008 and the first half of calendar year 2009, there was a rapid deterioration of global economic conditions, including economic conditions in India, which impacted our business. The current economic environment continues to be uncertain. The weakness and uncertainty in the economy has negatively impacted both corporate and consumer spending patterns and demand for travel services in general.
 
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 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.
 
Our Processing, Storage, Use and Disclosure of Customer Data of Our Customers or Visitors to Our Website Could Give Rise to Liabilities As a Result of Governmental Regulation, Conflicting Legal Requirements, Differing Views of Personal Privacy Rights or Data Security Breaches.
 
In the processing of our customer transactions, we receive and store a large volume of customer information. Such information is increasingly subject to legislation and regulations in various jurisdictions and governments are increasingly acting to protect the privacy and security of personal information that is collected, processed and transmitted in or from the governing jurisdiction. We could be adversely affected if legislation or regulations are expanded or amended 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, financial condition and results of operations. As privacy and data protection become more sensitive issues in India, we may also become exposed to potential liabilities. For example, under the Information Technology Act, 2000, as amended, we are subject to civil liability 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 on our computer systems, networks, databases and software.
 
We cannot guarantee that our security measures will prevent data breaches. Companies that handle such information have also been subject to investigations, lawsuits and adverse publicity due to allegedly improper disclosure of personally identifiable information. Security breaches could damage our reputation, cause interruptions in our operations, expose us to a risk of loss or litigation and possible liability, and could also cause customers and potential customers to lose confidence in the security of our transactions, which would have a negative effect on the demand for our services and products. Moreover, public perception concerning security and privacy on the Internet could adversely affect customers’ willingness to use our websites. A publicized breach of security in India or in other countries in which we have operations, even if it only affects other companies conducting business over the Internet, could inhibit the growth of the Internet as a means of conducting commercial transactions, and, therefore, the prospects of our business.
 
These and other privacy and security developments that are difficult to anticipate could adversely affect our business, financial condition and results of operations.


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We Cannot Be Sure That Our Intellectual Property Is Protected from Copying or Use by Others, Including Current or Potential Competitors.
 
Our websites 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 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. 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. Our logo and brand name, “MakeMyTrip,” are only registered as trademarks in India and the United States and are not protected in other countries where we operate or otherwise, and we are in the process of applying to obtain copyright protection for our logo and brand name in India. We cannot be sure that our trademarks or domain names will be protected to the same extent in India or elsewhere as in the United States 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.
 
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 in India. In our air ticketing business, we tend to experience higher revenues in the third and fourth calendar quarters of each year and lower revenue in the first calendar quarter, mainly as a result of changes in demand for business travel. As a result, quarter-to-quarter comparisons of our results may not be meaningful.
 
Changing Laws, Rules and Regulations and Legal Uncertainties, Including Adverse Application of Tax Laws and Regulations, May Adversely Affect Our Business and Financial Performance.
 
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, content restrictions, taxation and the quality of services and products sold or provided through the Internet. Furthermore, the growth and development of e-commerce may result in more stringent consumer protection laws that may impose additional burdens on online businesses generally.
 
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 affect on our business and financial performance. We received a notice in October 2010 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 a notice and a few assessment orders from the Indian income tax authorities. See “Business — Legal Proceedings.”


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Infrastructure in India May Not Be Upgraded in Order to Support Higher Internet Penetration, Which May Result in Additional Investments and Expenses for Us.
 
The majority of our bookings are made through our Indian website. However, Internet penetration in India was only 8.5% in 2010, according to Internet World Stats. There can be no assurance that Internet penetration in India will increase in the future as slowdowns or disruptions in upgrading efforts for infrastructure in India could reduce the rate of increase in the use of the Internet. As such we may need to make additional investments in alternative distribution channels. Further, any slowdown or negative deviation in the anticipated increase in Internet penetration in India may adversely affect our business and prospects.
 
Our Significant Shareholders Will Be Able to Exercise Significant Influence over Our Company After This Offering and May Have Interests That Are Different from Those of Our Other Shareholders.
 
After the completion of this offering, SB Asia Investment Fund II L.P., or SAIF, will own 31.54% of the issued and outstanding shares of our company and each of Mr. Deep Kalra, Tiger Global and Helion Venture Partners, LLC, or Helion Venture, will beneficially own 9.43%, 11.23% and 7.36%, respectively; of the issued and outstanding shares of our company. By virtue of such significant shareholdings, these shareholders will have the ability to exercise significant influence over our company and 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. The interests of these shareholders 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, even if such a transaction may be beneficial to our other shareholders.
 
Our Results of Operations Are Subject to Fluctuations in Currency Exchange Rates.
 
As the functional currency of MMT India, our key operating subsidiary, is the Indian Rupee, our exposure to foreign currency risk primarily 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 2011, a 10.0% appreciation of the US dollar against the Indian Rupee as of March 31, 2011, assuming all other variables remained constant, would have decreased our profit for fiscal year 2011 by $0.6 million. Similarly, a 10.0% depreciation of the US dollar against the Indian Rupee as of March 31, 2011, assuming all other variables remained constant, would have increased our profit for fiscal year 2011 by $0.6 million. Based on our operations in fiscal year 2010, a 10.0% appreciation of the US dollar against the Indian Rupee as of March 31, 2010, assuming all other variables remained constant, would have decreased our loss for the year by $0.2 million. Similarly, a 10.0% depreciation of the US dollar against the Indian Rupee as of March 31, 2010, assuming all other variables remained constant, would have increased our loss for the year by $0.2 million.
 
We are also exposed to movements between the US dollar and the Indian Rupee in our operations, as approximately 9.1% and 7.2% of our revenue for fiscal year 2010 and fiscal year 2011, respectively, was generated by MMT India from its air ticketing business and received in US dollars although our expenses are generally incurred in Indian Rupees. Additionally, we receive revenue from our hotels and packages segment in Indian Rupees, but a portion of our expenses in this segment (those relating to outbound packages from India in particular) could be incurred in a non-Indian currency. 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. While, we do incorporate margins in our pricing to cover any adverse fluctuations in foreign exchange rates, there can be no assurance that such margins will adequately protect us from adverse fluctuations in foreign exchange rates and hence our earnings remain susceptible to foreign exchange rate fluctuations.
 
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 skilled personnel, particularly personnel with experience in our industry and our information technology and systems. Any of these individuals may choose to terminate their employment with us at any time 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


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and/or develop and, as a result, these skills are often in short supply. A lengthy period of time 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 requires. 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.
 
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 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, changes in government policies, including taxation 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 present government, formed in May 2009, has announced policies and taken initiatives that support the continued economic liberalization policies that have been pursued by previous governments. However, the present government is a multiparty coalition and therefore there is no assurance that it will be able to generate sufficient cross-party support to implement such policies or initiatives. The rate of economic liberalization could change, and specific laws and policies affecting travel service companies, foreign investments, currency exchange rates and other matters affecting investments in India could change as well. A significant change in India’s policy of economic liberalization and deregulation or any social or political uncertainties could adversely affect business and economic conditions in India generally and our business and prospects.
 
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 2010 and 2011, 94.7% and 92.8%, respectively, of our revenue was derived directly from sales by our subsidiary 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, economic slowdown elsewhere in the world or otherwise. The CIA World Factbook estimates that consumer inflation in India was 8.3% in 2008, 10.9% in 2009 and 11.7% in 2010. The Indian economy also remains largely driven by the performance of the agriculture sector which depends on the quality of the monsoon which is difficult to predict. The Indian economy has grown significantly over the past few years. In the past, economic slowdowns in the Indian economy have harmed the travel industry as customers have less disposable income for their travels, especially holiday travel. Any future slowdown in the Indian economy or a further 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 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.


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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 involving India or 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. Military confrontations between India and Pakistan have occurred along the India/Pakistan border. There have also been incidents in and near India such as terrorist attacks 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 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 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 and drought in the past few years. In December 2004, Southeast Asia, including both the eastern and western coasts of India, experienced a massive tsunami, and in October 2005, the State of Jammu and Kashmir experienced an earthquake, both of which events caused significant loss of life and property damage. The extent and severity of these natural disasters determines their impact on the Indian economy. 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 in the future. Furthermore, if any of these natural disasters occur in tourist destinations such as the tsunami in 2004 which affected the state of Kerala, a popular vacation destination in India, travel to and within India could be adversely affected, which could have an adverse impact on our business and financial performance.
 
Restrictions on Foreign Investment in India May Prevent Us from Making Future Acquisitions or Investments in India, Which May Adversely Affect Our Results of Operations, Financial Condition and Financial Performance.
 
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 and affiliates which 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 its consolidated foreign direct investment policy, the Government of India has set out additional requirements for 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. These requirements, which currently include restrictions on valuations and sources of funding for such investments and may include prior approval from the Foreign Investment Promotion Board, may adversely affect our ability to make investments in India, including through MMT India. There can be no assurance that we will be able to obtain any required approvals for future acquisitions or investments in India, or that we will be able to obtain such approvals on satisfactory terms.


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We May Become Liable to Penalties or Actions Imposed by the Reserve Bank of India in Relation to Delays in Compliance with Certain Reporting Requirements Applicable in Respect of the Acquisition and Transfer of Our Shares by Certain Indian Resident Employees of MMT India and of Issuances of Shares of MMT India to Us.
 
The Reserve Bank of India has prescribed certain reporting requirements in connection with the acquisition and transfer of foreign securities by Indian residents, including periodic filings to be made by an Indian subsidiary of a foreign company with respect to employees acquiring shares under an employee share option scheme, and the issuance of shares of Indian entities to persons resident outside India. In the past, there have been instances where certain of such filings required to be made by our Indian subsidiary, MMT India, in connection with issuances of shares of our company to employees of MMT India under our employee share option scheme and of issuances of shares of MMT India to us, have been inadvertently delayed or incomplete. While we have now made the necessary filings or provided clarifications sought by the Reserve Bank of India with respect to such filings, we may become liable to certain penalties or actions by the Reserve Bank of India, which we are unable to quantify at this time. We have not received any other communication regarding the imposition of any penalty or action from the Reserve Bank of India with respect to such filings.
 
Our Business and Activities Are Regulated by the Competition Act, 2002.
 
The Competition Act, 2002, as amended, or the Competition Act, seeks to prevent practices that could have an appreciable adverse effect on competition. Under the Competition Act, any arrangement, understanding or action between enterprises, whether formal or informal, which causes or is likely to cause an appreciable adverse effect on competition is void and will be subject to substantial penalties. Any agreement that directly or indirectly determines purchase or sale prices, limits or controls production, or creates market sharing by way of geographical area or number of customers in the market is presumed to have an appreciable adverse effect on competition. Provisions relating to the regulation of certain acquisitions, mergers or amalgamations which have an appreciable adverse effect on competition and regulations recently issued by the Competition Commission of India with respect to notification requirements for such combinations were recently notified to come into force on June 1, 2011.
 
The effect of the Competition Act on the business environment in India is unclear. If we or any member of our group, including MMT India, are affected, directly or indirectly, by the application or interpretation of any provision of the Competition Act or any enforcement proceedings initiated by the Competition Commission of India or any other relevant authority under the Competition Act or any claim by any other party under the Competition Act or any adverse publicity that may be generated due to scrutiny or prosecution by the Competition Commission of India or any other relevant authority under the Competition Act, our business and financial performance may be materially and adversely affected.
 
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.


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We May Become Subject to Unanticipated Tax Liabilities That May Have a Material Adverse Effect on Our Results of Operations.
 
We are a Mauritius Category 1 Global Business 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, 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, and where 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 (Foreign Tax Credit) Regulations 1996, “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 Licence under the Financial Services Act 2007 of Mauritius, income derived in the course of a global business. 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 and 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% 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%.
 
Following amendments to the Financial Services Act 2007 of Mauritius pursuant to the Finance (Miscellaneous Provisions) Act 2010 in December 2010, Mauritius companies holding a Category 1 Global Business Licence, or GBC1, issued by the Financial Services Commission in Mauritius are permitted to conduct business both in and outside Mauritius (instead of outside Mauritius only). The operations of a GBC1 company in Mauritius will be subject to tax on chargeable income at the rate of 15% in Mauritius.
 
We hold two tax residence certificates issued by the Mauritius Revenue Authority. 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 and India. 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 and this Offering
 
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 subsidiary in India. The majority of our directors and officers, and some of the experts named in this prospectus, 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


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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. 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 prospectus 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. See “Enforceability of Civil Liabilities.”
 
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 follow certain home country corporate governance practices in lieu of certain Nasdaq Global Market requirements. A foreign private issuer must disclose in its annual reports filed with the Securities and Exchange Commission, or the SEC, each Nasdaq Global Market requirement 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 expect to follow our home country practice with respect to the composition of our board of directors and nominations committee and executive sessions. Unlike the requirements of the Nasdaq Global Market, the corporate governance practice and requirements in Mauritius do not require us as a Mauritius Category 1 Global Business Company to have a majority of our board of directors to be independent; do not require us as a Mauritius Category 1 Global Business Company to establish a nominations committee; and do not require us to hold regular executive sessions where only independent directors shall be present. 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.
 
While this offering will increase the number of our ordinary shares publicly trading in the United States, 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 public offering price. The public offering price of our shares will be determined by reference to the prevailing market price and market conditions at the time of pricing. You may be unable to sell your ordinary shares at a price that is attractive to you.
 
Because the Public Offering Price Is Substantially Higher Than Our Book Value Per Ordinary Share, You Will Incur Immediate and Substantial Dilution.
 
Purchasers of our ordinary shares will experience immediate and substantial dilution in net tangible book value per ordinary share from the public offering price per ordinary share. After giving effect to the issuance of ordinary shares upon the exercise of share options held by certain of our selling shareholders for sale in this offering and the


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sale of ordinary shares offered by this prospectus, after deducting the underwriting discounts and commissions and the estimated offering expenses payable by us in this offering, our net tangible book value as of March 31, 2011 would have been approximately $           million, or $           per ordinary share. This represents an immediate dilution in net tangible book value of $           per ordinary share to investors in this offering. For a calculation of the dilution purchasers in this offering will incur, see “Dilution.”
 
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 after the completion of this offering, 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.
 
We will have 36,759,519 ordinary shares outstanding immediately after this offering (assuming the issuance of 59,880 ordinary shares upon the exercise of share options held by certain of our selling shareholders for sale in this offering, effective upon the completion of this offering), or 37,008,501 ordinary shares if the underwriters exercise their option to purchase additional ordinary shares in full. Further, although certain of our share option holders are subject to restrictions on selling shares acquired upon the exercise of options, the majority of the options granted under our equity option plan will continue to be exercisable following the completion of this offering. All of the ordinary shares sold in this offering will be 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 the 90-day lock-up restrictions described below and other applicable restrictions and limitations under Rule 144 of the Securities Act, all of our shares outstanding prior to this offering 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.
 
In connection with this offering, we, the selling shareholders and Tiger Global, one of our shareholders, have agreed, subject to some exceptions, not to sell any ordinary shares for 90 days after the date of this prospectus without the written consent of the underwriters. However, the underwriters may release these ordinary shares from these lock-up restrictions at any time. 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 May Decrease the Trading Price of Our Ordinary Shares.
 
Any issuance of equity securities after this offering could dilute the interests of our shareholders and could substantially decrease the trading price 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.
 
We Will Have Considerable Discretion As to the Use of the Net Proceeds to be Received by Us from This Offering.
 
Our allocation of the net proceeds to be received by us of this offering is based on current plans and business conditions. The amounts and timing of any expenditure will vary depending on the amount of cash generated by our operations, competitive, market as well as technological developments, and the number and type of new acquisitions or investments we undertake. Accordingly, our management will have considerable discretion in the application of the net proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not improve our results of operations or increase our share price. The net proceeds from this offering, pending investment in operating assets or businesses, or technological enhancement, may be placed in investments that do not produce income or that lose value, which will cause the price of our ordinary shares to decline.


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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 Your 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 prospectus, MMT India has not paid any cash dividends on its equity shares. 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 subsidiary is established in India, it is also subject to certain limitations with respect to dividend payments. See “Dividends and Dividend Policy” for further information.
 
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. We have begun the process of bringing our company into compliance with applicable financial reporting regulations including the requirements under section 404 of the Sarbanes-Oxley Act. We have a senior manager and three other employees who are responsible for implementation of requirements under the Sarbanes-Oxley Act. We are in the process of evaluating and hiring consultants and new staff. Complying with these rules and requirements may be particularly difficult and costly for us because we may have difficulty finding sufficient personnel in India with experience and expertise relating to IFRS and United States public-company reporting requirements, and such personnel may be costly. If we cannot employ sufficient qualified and experienced personnel to ensure compliance with these rules and regulations, we may need to rely more on outside legal, accounting and financial experts, which may be costly. In addition, we will incur additional costs associated with our public company reporting requirements. We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
 
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 expect to be a passive foreign investment company, or PFIC, for US federal income tax purposes for our current taxable year ending March 31, 2012. However, we must make a separate determination 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% of its gross income for such year is passive income or (2) at least 50% 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. Because the value of our assets for purposes of the PFIC test will generally be determined 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 “Taxation — US Federal Income Taxation”) holds an ordinary share, certain adverse US federal income tax consequences could apply to such US Holder. See “Taxation — US Federal Income Taxation — Passive Foreign Investment Company.”


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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This prospectus 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 “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Industry Overview” and “Business.” These statements relate to events that involve known and unknown risks, uncertainties and other factors, including those listed under “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 “Risk Factors” and the following:
 
  •  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;
 
  •  political and economic stability in and around India;
 
  •  our ability to successfully implement our growth strategy;
 
  •  our ability to attract, train and retain executives and other qualified employees;
 
  •  increasing competition in the Indian travel industry; and
 
  •  risks associated with online commerce security.
 
The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. 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. You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results or performance may be materially different from what we expect.


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ENFORCEABILITY OF CIVIL LIABILITIES
 
We are incorporated in Mauritius and our primary operating subsidiary, MMT India, is incorporated in India. The majority of our directors and executive officers are not residents of the United States and substantially all of our assets and the assets of such persons are located outside the United States. As a result, it may not be possible for you to effect service of process within the United States upon such persons or us. In addition, you may be unable to enforce judgments obtained in courts of the United States against such persons outside the jurisdiction of their residence, including judgments predicated solely upon US securities laws.
 
There is uncertainty as to whether the courts in Mauritius would enforce judgments obtained in the United States against us or our directors or executive officers, as well as the experts named herein, based on the civil liability provisions of the securities laws of the United States or allow actions in Mauritius against us or our directors or executive officers based only upon the securities laws of the United States. Further, foreign judgments may not be given effect to by a Mauritius court where it would be contrary to any principle affecting public policy in Mauritius or to the extent that they constitute the payment of an amount which is in the nature of a penalty and not in the nature of liquidated damages.
 
In addition to and irrespective of jurisdictional issues, neither Mauritian nor Indian courts will enforce a provision of the US federal securities laws that is either penal in nature or contrary to public policy. An action brought pursuant to a public or penal law, the purpose of which is the enforcement of a sanction, power or right at the instance of the state in its sovereign capacity, is unlikely to be entertained by Mauritian or Indian courts. Specified remedies available under the laws of US jurisdictions, including specified remedies under US federal securities laws, would not be available under Mauritian or Indian law or enforceable in a Mauritian or Indian court, if they are considered to be contrary to Mauritian or Indian public policy. 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, as well as the experts named herein, in the first instance for a violation of US 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.
 
Section 44A of the Indian Code of Civil Procedure, 1908, as amended, or the Civil Procedure Code, provides that where a foreign judgment has been rendered by a superior court in any country or territory outside of India which the Government of India has by notification declared to be a reciprocating territory, such foreign judgment may be enforced in India by proceedings in execution as if the judgment had been rendered by an appropriate court in India. However, the enforceability of such judgments is subject to the exceptions set forth in Section 13 of the Civil Procedure Code. This section, which is the statutory basis for the recognition of foreign judgments, states that a foreign judgment is conclusive as to any matter directly adjudicated upon except:
 
  •  where the judgment has not been pronounced by a court of competent jurisdiction;
 
  •  where the judgment has not been given on the merits of the case;
 
  •  where the judgment appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognize the law of India in cases where such law is applicable;
 
  •  where the proceedings in which the judgment was obtained were opposed to natural justice;
 
  •  where the judgment has been obtained by fraud; or
 
  •  where the judgment sustains a claim founded on a breach of any law in force in India.
 
Section 44A of the Civil Procedure Code is applicable only to decrees or judgments under which a sum of money is payable not being in the nature of amounts payable in respect of taxes or other charges of a similar nature or in respect of fines or other penalties and does not include arbitration awards. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action were brought in India. Furthermore, it is unlikely that an Indian court would enforce a foreign judgment if it viewed the amount of damages awarded as excessive or inconsistent with public policy or practice in India.


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If a judgment of a foreign court is not enforceable under Section 44A of the Civil Procedure Code as described above, it may be enforced in India only by a suit filed upon the judgment, subject to Section 13 of the Civil Procedure Code, and not by proceedings in execution. The United States has not been declared by the Government of India to be a reciprocating territory for the purposes of Section 44A of the Civil Procedure Code. Accordingly, a judgment of a court in the United States may be enforced only by filing a fresh suit on the basis of the judgment and not by proceedings in execution.
 
The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is difficult to predict whether a suit brought in an Indian court will be disposed of in a timely manner or be subject to untimely delay.
 
A party seeking to enforce a foreign judgment in India is required to obtain prior approval from the Reserve Bank of India under the Foreign Exchange Management Act, 1999, as amended, to repatriate any amount recovered pursuant to such enforcement. Any judgment in a foreign currency would be converted into Indian Rupees on the date of judgment and not on the date of payment.
 
A final and conclusive judgment in the superior courts of a foreign jurisdiction, or foreign courts, other than the courts of the United Kingdom, under which a sum of money is payable (other than a sum payable in respect of taxes, fines, penalties or similar charges) may be recognized by, and be enforceable in, the courts of Mauritius if (1) the judgment is still valid, final and is capable of execution in the jurisdiction in which it was delivered; (2) the judgment is not contrary to any principle affecting public policy in Mauritius; (3) the foreign courts had jurisdiction to hear the claim; and (4) our company had been regularly summoned to attend the proceedings before the foreign courts. Any judgment expressed in a foreign currency by a foreign court, may, when made executory in Mauritius, be expressed in that foreign currency. A valid and final judgment rendered by a court in the United States may not be enforced in Mauritius except by way of exequatur under the Mauritius Code on Civil Procedure. The exequatur may be sought in Mauritius so long as the valid and final judgment is capable of execution in the United States.
 
A final and conclusive judgment or order in the superior courts of the United Kingdom under which a sum of money is made payable (and including an award in proceedings on an arbitration if the award has, under the law in force in the place where it was made, become enforceable in the same manner as a judgment by a court in that place) would, on registration in accordance with the provisions of The Reciprocal Enforcement of Judgments Act 1923 be enforceable in the Supreme Court of Mauritius. Any judgment expressed in pounds sterling or other currency by a superior court of the United Kingdom, may, when made executory in Mauritius, be expressed in pounds sterling or any other currency at the rate of exchange prevailing at the date of judgment of the original court.


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USE OF PROCEEDS
 
The net proceeds we will receive from the sale of the ordinary shares offered by us will be approximately $           million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The underwriters have agreed to pay for certain expenses in connection with this offering. If the underwriters exercise their option to purchase 900,000 additional ordinary shares in full, our net proceeds from the sale of the ordinary shares offered by us will be approximately $           million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of ordinary shares by the selling shareholders.
 
We intend to use the net proceeds received by us from this offering to expand our operations by acquiring or investing in strategic businesses or assets that complement our service and product offerings, to invest in enhancements to our technology, as well as for working capital and other general corporate purposes. At this time, we have not entered into any agreement or commitment with respect to any material acquisitions or investments.
 
We have not yet determined all of our expected expenditures, and we cannot estimate the amounts to be used for the purposes set forth above. The amounts and timing of any expenditures will depend on the amount of cash generated by our operations, competitive and market developments and the availability of acquisition or investment opportunities on terms acceptable to us. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering. See “Risk Factors — Risks Related to Our Ordinary Shares and this Offering — We Will Have Considerable Discretion As to the Use of the Net Proceeds to Be Received by Us from This Offering.”
 
Pending use of the net proceeds as described above, we intend to invest the net proceeds of this offering in short-term, interest-bearing bank deposits or money market funds. These investments may have a material adverse effect on the US federal income tax consequences of your investment in our ordinary shares. See “Risk Factors — Risks Related to Our Ordinary Shares and this Offering — 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” and “Taxation — US Federal Income Taxation — Passive Foreign Investment Company.”


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CAPITALIZATION
 
The following table sets forth our indebtedness and capitalization as of March 31, 2011:
 
  •  on an actual basis; and
 
  •  on an as adjusted basis to reflect (1) the issuance of 59,880 ordinary shares upon the exercise of share options held by certain of our selling shareholders for sale in this offering, effective upon the completion of this offering; and (2) the issuance and sale by us of 1,600,000 ordinary shares offered in this offering at the public offering price of $      per share, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, and further assuming no exercise by the underwriters of their over-allotment option and no other change to the number of ordinary shares sold by us as set forth on the cover page of this prospectus.
 
You should read this table in conjunction with “Use of Proceeds,” “Selected Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.
 
                 
    As of March 31, 2011  
    Actual     As Adjusted  
    (in thousands)  
 
Loans and borrowings
  $ 209.6     $ 209.6  
Bank overdraft
    3,856.0       3,856.0  
Equity/(deficit):
    17.5          
Ordinary shares of par value $0.0005 each,
Issued: 35,099,639, actual; 36,759,519, as adjusted(1)
               
Share premium
    111,541.7          
Accumulated deficit
    (38,024.1 )     (38,024.1 )
Share-based payment reserve
    3,914.8          
Foreign currency translation reserve
    (1,174.1 )     (1,174.1 )
                 
Total equity/(deficit) attributable to equity holders of our company
    76,275.9          
                 
Total capitalization
  $ 80,341.5     $  
                 
 
 
Note: (1) The actual ordinary shares stated in the table above excludes 1,510,187 ordinary shares issuable upon the exercise of outstanding options granted under our equity option plan as of March 31, 2011. See “Management — Share Incentive Plans — Equity Option Plan.” The as adjusted ordinary shares as of March 31, 2011 stated in the table above exclude 1,450,307 ordinary shares issuable upon the exercise of outstanding options granted under our equity option plan (not taking into account those share options to be exercised by certain of our selling shareholders for sale in this offering, effective upon the completion of this offering).


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DIVIDENDS AND DIVIDEND POLICY
 
Since our incorporation, no dividends have been declared or paid on our ordinary shares. We currently intend to retain our earnings, if any, to finance the development and growth of our business and operations as well as expand our business and do not currently anticipate paying dividends on our ordinary shares in the near future.
 
Under Mauritius law, we may only pay dividends out of retained earnings, after having made good any accumulated losses at the beginning of the relevant accounting period and no distribution (which term includes dividend) may be made unless our board of directors is satisfied that upon the distribution being made (1) our company is able to pay its debts as they become due in the normal course of business and (2) the value of our company’s assets is greater than the sum of (a) the value of its liabilities and (b) our company’s stated capital (which refers to the total of all amounts received by our company or due and payable to our company in respect of the nominal paid-up value of our issued shares and share premiums paid to our company in relation to such shares). Subject to the Mauritius Companies Act and our Constitution, the declaration and payment of any dividend has to be authorized by our board of directors and is subject to the approval of our shareholders. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, cash flows, capital requirements, general financial condition, contractual restrictions and other factors which our directors may deem relevant. Cash dividends, if any, will be paid in US dollars. Other distributions, if any, will be made to our shareholders by any means which our directors deem fair, legal and practicable.
 
As we are a holding company, we will have to rely on dividends paid to us by our subsidiaries (in particular, our key operating subsidiary in India, MMT India) for our cash requirements, including funds to pay dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. Our ability to pay dividends to our shareholders will depend on, among other things, the availability of dividends from MMT India.
 
As of the date of this prospectus, MMT India has not paid any cash dividends on its equity shares. Dividends other than in cash are not permitted under Indian law. The declaration and payment of any dividends in the future will be recommended by the board of directors of MMT India and approved by the shareholders of MMT India at their discretion and would depend on a number of factors, including its financial condition, results of operations, capital requirements and surplus, contractual obligations, applicable Indian legal restrictions, the provisions of its articles of association, the terms of its credit facilities and other financing arrangements at the time a dividend is considered and other factors considered relevant by the board of directors. MMT India may also from time to time pay interim dividends. MMT India is liable to pay dividend distribution tax in India at the rate of 15.0%, plus applicable cess and surcharge, on any dividends paid by it.
 
Under Indian law, a company declares dividends upon a recommendation by its board of directors and approval by a majority of the shareholders at the annual general meeting of shareholders held within six months of the end of each fiscal year. However, while final dividends can be paid out by a company only after such dividends have been recommended by the board of directors and approved by shareholders, interim dividends can be paid out with only a recommendation by the board of directors. The shareholders have the right to decrease but not to increase any dividend amount recommended by the board of directors. Under Indian law, shares of a company belonging to the same class must receive equal dividend treatment.
 
Under Indian law, a company is permitted to declare or pay dividends in any year from profits for that year only if it transfers a specified percentage of profits for that year to the reserves of the company as prescribed by the Companies Act, 1956, as amended, or the Companies Act, and applicable rules thereunder. We intend to make such transfers to our general reserves in anticipation of any dividends we may pay.
 
If profits for a particular year are insufficient to declare dividends (including interim dividends), the dividends for that year may be declared and paid out from accumulated profits if the following conditions are fulfilled:
 
  •  the rate of dividend to be declared shall not exceed the average of the rates at which dividends were declared in the five years immediately preceding that year or 10.0% of our paid-up share capital, whichever is less;


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  •  the total amount to be drawn from the accumulated profits earned in previous years and transferred to the reserves shall not exceed an amount equal to one-tenth of the sum of our paid-up share capital and net reserves, and the amount so drawn shall first be utilized to set off the losses incurred in the financial year before any dividend in respect of preference or equity shares is declared; and
 
  •  the balance of the reserves after such withdrawal shall not fall below 15.0% of our paid-up share capital.


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DILUTION
 
If you invest in our ordinary shares, your interest will be diluted to the extent of the difference between the public offering price per ordinary share and our net tangible book value per ordinary share after this offering. Dilution results from the fact that the public offering price per ordinary share is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares.
 
As of March 31, 2011, we had net tangible book value of $73.48 million, or $2.09 per ordinary share outstanding as of that date. Our net tangible book value is determined by subtracting the value of our intangible assets and total liabilities from our total assets.
 
Dilution is determined by subtracting net tangible book value per ordinary share from the public offering price per ordinary share of $          , after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
 
Without taking into account any other changes in net tangible book value after March 31, 2011, other than to give effect to (1) the issuance of ordinary shares upon the exercise of share options held by certain of our selling shareholders for sale in this offering, to be effected upon the completion of this offering; and (2) our sale of the ordinary shares offered in this offering, with estimated net proceeds of $      million after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our proforma net tangible book value as of March 31, 2011 would have been $           million and $           per outstanding ordinary share. This represents an immediate dilution in proforma net tangible book value of $           per ordinary share to new investors in this offering.
 
The following table illustrates such dilution per ordinary share
 
         
Public offering price per ordinary share
  $    
Net tangible book value per ordinary share as of March 31, 2011
  $ 2.09  
Proforma net tangible book value per ordinary share after giving effect to the issuance of shares pursuant to the exercise of options for sale in this offering and this offering
  $    
Amount of dilution in net tangible book value per ordinary share to new investors in the offering
  $    
Percentage dilution in net tangible book value per ordinary share to new investors in the offering
      %
 
Assuming the underwriters’ over-allotment option is exercised in full, our net tangible book value as of March 31, 2011 (after giving effect to the issuance of shares pursuant to the exercise of options for sale in this offering, and this offering) would have been $      million and $      per outstanding ordinary share. This represents an immediate dilution in proforma net tangible book value of $           per ordinary share to new investors in this offering.
 
The following table summarizes, on a proforma basis as of March 31, 2011 (assuming the exercise of share options by certain of our selling shareholders for sale in this offering occurred on such date), the differences between the number of ordinary shares purchased from us, the total consideration paid to us and the average price per ordinary share that existing shareholders paid for their shares and new investors paid, before deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
 
                                         
                    Average
    Ordinary Shares Purchased   Total Consideration   Price
    Number   Percent   Amount   Percent   per Share
 
Existing shareholders
    35,159,519       95.6%     $         %     $    
New investors
    1,600,000       4.4                            
                                         
Total
    36,759,519       100.0%     $         %     $    
                                         


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The discussion and tables above assume no exercise of any outstanding share options other than such options to be exercised by certain of our selling shareholders effective upon completion of this offering. As of March 31, 2011, there were 1,450,307 ordinary shares issuable upon exercise of outstanding share options with exercise prices ranging from $0.0005 to $5.39 (excluding those outstanding share options to be exercisable by certain of our selling shareholders effective upon completion of this offering), and there were ordinary shares available for future issuance upon the exercise of future grants under our equity option plan. To the extent that any of these options is exercised, there will be further dilution to new investors.


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EXCHANGE RATES
 
Our consolidated financial statements and other financial data included in this prospectus are presented in US dollars. Our business and operations are primarily conducted in India through our Indian subsidiary, MMT India. The functional currency of MMT India is Indian Rupees and its revenues and expenses are denominated in that currency. We report our consolidated financial results in US dollars. The conversion of Indian Rupees into US dollars in this prospectus is based on the noon buying rate 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. For your convenience, unless otherwise noted, all translations from Indian Rupees to US dollars and from US dollars to Indian Rupees in this prospectus were made at a rate of Rs. 44.24 to $1.00, the noon buying rate in effect as of April 30, 2011. We make no representation that any Indian Rupee or US dollar amounts referred to in this prospectus could have been or could be converted into US dollars or Indian Rupees, as the case may be, at any particular rate or at all. The effects of foreign currency translation adjustments are included as a component of other comprehensive income in our shareholders’ equity.
 
The following table sets forth, for each of the periods indicated, the low, average, high and period-end noon buying rates in The City of New York for cable transfers, in Indian Rupees per US dollar, as certified for customs purposes by the Federal Reserve Bank of New York. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this prospectus or will use in the preparation of our periodic reports or any other information to be provided to you.
 
                                 
    Indian Rupees per US Dollar
    Noon Buying Rate
Period   Period End   Average(1)   Low   High
 
2006
    44.11       45.17       43.89       46.83  
2007
    39.41       41.00       38.48       44.49  
2008
    48.58       43.70       39.12       50.12  
2009
    46.40       48.22       46.00       51.96  
2010
    44.80       45.58       43.90       47.49  
November
    45.83       44.93       43.90       45.83  
December
    44.80       45.10       44.70       45.54  
2011:
                               
January
    45.92       45.38       44.59       45.92  
February
    45.18       45.38       45.06       45.66  
March
    44.54       44.91       44.54       45.24  
April
    44.24       44.30       44.00       44.51  
 
 
Note: (1) Averages for a period other than one month are calculated by using the average of the noon buying rate at the end of each month during the period. Monthly averages are calculated by using the average of the daily noon buying rates during the relevant month.
 
Source: Federal Reserve Statistical Release.


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MARKET INFORMATION
 
Our outstanding ordinary shares are currently listed and traded on the Nasdaq Global Market under the symbol “MMYT.” As at March 31, 2011, 35,099,639 ordinary shares were outstanding.
 
The following table shows:
 
  •  the reported high and low trading prices quoted in US dollars for our ordinary shares on the Nasdaq Global Market; and
 
  •  the average of the aggregate trading volume for our ordinary shares on the Nasdaq Global Market.
 
                 
    Nasdaq Global Market Price
    Per Ordinary Share
Period   High   Low
 
Fiscal Year
               
2011(1)
  $ 42.88     $ 20.75  
Fiscal Quarter 2011
               
2nd Quarter(1)
  $ 42.88     $ 20.75  
3rd Quarter
  $ 40.80     $ 23.81  
4th Quarter
  $ 32.41     $ 24.03  
2010
               
November
  $ 39.60     $ 26.22  
December
  $ 29.10     $ 23.81  
2011
               
January
  $ 32.41     $ 27.00  
February
  $ 30.16     $ 24.03  
March
  $ 29.50     $ 24.47  
April
  $ 34.22     $ 28.85  
 
 
Note: (1) From August 12, 2010 following completion of our initial public offering on the Nasdaq Global Market.


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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
 
The following selected consolidated statement of comprehensive income and loss data for fiscal years 2009, 2010 and 2011 and the selected consolidated statement of financial position data as of March 31, 2010 and 2011 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated statement of comprehensive income and loss data for fiscal year 2008 and the selected consolidated statement of financial position as of March 31, 2008 and 2009 have been derived from our audited financial statements not included in this prospectus. The financial data set forth below should be read in conjunction with, and are qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this prospectus. 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.
 
Prior to initiation of our initial public offering that was completed in August 2010, we had not prepared consolidated financial statements. Our India-incorporated and Delaware-incorporated operating subsidiaries prepare financial statements in accordance with Indian Generally Accepted Accounting Principles, or Indian GAAP, and United States Generally Accepted Accounting Principles, or US GAAP, respectively. We have adopted IFRS as issued by the IASB with a transition date of April 1, 2007 and have prepared consolidated financial statements with effect from that date. We represent that selected financial data for fiscal year 2007 cannot be prepared and presented below in accordance with IFRS as issued by the IASB without incurring unreasonable effort or expense, as, among other things, our subsidiaries would have to convert their respective financial statements from Indian GAAP to IFRS and from US GAAP to IFRS, in order for the historical financial data to be extracted.
 
                                 
    Fiscal Year Ended March 31  
    2008     2009     2010     2011  
    (in thousands, except per share data and number of shares)  
 
Consolidated Statement of Comprehensive Income (Loss) Data:
                               
Revenue:
                               
Air ticketing
  $ 14,091.4     $ 19,225.1     $ 32,119.5     $ 47,622.7  
Hotels and packages
    24,189.4       48,622.8       50,287.9       74,558.0  
Other revenue
    50.1       703.8       1,152.8       2,540.7  
                                 
Total revenue
    38,330.9       68,551.7       83,560.2       124,721.4  
                                 
Service cost:
                               
Procurement cost of hotels and packages services
    (21,823.8)       (43,069.2)       (42,292.2)       (63,650.9)  
Purchase of air ticket coupons
          (491.8)       (985.5)        
Personnel expenses
    (8,459.2)       (9,679.8)       (16,562.0)       (14,399.0)  
Other operating expenses
    (23,229.0)       (24,369.9)       (28,160.5)       (40,698.9)  
Depreciation and amortization
    (1,107.5)       (1,558.7)       (1,569.7)       (1,910.6)  
                                 
Results from operating activities
    (16,288.7)       (10,617.6)       (6,009.8)       4,061.9  
Net finance income (costs)
    (2,611.2)       3,244.1       (188.8)       (1,923.9)  
                                 
Profit (Loss) before tax
    (18,899.8)       (7,373.5)       (6,198.6)       2,138.0  
                                 
Income tax benefit (expense)
    4.5       25.3       (8.4)       2,691.7  
                                 
Profit (Loss) for the year
  $ (18,895.4)     $ (7,348.2)     $ (6,207.0)     $ 4,829.7  
                                 
Profit (Loss) per ordinary share:
                               
Basic
  $ (1.08)     $ (0.42)     $ (0.35)     $ 0.17  
Diluted
  $ (1.08)     $ (0.55)     $ (0.35)     $ 0.15  
Weighted average number of ordinary shares outstanding:
                               
Basic
    17,437,120       17,437,120       17,521,120       28,320,901  
Diluted
    17,437,120       20,403,420       17,521,120       34,950,246  


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    Fiscal Year Ended March 31  
    2008     2009     2010     2011  
    (in thousands, except per share data and number of shares)  
 
Proforma earnings (loss) per ordinary Share (unaudited):
                               
Basic(1)
  $ (0.59)     $ (0.38)     $ (0.18)     $ 0.16  
Diluted(1)
  $ (0.59)     $ (0.38)     $ (0.18)     $ 0.15  
Proforma weighted average number of ordinary shares outstanding (unaudited):
                               
Basic(1)
    26,980,680       29,761,580       29,845,580       32,993,361  
Diluted(1)
    26,980,680       29,761,580       29,845,580       34,929,282  
 
 
Note: (1)  In December 2006, August 2007 and May 2008, we issued Series A, Series B and Series C preferred shares, respectively, that were converted into ordinary shares effective upon the completion of our initial public offering on August 17, 2010. Our proforma earnings (loss) per ordinary share (basic and diluted) and proforma weighted average number of ordinary shares outstanding (basic and diluted) have been calculated assuming that the conversion of all our outstanding preferred shares occurred on a “hypothetical basis” on April 1, 2007 for our Series A and Series B preferred shares and April 1, 2008 for our Series C preferred shares.
 
The following table sets forth a summary of our consolidated statement of financial position as of March 31, 2008, 2009, 2010 and 2011:
 
                                 
    As of March 31
    2008   2009   2010   2011
    (in thousands)
 
Consolidated Statement of Financial Position Data:
                               
Trade and other receivables
  $ 9,852.8     $ 5,428.2     $ 12,449.5     $ 12,857.2  
Term deposits
    7,346.3       16,038.9       14,471.4       16,941.9  
Cash and cash equivalents
    3,775.5       5,471.6       9,341.5       51,730.3  
Total assets
    33,226.6       37,898.2       50,633.5       112,939.6  
Total equity (deficit) attributable to equity holders of our company
    (17,244.6)       (27,237.5)       (24,955.4)       76,275.9  
Loans and borrowings(1)
    24,198.1       39,712.5       40,966.9       209.6  
Trade and other payables
    12,321.1       13,440.1       26,467.0       29,694.7  
Total liabilities
    50,468.1       65,131.6       75,584.5       36,663.8  
Total equity (deficit) and liabilities
  $ 33,226.6     $ 37,898.2     $ 50,633.5     $ 112,939.6  
 
 
Note: (1)  The preferred shares issued by us were compound financial instruments with equity, liability and embedded derivative components. Accordingly, the liability portion of our preferred shares amounting to $24.1 million, $39.6 million, $40.8 million and $0 for fiscal years 2008, 2009, 2010 and 2011, respectively, had been included under our loans and borrowings. All our preferred shares were converted into ordinary shares effective upon the completion of our initial public offering on August 17, 2010.

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Other Data:
 
The following table sets forth for the periods indicated, certain selected consolidated financial and other data:
 
                                 
    Fiscal Year Ended March 31  
    2008     2009     2010     2011  
    (in thousands, except percentages)  
 
Number of transactions:
                               
Air ticketing
    1,029.1       1,250.8       1,766.9       2,824.6  
Hotels and packages
    36.9       81.4       109.7       175.9  
Revenue less service cost(1):
                               
Air ticketing
  $ 14,091.4     $ 18,733.3     $ 31,134.0     $ 47,622.7  
Hotels and packages
    2,365.6       5,553.6       7,995.7       10,907.1  
Other revenue
    50.1       703.8       1,152.8       2,540.7  
                                 
    $ 16,507.1     $ 24,990.7     $ 40,282.5     $ 61,070.5  
                                 
Gross bookings(2):
                               
Air ticketing
  $ 198,799.6     $ 260,945.1     $ 408,603.1     $ 647,846.9  
Hotels and packages
    26,489.7       52,365.7       57,273.1       94,608.2  
Net revenue margins(3):
                               
Air ticketing
    7.1 %     7.2 %     7.6 %     7.4 %
Hotels and packages
    8.9 %     10.6 %     14.0 %     11.5 %
 
 
Notes: (1)  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 based on revenue less service cost, which is a non-IFRS measure, as we believe that revenue less service cost reflects more accurately the value addition of the travel services that we provide to our customers. The presentation of this non-IFRS 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 revenue less service cost 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 revenue less service cost (a non-IFRS measure):
 
                                                                                                                                 
    Air Ticketing     Hotels and Packages     Other Revenue     Total  
    Fiscal Year Ended March 31     Fiscal Year Ended March 31     Fiscal Year Ended March 31     Fiscal Year Ended March 31  
    2008     2009     2010     2011     2008     2009     2010     2011     2008     2009     2010     2011     2008     2009     2010     2011  
    (In thousands)  
 
Revenue
  $ 14,091.4     $ 19,225.1     $ 32,119.5     $ 47,622.7     $ 24,189.4     $ 48,622.8     $ 50,287.9     $ 74,558.0     $ 50.1     $ 703.8     $ 1,152.8     $ 2,540.7     $ 38,330.9     $ 68,551.7     $ 83,560.2     $ 124,721.4  
Less:
                                                                                                                               
Service cost
          491.8       985.5             21,823.8       43,069.2       42,292.2       63,650.9                               21,823.8       43,561.0       43,277.7       63,650.9  
                                                                                                                                 
Revenue less service cost
  $ 14,091.4     $ 18,733.3     $ 31,134.0     $ 47,622.7     $ 2,365.6     $ 5,553.6     $ 7,995.7     $ 10,907.1     $ 50.1     $ 703.8     $ 1,152.8     $ 2,540.7     $ 16,507.1     $ 24,990.7     $ 40,282.5     $ 61,070.5  
                                                                                                                                 
 
(2) 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.
 
(3) Net revenue margins is defined as revenue less service cost as a percentage of gross bookings.


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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled “Selected Consolidated Financial and Other Data,” and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this prospectus. Actual results could differ materially from those contained in any forward-looking statements.
 
Overview
 
We are the largest online travel company in India, based on gross bookings for 2009, according to PhoCusWright. Through our primary website, www.makemytrip.com, and other technology-enhanced 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 tickets, hotels, packages, rail tickets, bus tickets, car hire and ancillary travel requirements such as facilitating access to travel insurance. As reported by The Economic Times on February 6, 2011, the Indian middle class is expected to grow over three times from 160 million people currently to 547 million people by 2026. In order to meet the requirements of this growing Indian middle class travel market where Internet penetration is relatively low, we also utilize other technology-enhanced distribution channels, including call centers, our travel stores in India, as well as our travel agents’ network in India.
 
We generate revenue through two main lines of business, air ticketing, and hotels and packages. Sales in our air ticketing business are primarily made through our websites whereas sales in our hotels and packages business are made mainly through our call centers, travel stores and travel agents’ network. We also generate revenue through the online sale of rail and bus tickets and by facilitating access to travel insurance, 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 provider. 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 are classified as service cost. Our hotels and packages revenue also includes commissions we earn 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 hotels outside India, which are accounted for on a “net” 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 based on revenue less service cost, which is a non-IFRS measure, as we believe that revenue less service cost reflects more accurately the value addition of the travel services that we provide to our customers. The presentation of this non-IFRS 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 revenue less service cost 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 tables reconcile our revenue (an IFRS measure) to revenue less service cost (a non-IFRS measure):
 
                                                                                                 
    Air Ticketing     Hotels and Packages     Other Revenue     Total  
    Fiscal Year Ended
    Fiscal Year Ended
    Fiscal Year Ended
    Fiscal Year Ended
 
    March 31     March 31     March 31     March 31  
    2009     2010     2011     2009     2010     2011     2009     2010     2011     2009     2010     2011  
    (in thousands, except percentages)  
 
Revenue
  $ 19,225.1     $ 32,119.5     $ 47,622.7     $ 48,622.8     $ 50,287.9     $ 74,558.0     $ 703.8     $ 1,152.8     $ 2,540.7     $ 68,551.7     $ 83,560.2     $ 124,721.4  
Less:
                                                                                               
Service cost
    491.8       985.5             43,069.2       42,292.2       63,650.9                         43,561.0       43,277.7       63,650.9  
                                                                                                 
Revenue less service cost
  $ 18,733.3     $ 31,134.0     $ 47,622.7     $ 5,553.6     $ 7,995.7     $ 10,907.1     $ 703.8     $ 1,152.8     $ 2,540.7     $ 24,990.7     $ 40,282.5     $ 61,070.5  
                                                                                                 
% of total revenue less service cost
    75.0%       77.3%       78.0%       22.2%       19.8%       17.9%       2.8%       2.9%       4.1%       100.0%       100.0%       100.0%  
 
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 revenue less service cost, gross bookings and net revenue margins.
 
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 as we 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 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 are 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 are the primary obligor and have responsibility for the delivery of services. The cost of procuring the relevant services and products for sale to our customers in this business are classified as service cost. However, our hotels and packages revenue also includes commissions we earn 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 hotels outside India, which are accounted for on a “net” basis. Our hotels and packages revenue is recognized on the check-in date for hotel reservations and the date of departure for packages.
 
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 based on revenue less service cost, as we believe this reflects more accurately 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.
 
Net revenue margins is defined as revenue less service cost as a percentage of gross bookings and represent the commissions, fees, incentive payments and other amounts earned in our business. We follow net revenue 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 the number of transactions, gross bookings and net revenue margins for our air ticketing business, and hotels and packages business for our last three fiscal years.
 
                         
    Fiscal Year Ended March 31  
    2009     2010     2011  
    (in thousands, except percentages)  
 
Number of transactions:
                       
Air ticketing
    1,250.8       1,766.9       2,824.6  
Hotels and packages
    81.4       109.7       175.9  
Gross bookings:
                       
Air ticketing
  $ 260,945.1     $ 408,603.1     $ 647,846.9  
Hotels and packages
    52,365.7       57,273.1       94,608.2  
                         
    $ 313,310.8     $ 465,876.2     $ 742,455.1  
                         
Net revenue margins:
                       
Air ticketing
    7.2 %     7.6 %     7.4 %
Hotels and packages
    10.6 %     14.0 %     11.5 %
Combined net revenue margin for air ticketing and hotels and packages
    7.8 %     8.4 %     7.9 %
 
Factors Affecting Our Results of Operations
 
Changes in Our Business Mix and Net Revenue Margins.  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 and jet fuel prices in recent years 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. In our experience, the commission rate paid by airlines to travel agents has generally been decreasing and we expect this trend to continue. 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.
 
In fiscal year 2010, these trends prompted Indian travel agents, including our company, to increase the amount of service fees charged to customers and the number of services for which fees are levied. As a result, although commissions in the air ticketing business faced downward pressures in the industry, our air ticketing net revenue margins increased from 7.2% in fiscal year 2009 to 7.6% in fiscal year 2010. In addition, many of our Indian airline suppliers also paid incentive fees to travel agents such as ourselves during the economic slowdown in fiscal year 2010 and most of fiscal year 2009 in order to improve their sales.
 
In fiscal year 2011, our air ticketing net revenue margins decreased to 7.4% from 7.6% in fiscal year 2010. This decrease was mainly a result of a reduction in the service fees we charge in our domestic air ticketing business in order to attract more customers and gain market share. This reduction in service fees partially offset the effects of an increase in our gross bookings and higher volume-related incentives we earned from the airlines during fiscal year 2011.
 
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. Our net revenue margins in this business increased from 10.6% in fiscal year 2009 to 14.0% in fiscal year 2010 as we were able to negotiate more favorable terms with our suppliers on account of the growth in our number of transactions and gross bookings during these years, and also because our travel suppliers provided more favorable terms due to the slowdown in India’s economy in fiscal 2010. Our net revenue margins in the hotels and packages business decreased, however, from 14.0% in fiscal year 2010 to 11.5% in fiscal year 2011. We reduced our margin in the third


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quarter of fiscal year 2011 in order to increase our market share and promote new holiday packages as we continued to develop new travel destinations.
 
We are focused on expanding our hotels and packages business. Our hotels and packages transactions have increased over the last three fiscal years, increasing from 81,357 transactions in fiscal year 2009 to 175,869 transactions in fiscal year 2011. Gross bookings for hotels and packages have increased from $52.4 million in fiscal year 2009 to $94.6 million in fiscal year 2011. Revenue less service cost from our hotels and packages business accounted for 22.2%, 19.8% and 17.9% of our total revenue less service cost in fiscal years 2009, 2010 and 2011, respectively.
 
Seasonality in the Indian 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 in India. In our air ticketing business, we tend to experience higher revenues in the third and fourth calendar quarters of each year and lower revenue in the first calendar quarter, mainly as a result of changes in demand for business travel.
 
Advertising and Business 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 advertising and business promotion expenses or lower our service fees in the future in order to compete effectively with new entrants and existing players in the market. We may also increase our advertising and business promotion expenses as well as personnel 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 intend to invest in marketing to further increase our brand awareness through our “Memories Unlimited” marketing campaign. We expect to spend approximately $2.0 million on marketing in fiscal year 2012 in addition to our typical advertising and business promotion expenses to further strengthen our brand.
 
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. 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 Internet penetration (particularly broadband penetration) in India;
 
  •  increased use of the Internet for commerce in India; and
 
  •  intensive competition from new and existing market entrants, particularly in the Indian online travel industry.
 
See “Industry Overview” for further information.
 
Our Revenue, Service Cost and Other Revenue and Expenses
 
Revenue
 
We started our business in 2000 with a focus on the sales of air tickets to non-resident Indians in the United States traveling inbound to India. In 2005 we started our Indian air ticketing business. Over time, we have expanded our hotels and packages business as well as introduced new non-air services and products such as the sale of rail and bus tickets, and facilitating access to travel insurance. We also generate advertising revenue from third party advertisements on our websites.
 
Air Ticketing.  We earn commissions from airlines 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 periodic basis. Incentives earned from airlines are recognized on the basis of performance targets agreed with the


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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 provider 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 includes commissions we earn 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 hotels outside India, which is recorded on a “net” basis. 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.
 
Other Revenue.  Our other revenue primarily comprises revenue from commissions or fees from IRCTC for the sale of rail tickets, bus operators for the sale of bus tickets, as well as Apollo Munich Health Insurance Company Limited (previously known as Apollo DKV Insurance Company Limited) for our facilitation of the access to travel insurance, and third-party advertising on our websites. We also receive fees from aggregators from whom we procure inventory for certain bus tickets, when we book bus tickets through them. We expect that revenue from these other businesses will continue to contribute an insignificant percentage of our revenue in the near future.
 
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; 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. However, on a few occasions, we pre-purchase air ticket inventory in order to enjoy special negotiated rates and revenue from the sale of such tickets is recognized on a “gross” basis (representing the retail value of the tickets paid by our customers). The cost of such air tickets are classified as service cost.
 
The following tables 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 and our other revenue during our last three fiscal years.
 
                                                                                                 
    Air Ticketing     Hotels and Packages     Other Revenue     Total  
    Fiscal Year Ended
    Fiscal Year Ended
    Fiscal Year Ended
    Fiscal Year Ended
 
    March 31     March 31     March 31     March 31  
    2009     2010     2011     2009     2010     2011     2009     2010     2011     2009     2010     2011  
    (in thousands)  
 
Revenue on gross basis
  $ 578.7     $ 1,110.2     $     $ 48,101.0     $ 48,724.2     $ 71,155.1     $     $     $     $ 48,679.7     $ 49,834.4     $ 71,155.1  
Revenue on net basis
    18,646.4       31,009.3       47,622.7       521.8       1,563.7       3,402.9       703.8       1,152.8       2,540.7       19,872.0       33,725.8       53,566.3  
                                                                                                 
Revenue
    19,225.1       32,119.5     $ 47,622.7       48,622.8       50,287.9     $ 74,558.0       703.8       1,152.8     $ 2,540.7       68,551.7       83,560.2     $ 124,721.4  
Less:
                                                                                               
Service cost
    491.8       985.5             43,069.2       42,292.2       63,650.9                         43,561.0       43,277.7       63,650.9  
                                                                                                 
Revenue less service cost
  $ 18,733.3     $ 31,134.0     $ 47,622.7     $ 5,553.6     $ 7,995.7     $ 10,907.1     $ 703.8     $ 1,152.8     $ 2,540.7     $ 24,990.7     $ 40,282.5     $ 61,070.5  
                                                                                                 
 
Personnel Expenses
 
Personnel expenses primarily consist of wages and salaries, employee welfare expenses, contributions to mandatory retirement provident funds as well as other expenses related to the payment of retirement benefits, and employee share-based compensation.


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Other Operating Expenses
 
Other operating expenses primarily consist of, among other things, advertising and business promotion expenses, charges by payment gateway providers and fees paid to our outsourcing service providers for our call center service and other functions.
 
Depreciation and Amortization
 
Depreciation consists primarily of depreciation expense recorded on property and equipment, such as computers and office furniture, fixtures and equipment, leasehold improvements, motor vehicles and power backup generators at certain of our offices, including our corporate office in Gurgaon, India. Amortization expense consists primarily of amortization recorded on intangible assets including website development expenses and software.
 
Finance Income
 
Finance income consists mainly of net gains and/or losses arising from the change in fair value of the derivative component on our preferred shares (being the option embedded in our preferred shares which obliges our company to issue additional preferred shares to preferred shareholders if we subsequently issue new preferred shares at lower prices than the original issue prices of the preferred shares of the same class) as well as interest income on our term deposits.
 
Finance Costs
 
Finance costs consist primarily of interest expense accrued on our convertible preferred shares which are considered as interest bearing loans for accounting purposes (except for their embedded option derivative value), bank charges, impairment loss on trade and other receivables, which represent provisions for bad and doubtful debts under certain terminated contracts with travel suppliers as well as receivables under dispute by our suppliers, and cost of initial public offering of our ordinary shares. All of our preferred shares were converted into ordinary shares upon the completion of our initial public offering in August 2010.
 
Foreign Currency Translation
 
Our functional currency and that of our subsidiary, MakeMyTrip.com Inc., is the US dollar. However, MMT India, our key operating subsidiary, primarily operates its business in Indian Rupees and its functional currency is the Indian Rupee. We report our consolidated financial statements in US dollars. The financial statements of MMT India are translated to our reporting 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. Adjustments resulting from the translation of MMT India’s financial statements from its functional currency to our reporting currency are accumulated and reported as other comprehensive income (loss), which is a separate component of our shareholders’ equity. 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.


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Revenue Recognition
 
We derive our revenue primarily from two sources: air ticketing and hotels and packages.
 
Revenue from our air ticketing business is primarily generated from our websites whereas revenue from our hotels and packages business is primarily generated through call centers, travel stores and travel agents’ network. We also generate revenue through the sale of rail and bus tickets, facilitating access to travel insurance and advertising revenue from third party advertisements on our websites.
 
Air Ticketing.  Income from our air ticketing business comprises commissions and incentive payments from airline suppliers, service fees charged to customers and fees from our GDS service provider. We recognize income from our air ticket bookings at the time of issuance of tickets on the net commission we earn as an agent as we do not assume any performance obligation after the confirmation of the issuance of the air tickets to our customers. Incentives earned from airlines are recognized on the basis of performance targets agreed with the relevant airline and when performance obligations have been completed. In cases where we pre-purchase air tickets and assume inventory risk, revenue from the sale of such tickets are accounted for on a “gross” basis. The costs of such air tickets are classified as service cost.
 
Hotels and Packages.  Income from our hotels and packages business, including income from air tickets sold as part of packages, is accounted for on a “gross” basis as we are the primary obligor in the arrangement and incur risk and responsibility, including the responsibility for delivery of services. Our hotels and packages revenue also includes commissions we earn 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 hotels outside India, which are accounted for on a “net” basis. Our hotels and packages revenue is recognized on the check-in date for hotel reservations and the date of departure for packages, respectively.
 
Other Revenue.  We also earn commissions and fees from railway and bus operators, earn fees by facilitating access to travel insurance policies to our customers and generate revenue from third party advertisements on our websites. Income from these other sources is recognized as the services are being performed.
 
We recognize revenue when we have persuasive evidence of an arrangement in respect of services to be provided, where such services have been rendered, and the fee is determinable and collectibility is reasonably assured. We conclude that we have persuasive evidence of an arrangement when we enter into a legally enforceable agreement with our customers with terms and conditions that describe the service and the related payments. We consider fees to be determinable when the services have been provided in accordance with the agreement, i.e. upon booking of the air ticket in the case of airline ticketing revenue and upon check-in in the case of packages and hotels, respectively. As the customer is primarily required to pay the amount at the time of transaction, collectibility is reasonably assured. We do not believe we have significant uncertainty regarding revenue recognition, or that the same would not be affected by uncertain future events. No major estimates or assumptions are made at the time of revenue recognition.
 
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 our company on such tickets is reversed and is net off from our revenue earned during the fiscal period at the time of cancellation. In addition, a liability is recognized in respect of the refund due to our customers for the gross amount charged to such customers net of cancellation fees. The revenue from the sale of hotels 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 availing of services by the customer.
 
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 services. Service costs also include costs of pre-purchased air tickets in respect of sale of airline tickets where our company assumes inventory risks.


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Service costs are the amount paid or accrued against procurement of these services and products from the respective suppliers and do not include any other operating cost to provide these services or products. Service costs are recognized when incurred, which coincides with the recognition of the corresponding revenue.
 
Other operating costs include costs such as advertising and business promotion costs, payment gateway charges, web hosting charges and outsourcing fees, which are recognized on an accrual basis. Depreciation and amortization costs are amortized over the estimated useful lives of the assets.
 
Advertising and business promotion costs are primarily comprised of Internet, television, radio and print media advertisement costs, as well as event-driven promotion costs for our company’s products and services. Such costs are the amounts paid by us to or accrued by us toward advertising agencies or direct service providers for advertising on websites, television, print formats, search engine marketing and any other media. Advertising and business promotion costs are recognized when incurred.
 
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.
 
Our estimate of liability relating to pending litigation is based on currently available facts and our assessment of the probability of an unfavorable outcome. Considering the uncertainties about the ultimate outcome and the amount of losses, we re-assess our estimates as additional information becomes available. 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. Any changes in estimates are recognized prospectively. Certain of our accounting policies require higher degrees 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.
 
Impairment Loss on Trade and Other Receivables
 
We estimate the amount of uncollectible receivables each period and establish an impairment loss for uncollectible amounts. We provide impairment loss based on (i) our specific assessment of the collectability of all significant amounts; and (ii) any specific knowledge we have acquired that might indicate that an amount is uncollectible. The assessments reflect management’s best assumptions and estimates. Significant management judgment is involved in estimating these factors, and they include inherent uncertainties. Management periodically evaluates and updates the estimates based on the conditions that influence these factors. The variability of these factors depends on a number of conditions, including uncertainty about future events, and thus our accounting estimates may change from period to period.
 
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 therefore only recognize compensation cost for those shares expected to vest over the service period of the award.
 
We apply the Black-Scholes valuation model in determining the fair value of options granted, which requires the input of highly subjective assumptions, including the expected life of the share option, share price volatility, and the pre-vesting option forfeiture rate. Expected life is based on historical exercise patterns, which we believe are representative of future behavior. We estimate expected volatility at the date of grant based on historical volatility of comparable companies for the period equal to the expected term of the options. Expected dividends percentage is


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taken as zero as we do not anticipate issuing dividends. The risk-free interest rate is the yield on a treasury bond with a remaining term equal to the expected option life assumed at the date of grant. The assumptions used in calculating the fair value of share options represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our share-based compensation expense could be materially different in the future. In addition, we are required to estimate share-based compensation expense net of estimated forfeitures. 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.
 
In the future, if we elect to use different assumptions under the Black-Scholes valuation model, it could result in a significantly different impact on our net income or loss.
 
Estimated Useful Lives of Property, Plant and Equipment and Website 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 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.
 
Website Development Cost.  Website development costs representing vendor invoices towards costs of design, configuration, coding, installation and testing of our websites are capitalized until implementation. Upon implementation, the asset is amortized to expense over its estimated useful life. Ongoing website post-implementation costs of operation and application maintenance is charged to expense as incurred. In accordance with IAS 38 “Intangible Assets,” website 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 separately identifiable.
 
We review the carrying value of long-lived assets or asset groups to be used in operations whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset, or a significant decline in the observable market value of an asset, among others.
 
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 in each of 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


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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.
 
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.
 
Compound Financial Instruments
 
Compound financial instruments issued by our company comprise our convertible and redeemable preferred shares with a discretionary, non-cumulative dividend that may be converted into our ordinary share capital at the option of the holder. Our preferred shares comprise equity, liability and embedded derivative components. One preferred share is convertible into one ordinary share. As our preferred shares contain adjustment clauses that represent price protection features which protect the original preferred shareholders from decline in the fair market value of their shares, our company may have to issue a variable number of ordinary shares on conversion and hence this represents a liability.
 
Equity instruments are instruments that evidence a residual interest in the assets of an entity after deducting all of its liabilities. Therefore, as the initial carrying amount of our preferred shares (which are compound financial instruments) has been allocated to their equity and liability components, the equity component has been assigned the residual amount after deducting the amount separately determined for their liability component from the entire fair value of our preferred shares. The value of derivative features (such as the conversion option) embedded in our preferred shares is included as a component of liability. The sum of the carrying amounts assigned to the liability and equity components on initial recognition was equal to the fair value that would be ascribed to the instrument as a whole. No gain or loss was recognized from initially recording the components of the instrument.
 
The fair value of the financial liability has been initially recognized at the amount payable on demand, discounted from the first date that the amount could be required to be paid. As the preference shareholders can demand repayment of the purchase price at any time subsequent to issuance, the fair value of the liability component has been calculated at not less than the nominal amount of the preference shares issued.
 
The equity component has been recognized initially based on the difference between the fair value of our preferred shares as a whole and the fair value of their liability component (including the embedded derivative liability). From the liability component that included the embedded derivative liability, the fair value of the


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derivative liability has been separated and the balance has been accounted for as a non-derivative liability. Any directly attributable transaction costs have been allocated to the liability and equity components of our preferred shares in proportion to their initial carrying amounts. Subsequent to initial recognition, the non-derivative liability component of our preferred shares has been measured at their amortized cost using an “effective interest” method. The equity component of our preferred shares is not re-measured subsequent to its initial recognition. Separable embedded derivatives in our preferred shares are recognized as described below in “— Separable Embedded Derivatives.”
 
The fair value of the separable embedded derivative is measured using the binomial lattice model. Measurement inputs include share price on measurement date, expected term of the instrument, anti-dilution price of different class of convertible and redeemable preference shares, risk free rate (based on government bonds), expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), probability of funds to be raised from an initial public offering or private placement, probability of conversion or redemption of the convertible and redeemable preference shares. The assumptions used in calculating the fair value of derivative liability represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our fair value of derivative liability could be materially different in the future.
 
Interest, dividends, losses and gains relating to the liability component of our preferred shares have been recognized in our profit or loss.
 
Separable Embedded Derivatives
 
Our preferred shares, which have all been converted to ordinary shares upon the completion of our initial public offering in August 2010, included a variable conversion feature which represents an embedded derivative feature. Such derivatives have been recognized initially at their fair value and attributable transaction costs are recognized in our profit or loss as they are incurred. Fair value of the derivatives have been determined on the date of issuance of our preferred shares using an appropriate valuation method. Subsequent to initial recognition, such derivatives have been measured at their fair value, and any changes in such value are accounted for in our profit or loss.
 
Results of Operations
 
The following table sets forth a summary of our consolidated statement of comprehensive income (loss), both actual amounts and as a percentage of total revenue, for the periods indicated.
 
                                                 
    Fiscal Year Ended March 31  
    2009     2010     2011  
    Amount     %     Amount     %     Amount     %  
    (in thousands, except percentages)  
 
Revenue
  $ 68,551.7       100.0     $ 83,560.2       100.0     $ 124,721.4       100.0  
Service cost
    (43,561.0 )     (63.5 )     (43,277.7 )     (51.8 )     (63,650.9 )     (51.0 )
Personnel expenses
    (9,679.8 )     (14.1 )     (16,562.0 )     (19.8 )     (14,399.0 )     (11.5 )
Other operating expenses
    (24,369.9 )     (35.5 )     (28,160.5 )     (33.7 )     (40,698.9 )     (32.6 )
Depreciation and amortization
    (1,558.7 )     (2.3 )     (1,569.7 )     (1.9 )     (1,910.6 )     (1.5 )
Results from operating activities
    (10,617.6 )     (15.5 )     (6,009.8 )     (7.2 )     4,061.9       3.3  
Finance income
    6,293.7       9.2       1,874.2       2.2       1,601.8       1.3  
Finance costs
    (3,049.6 )     (4.4 )     (2,062.9 )     (2.5 )     (3,525.7 )     (2.8 )
Profit (Loss) before tax
    (7,373.5 )     (10.8 )     (6,198.6 )     (7.4 )     2,138.0       1.7  
Income tax benefit (expense)
    25.3       0.03       (8.4 )     *     2,691.7       2.2  
Profit (Loss) for the year
    (7,348.2 )     (10.7 )     (6,207.0 )     (7.4 )     4,829.7       3.9  
 
 
* not meaningful.


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Fiscal Year 2011 Compared to Fiscal Year 2010
 
Revenue.  We had revenue of $124.7 million in fiscal year 2011, an increase of 49.3% over revenue of $83.6 million in fiscal year 2010.
 
Air Ticketing.  Revenue from our air ticketing business increased by 48.3% to $47.6 million in fiscal year 2011 from $32.1 million in fiscal year 2010. Our gross bookings increased by 58.6%, primarily due to a 59.9% growth in the number of transactions both as a result of an improvement in the overall air travel market as well as the continued increase in our domestic air ticket market share, partially offset by a 0.8% decrease in the average value per transaction. Our air ticketing net revenue margins declined to 7.4% in fiscal year 2011 from 7.6% in fiscal year 2010, primarily as a result of a reduction by us of the service fees we charge in our domestic air ticketing business in order to attract more customers and gain market share.
 
Hotels and Packages.  Revenue from our hotels and packages business increased by 48.3% to reach $74.6 million in fiscal year 2011 from $50.3 million in fiscal year 2010. This was due to an increase of 65.2% in gross bookings, primarily due to a 60.3% increase in the number of transactions and an increase in the average value per transaction of 3.0%. Despite strong growth in our gross bookings, revenue less service cost from our hotels and packages business increased by only 36.4% to $10.9 million in fiscal year 2011 from $8.0 million in fiscal year 2010, primarily as a result of a reduction in our hotels and packages net revenue margins to 11.5% in fiscal year 2011 from 14.0% in fiscal year 2010. In fiscal year 2010, our travel suppliers provided more favorable terms due to the slowdown in India’s economy. We also reduced our margin in the third quarter of fiscal year 2011 in order to increase our market share and promote new holiday packages as we continued to develop new travel destinations.
 
Other Revenue.  Our other revenue more than doubled to $2.5 million in fiscal year 2011 from $1.2 million in fiscal year 2010, primarily due to an increase in facilitation fees on travel insurance and the sale of rail tickets and bus tickets. We commenced the sale of rail tickets in June 2009.
 
Service Cost.  Service cost increased by 47.1% to $63.7 million in fiscal year 2011 from $43.3 million in fiscal year 2010, as a result of an increase in the transaction volume in our hotels and packages business.
 
Total Revenue Less Service Cost.  Our total revenue less service cost increased by 51.6% to $61.1 million in fiscal year 2011 from $40.3 million in fiscal year 2010, primarily as a result of a 53.0% increase in our air ticketing revenue less service cost in line with the increase in the number of transactions, as well as a 36.4% increase in our hotels and packages revenue less service cost, mainly reflecting the increase in the number of transactions. However, the total revenue less service cost was partially offset by reductions in the net revenue margins in our hotels and packages business to 11.5% in fiscal year 2011 from 14.0% in fiscal year 2010 and our air ticketing business to 7.4% in fiscal year 2011 from 7.6% in fiscal year 2010.
 
Personnel Expenses.  Personnel expenses decreased by 13.1% to $14.4 million in fiscal year 2011 from $16.6 million in fiscal year 2010, primarily as a result of a reduction in employee share-based compensation costs to $0.5 million in fiscal year 2011 from $6.8 million in fiscal year 2010. The employee share-based compensation costs for fiscal year 2010 were primarily attributable to grants of fully-vested employee share options in the first quarter of fiscal year 2010, as a result of options issued under our 2001 equity option plan and grants intended to replace prior options granted under MMT India’s share option plan. Excluding employee share-based compensation costs, personnel expenses increased by 41.7% in fiscal year 2011 from fiscal year 2010, primarily as a result of annual wage increases and an increase in average employee headcount.
 
Other Operating Expenses.  Other operating expenses increased by 44.5% to $40.7 million in fiscal year 2011 from $28.2 million in fiscal year 2010, primarily as a result of an increase in payment gateway charges, an increase in advertising and business promotion expenses, as a result of an increase in online searches, promotions on outbound tours and an increase in spending on customer relationship management, and outsourcing fees.
 
Depreciation and Amortization.  Our depreciation and amortization expenses increased by 21.7% to $1.9 million in fiscal year 2011 from $1.6 million in fiscal year 2010, primarily as a result of costs incurred for purchases of computers and software.


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Results from Operating Activities.  As a result of the foregoing factors, our results from operating activities improved to an operating profit of $4.1 million in fiscal year 2011 from a loss of $(6.0) million in fiscal year 2010. Excluding the effects of employee share-based compensation costs for both fiscal years 2010 and 2011, we would have recorded an operating profit of $0.8 million in fiscal year 2010 and an operating profit of $4.6 million in fiscal year 2011.
 
Finance Income.  Our finance income decreased to $1.6 million in fiscal year 2011 from $1.9 million in fiscal year 2010, primarily as a result of a decrease in interest income on term deposits due to our withdrawal of certain term deposits to pay down bank overdrafts, a lower rate of interest earned on Mauritius based term deposits and a reduction of the net gain recognized on the change in fair value of the embedded derivative component of our preferred shares, partially offset by a foreign exchange gain in fiscal year 2011.
 
Finance Costs.  Our finance costs increased by 70.9% to $3.5 million in fiscal year 2011 from $2.1 million in fiscal year 2010, primarily due to costs relating to our initial public offering of $2.1 million, partially offset by a decrease in foreign exchange loss. In addition, interest expenses on the liability portion of our preference shares were $1.1 million in fiscal year 2010 and $0.4 million in fiscal year 2011.
 
Income Tax Benefit (Expense).  We recognized income tax benefit of $2.7 million in accordance with our accounting policy on deferred tax for unutilized tax losses as on March 31, 2011, as management considered it probable that future taxable profits would be available. We had an income tax expense of $8,428 in fiscal year 2010.
 
Profit (Loss) for the Year.  As a result of the foregoing factors, including the effects of employee share-based compensation costs, our profit for fiscal year 2011 was $4.8 million, an improvement against a loss of $(6.2) million in fiscal year 2010. Excluding the effects of employee share-based compensation costs for both fiscal years 2010 and 2011, we would have recorded a net profit of $0.6 million in fiscal year 2010 and a net profit of $5.4 million in fiscal year 2011.
 
Fiscal Year 2010 Compared to Fiscal Year 2009
 
Revenue.  We had revenue of $83.6 million in fiscal year 2010, an increase of 21.9% over revenue of $68.6 million in fiscal year 2009.
 
Air Ticketing.  Revenue from our air ticketing business increased by 67.1% to $32.1 million in fiscal year 2010 from $19.2 million in fiscal year 2009. Our gross bookings increased by 56.6%, primarily due to a 41.3% growth in the number of transactions both as a result of an improvement in the overall air travel market as well as the continued increase in our domestic air ticket market share, and a 10.8% increase in the average value per transaction. Contributing to our revenue increase was also an improvement in our air ticketing net revenue margins from 7.2% in fiscal year 2009 to 7.6% in fiscal year 2010. The improvement in our air ticketing net revenue margins was mainly due to incentive fees paid to us from certain airlines, better commissions from certain consolidators and higher per-segment revenue earned from our GDS service provider in fiscal year 2010.
 
Hotels and Packages.  Revenue from our hotels and packages business increased by 3.4% to reach $50.3 million in fiscal year 2010 from $48.6 million in fiscal year 2009. Revenue increased at a slower rate as our hotels and packages gross bookings increased by 9.4% due to a reduction in average value per transaction by 18.9% from $644 in fiscal year 2009 to $522 in fiscal year 2010, as we sold more domestic packages in fiscal year 2010, which tend to have lower values as compared to international packages. Revenue less service cost from our hotels and packages business increased by 44.0% from $5.6 million in fiscal year 2009 to $8.0 million in fiscal year 2010, primarily due to a 34.8% increase in the number of hotels and packages transactions as well as higher net revenue margins of 14.0% in fiscal year 2010 compared to 10.6% in fiscal year 2009, as we were able to negotiate better rates with travel suppliers on account of increased volumes and also due to the slowdown in India’s economy in fiscal year 2010.
 
Other Revenue.  Our other revenue increased by 63.8% to $1.2 million in fiscal year 2010 from $0.7 million in fiscal year 2009, primarily as our advertising revenue more than doubled from sales of third-party advertisement space on our websites (a sales initiative we started in fiscal year 2009), and we earned


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$0.2 million in revenue from our rail and bus services in fiscal year 2010, compared to $0.01 million from our bus services in fiscal year 2009. We commenced the sale of rail tickets in June 2009.
 
Service Cost.  Service cost decreased slightly to $43.3 million in fiscal year 2010 from $43.6 million in fiscal year 2009, primarily as a result of a decrease in procurement cost for our hotel and packages services from $43.1 million in fiscal year 2009 to $42.3 million in fiscal year 2010 as we managed to negotiate better rates with our suppliers, partially offset by an increase in costs associated with the pre-purchase of air ticket inventory from $0.5 million in fiscal year 2009 to $1.0 million in fiscal year 2010.
 
Total Revenue Less Service Cost.  Our total revenue less service cost increased by 61.2% to $40.3 million in fiscal year 2010 from $25.0 million in fiscal year 2009, primarily as a result of a 66.2% increase in our air ticketing revenue less service cost in line with the increase in the number of transactions and the increase in commissions due to the increase in the value per transaction and higher net revenue margins, as well as a 44.0% increase in our hotels and packages revenue less service cost, mainly reflecting the increase in the number of transactions and our net revenue margins.
 
Personnel Expenses.  Personnel expenses increased by 71.1% to $16.6 million in fiscal year 2010 from $9.7 million in fiscal year 2009, mainly as result of a significant increase in our employee share-based compensation costs which were $6.8 million in fiscal year 2010, compared with $0.4 million in fiscal year 2009. This increase arose from grants of fully-vested employee share options in the first quarter of fiscal year 2010, both as a result of options issued under our 2001 equity option plan and grants intended to replace prior options granted under MMT India’s share option plan. The total of the remaining personnel expenses (which excludes our employee share-based compensation costs) increased by 5.7% in fiscal year 2010 primarily due to an increase in bonus accruals from $0.9 million in fiscal year 2009 to $1.6 million in fiscal year 2010, partly offset by a reduction in the overall average headcount during the fiscal year.
 
Other Operating Expenses.  Other operating expenses increased by 15.6% to $28.2 million in fiscal year 2010 from $24.4 million in fiscal year 2009, primarily as a result of higher outsourcing fees of $4.3 million in fiscal year 2010 compared with $3.1 million in fiscal year 2009 as we outsourced most of our call center operations and back office fulfillment functions in fiscal year 2010. We entered into an agreement with Intelenet Global Services, our second outsourcing service provider, in March 2009. In fiscal year 2010, we also recorded increases in payment gateway charges and advertising and business promotion expenses in line with the growth in our business.
 
Depreciation and Amortization.  Our depreciation and amortization expenses remained almost constant at $1.6 million in fiscal years 2009 and 2010.
 
Results from Operating Activities.  As a result of the foregoing factors, our results from operating activities improved from a loss of $(10.6) million in fiscal year 2009 to a loss of $(6.0) million in fiscal year 2010. Excluding the effects of employee share-based compensation costs for both fiscal years 2009 and 2010, we would have recorded an operating loss of $(10.2) million in fiscal year 2009 and an operating profit of $0.8 million in fiscal year 2010.
 
Finance Income.  Our finance income decreased significantly to $1.9 million in fiscal year 2010 from $6.3 million in fiscal year 2009, primarily as a result of the reduction of the net gain recognized on the change in fair value of the embedded derivative component of our preferred shares to $0.3 million in fiscal year 2010 from $5.0 million in fiscal year 2009 due to a reduction in the value of the anti-dilution option embedded in our preferred shares, partially offset by higher interest rates earned on our term deposits. The value of the option embedded in our preferred shares was reduced due to a lower probability of the anti-dilution option being exercised as we commenced preparation for our initial public offering.
 
Finance Costs.  Our finance costs decreased by 32.4% to $2.1 million in fiscal year 2010 from $3.0 million in fiscal year 2009, primarily as our impairment loss on trade and other receivables was reduced to $0.04 million in fiscal year 2010 from $1.0 million in fiscal year 2009. Our impairment loss on trade and other receivables in fiscal year 2009 included receivables under dispute with certain airlines as well as outstanding receivables due from Abacus after we terminated our contract with them.


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Income Tax Benefit (Expense).  Our company had an income tax benefit of $25,291 for fiscal year 2009. Our income tax expense for fiscal year 2010 was $8,428. Our company had unrecognized deferred tax assets of $13.1 million as of March 31, 2010. We have not recognized deferred tax benefits in respect of the cumulative tax losses of our Indian subsidiary, MMT India, as it has a limited history of taxable profits. We shall recognize a deferred tax asset in respect of such cumulative tax losses when it is probable that MMT India will be able to realize such tax losses. Under Indian tax laws, tax losses are permitted to be carried forward for a period of eight years and tax depreciation is permitted to be carried forward for an indefinite period.
 
Loss for the Year.  As a result of the foregoing factors, including the effects of our employee share-based compensation costs, our loss for the year improved from a loss of $(7.3) million in fiscal year 2009 to a loss of $(6.2) million in fiscal year 2010. Excluding the effects of employee share-based compensation costs for both fiscal years 2009 and 2010, we would have recorded a net loss of $(6.9) million in fiscal year 2009 and a net profit of $0.6 million in fiscal year 2010.
 
Our Selected Quarterly Results of Operations
 
The following table presents our selected consolidated quarterly results of operations for the nine fiscal quarters in the period ended March 31, 2011. This information should be read together with our audited consolidated financial statements and related notes included elsewhere in this prospectus. The selected consolidated quarterly financial information has been derived from our quarterly condensed consolidated financial statements not included in the prospectus. The unaudited quarterly condensed consolidated financial statements includes all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of our financial position and operating results for the quarters presented. Operating results for any quarter are not necessarily indicative of results for any future quarter or for a full year. There are many factors, including those discussed under “Risk Factors,” that could have a material adverse effect on our business and operating results.
 
                                                                         
    Three Months Ended  
    March 31,
    June 30,
    September 30,
    December 31,
    March 31,
    June 30,
    September 30,
    December 31,
    March 31,
 
    2009     2009     2009     2009     2010     2010     2010     2010     2011  
    (unaudited)
 
    (in thousands, except per share data)  
 
Revenue:
                                                                       
Air ticketing
  $ 5,464.3     $ 7,816.7     $ 7,338.8     $ 8,380.0     $ 8,584.0     $ 9,989.5     $ 10,280.7     $ 13,486.4     $ 13,866.2  
Hotels and packages
    8,819.0       14,558.1       9,383.8       14,115.0       12,231.0       23,222.3       13,020.7       21,461.0       16,853.9  
Other revenue
    271.7       252.2       241.8       351.0       307.9       510.9       527.1       845.5       657.2  
                                                                         
Total revenue
    14,555.1       22,627.0       16,964.4       22,846.0       21,122.8       33,722.8       23,828.5       35,792.9       31,377.3  
Service cost:
                                                                       
Procurement cost of hotels and packages services
    (7,448.9)       (12,360.4)       (7,857.0)       (11,808.3)       (10,266.5)       (19,863.6)       (10,960.6)       (18,511.5)       (14,315.2)  
Purchase of air ticket coupons
    (491.8)       (759.5)       (12.0)       (183.9)       (30.0)                          
Personnel expenses
    (2,269.6)       (8,774.9)       (2,419.1)       (2,436.2)       (2,931.7)       (3,455.6)       (3,357.5)       (3,862.2)       (3,723.8)  
Other operating expenses
    (5,854.4)       (5,996.6)       (6,115.0)       (7,360.3)       (8,688.6)       (8,695.2)       (8,731.4)       (11,479.6)       (11,792.7)  
Depreciation and amortization
    (369.4)       (364.5)       (382.9)       (402.3)       (420.0)       (449.0)       (453.8)       (496.3)       (511.5)  
                                                                         
Results from operating activities
    (1,879.1)       (5,628.9)       178.4       654.8       (1,214.1)       1,259.3       325.2       1,443.3       1,034.1  
Net finance income (costs)
    (946.7)       46.5       (159.3)       (20.0)       (56.0)       52.1       (2,120.9)       183.6       (38.8)  
                                                                         
Profit (Loss) before tax
    (2,825.8)       (5,582.3)       19.1       634.8       (1,270.1)       1,311.4       (1,795.7)       1,626.9       995.3  
Income tax benefit (expense)
    25.3       (3.4)             0.5       (5.6)       (1.2)             1.2       2,691.7  
                                                                         
Profit (Loss) for the period
  $ (2,800.5)     $ (5,585.7)     $ 19.1     $ 635.4     $ (1,275.7)     $ 1,310.2     $ (1,795.7)     $ 1,628.1     $ 3,687.0  
                                                                         
Profit (Loss) per ordinary share:
                                                                       
Basic
  $ (0.16)     $ (0.32)     $ 0.001     $ 0.04     $ (0.07)     $ 0.07     $ (0.07)     $ 0.05     $ 0.11  
Diluted
  $ (0.16)     $ (0.32)     $ 0.001     $ 0.02     $ (0.07)     $ 0.05     $ (0.07)     $ 0.04     $ 0.10  


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The following table presents certain selected consolidated financial and operating data derived from unaudited consolidated financial statements for the nine fiscal quarters in the period ended March 31, 2011.
 
                                                                         
    Three Months Ended  
    March 31,
    June 30,
    September 30,
    December 31,
    March 31,
    June 30,
    September 30,
    December 31,
    March 31,
 
    2009     2009     2009     2009     2010     2010     2010     2010     2011  
    (in thousands, except percentages)  
 
Number of transactions:
                                                                       
Air ticketing
    350.2       350.4       460.8       477.3       478.4       590.5       620.9       759.2       854.0  
Hotels and packages
    21.6       26.1       22.2       33.3       28.0       42.6       31.4       50.7       51.2  
Revenue less service cost:
                                                                       
Air ticketing
  $ 4,972.6     $ 7,057.2     $ 7,326.8     $ 8,196.1     $ 8,553.9     $ 9,989.5     $ 10,280.7     $ 13,486.4     $ 13,866.2  
Hotels and packages
    1,370.1       2,197.7       1,526.8       2,306.6       1,964.5       3,358.7       2,060.2       2,949.6       2,538.6  
Other revenue
    271.7       252.2       241.8       351.0       307.9       510.9       527.1       845.5       657.2  
                                                                         
    $ 6,614.4     $ 9,507.1     $ 9,095.4     $ 10,853.7     $ 10,826.3     $ 13,859.2     $ 12,867.9     $ 17,281.4     $ 17,062.0  
                                                                         
Gross bookings:
                                                                       
Air ticketing
  $ 60,771.3     $ 89,539.4     $ 94,208.8     $ 106,964.9     $ 117,889.9     $ 146,479.9     $ 138,613.3     $ 183,390.3     $ 179,363.5  
Hotels and packages
    9,763.9       16,112.9       10,598.3       16,440.8       14,121.0       28,164.1       17,374.7       27,214.8       21,854.5  
                                                                         
    $ 70,535.2     $ 105,652.3     $ 104,807.1     $ 123,405.7     $ 132,010.9     $ 174,644.0     $ 155,988.0     $ 210,605.1     $ 201,218.0  
                                                                         
Net revenue margins:
                                                                       
Air ticketing
    8.2 %     7.9 %     7.8 %     7.7 %     7.3 %     6.8 %     7.4 %     7.4 %     7.7 %
Hotels and packages
    14.0 %     13.6 %     14.4 %     14.0 %     13.9 %     11.9 %     11.9 %     10.8 %     11.6 %
Combined net revenue margin for air ticketing and hotels and packages
    9.0 %     8.8 %     8.4 %     8.5 %     8.0 %     7.6 %     7.9 %     7.8 %     8.2 %
 
Revenue from our air ticketing business has experienced continued growth since the fourth quarter of fiscal year 2009, except for the second quarter of fiscal year 2010. Our air ticketing revenue in the second quarter of fiscal year 2010 was lower than the first quarter because we sold a larger number of air tickets in the first quarter for which we had pre-purchased air tickets as we managed to secure air ticket inventory at attractive rates. Revenue from the sale of these pre-purchased air tickets was accounted for on a “gross” basis as we assumed inventory risk on such tickets. Revenue less service cost from our air ticketing business increased in all nine fiscal quarters ended March 31, 2011, growing from $5.0 million in the fourth quarter of fiscal year 2009 to $13.9 million in the fourth quarter of fiscal year 2011.
 
We experience seasonal fluctuations in our hotels and packages segment, with revenues, number of transactions and gross bookings being higher in the first and third quarters of each fiscal year, coinciding with the summer holiday travel season and calendar year-end holiday travel season in India, respectively. Revenue less service cost from our hotels and packages business increased from $1.4 million in the fourth quarter of fiscal year 2009 to $2.5 million in the fourth quarter of fiscal year 2011. In the third quarter of fiscal year 2011, revenue less service cost was $2.9 million as we reduced our margin in the third quarter of fiscal year 2011 to increase our market share and promote new holiday packages as we continued to develop new travel destinations.
 
Our air ticketing net revenue margins decreased from 8.2% in the fourth quarter of fiscal year 2009 to 7.7% in the fourth quarter of fiscal year 2011, reflecting the reduction in service fees earned on our domestic air ticketing business in order to attract more customers and gain market share.
 
Net revenue margins for our hotels and packages business ranged from 13.6% to 14.4% from the fourth quarter of fiscal year 2009 to the fourth quarter of fiscal year 2010 due to the comparatively favorable rates provided by travel suppliers during the slowdown in India’s economy. In fiscal year 2011, our net revenue margins decreased, reaching 11.6% in the fourth quarter of fiscal year 2011 as India’s economy improved in fiscal year 2011 and rates provided by our hotel and packages travel suppliers increased without a corresponding increase in the rates we


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charged to our customers, in order to increase the volume of our transactions. Our hotels and packages net revenue margins improved to 14.4%, in the second quarter of fiscal year 2010 from 13.6% in the first quarter of fiscal year 2010 due to a reduction in the cost of procurement of services from our suppliers as this period was the off peak season for travel and holidays. Our net revenue margins decreased from 14.4% in the second quarter of fiscal year 2010 to 13.9% in the fourth quarter of fiscal year 2010, as we reduced margins in our domestic hotels and packages business to increase our sales of domestic packages. This was partially offset by increasing our margin in our outbound hotels and packages business. Our net revenue margins decreased to 10.8% in the third quarter of fiscal year 2011 as we reduced margin in that quarter to increase our market share and promote new holiday packages as we continued to develop new travel destinations.
 
Our historical quarterly results of operations have also been impacted by our employee share-based compensation costs. Our personnel expenses of $8.8 million in the first quarter of fiscal year 2010 included $6.6 million in employee share-based compensation costs relating to grants of fully-vested employee share options awarded in that quarter, both on account of options issued under our 2001 equity option plan and options issued to replace prior options granted under MMT India’s share option plan. The overall increase in our personnel expenses was a result of salary increases, increased contributions to defined contribution plans as well as employee welfare expenses, and in the fourth quarter of fiscal year 2010 in particular, due to an increase of $0.3 million in the final accrued bonus payment for fiscal year 2010, compared with the prior quarters of fiscal year 2010. Our personnel expenses, including employee share-based compensation for the fourth quarter of fiscal year 2011 was $3.7 million, up from $2.9 million in the fourth quarter of fiscal year 2010 mainly as a result of annual wage increases and an increase in average employee headcount.
 
Other operating expenses increased from $5.9 million in the fourth quarter of fiscal year 2009 to $11.8 million in the fourth quarter of fiscal year 2011, primarily as a result of increases in payment gateway charges, advertising and business promotion expenses and outsourcing fees. We spent less on marketing and advertisements during the second quarter of fiscal year 2010 as the second quarter does not coincide with the holiday or vacation season in India and we also reduced our marketing expenditure during that quarter in respect of our United States-India inbound air ticketing business. Contributing to increases in our other operating expenses were increases in payment gateway charges due to the growth in our number of transactions. Our advertising and business promotion expenses were $3.7 million in the fourth quarter of fiscal year 2011 compared with $3.5 million in the fourth quarter of fiscal year 2010, primarily as a result of increases in advertising expenses for online search engines, promotions on outbound tours and increases in spending on customer relationship management in the period. Since the first quarter of fiscal year 2009, we have recorded quarter-on-quarter increases in our outsourcing fees as we continued to outsource more of our call center operations and back office fulfillment functions as our business grew.
 
Our depreciation and amortization increased from $0.37 million in the fourth quarter of fiscal year 2009 to $0.5 million in the fourth quarter of fiscal year 2011, primarily as a result of our purchases of computers, software and motor vehicles.
 
As a result of the foregoing, our results from operating activities, excluding the effects of employee share-based compensation costs, improved from a loss of $(1.8) million in the fourth quarter of fiscal year 2009 to profits of $1.0 million, $1.4 million, $0.5 million, $1.6 million and $1.1 million in the first quarter of fiscal year 2010 and in the first, second, third and fourth quarters of fiscal year 2011, respectively, but recorded a loss of $(1.1) million in the fourth quarter of fiscal year 2010.
 
We had net finance costs of $(0.9) million in the fourth quarter of fiscal year 2009 and net finance income of $0.05 million in the first quarter of fiscal year 2010. The fiscal year 2009 net finance cost was primarily as a result of an impairment loss on trade and other receivables of $(1.0) million in the fourth quarter of fiscal year 2009 arising out of receivables under disputes with certain airlines as well as outstanding receivables due from Abacus after we terminated our contract with Abacus. We did not record any impairment loss on trade and other receivables in the first quarter of fiscal year 2010. The impairment loss on trade and other receivables in the fourth quarter of fiscal year 2009 was partially offset by the net gain recognized on the change in fair value of the embedded derivative component of our preferred shares of $0.3 million. The net gain recognized on the change in fair value of the embedded derivative component in our preferred shares in the fourth quarter of fiscal year 2009 was due to the reduction in value of such option from the prior fiscal quarter as a result of a lower probability of the anti-dilution


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option being exercised. The lower probability of such anti-dilution option being exercised was due to the likelihood of our recognizing operating cash profits in the near term which could be used to meet our funding requirements and also due to higher probability of our funding requirements being met through an initial public offering. Between the second and third quarters of fiscal year 2010, the net gain recognized on the change in fair value of the embedded derivative component of our preferred shares increased from $0.01 million to $0.2 million, as a result of a further significant decrease in the value of such embedded derivative option due to a further reduction in probability of the anti-dilution option being exercised as we recognized a profit in both the second and third quarters of fiscal year 2010. We had net finance costs of $0.2 million in the second quarter of fiscal year 2010 primarily as a result of lower finance income compared to the two previous fiscal quarters, as certain of our fixed deposits matured and we earned lower interest rates on certain of our new fixed deposits as interest rates declined during that period. In the second quarter of fiscal year 2011, we had net finance costs of $2.1 million, primarily due to initial public offering costs, partially offset by a decrease in foreign exchange loss. In the third quarter of fiscal year 2011, we earned net finance income of $0.2 million, primarily as a result of $0.2 million of interest on fixed deposits and $0.1 million of foreign exchange gains partially offset by interest expenses. In the fourth quarter of fiscal year 2011, we had net finance costs of $0.04 million, primarily as a result of $0.3 million of impairment loss on receivables and interest expense partially offset by interest on fixed deposits.
 
Our profit (loss) before tax, including the effects of employee share-based compensation costs, was a loss of $(2.8) million in the fourth quarter of fiscal year 2009 and a loss of $(5.6) million in the first quarter of fiscal year 2010, improving to a profit of $0.02 million and $0.6 million in the second and third quarters of fiscal year 2010, respectively, and reducing to a loss of $(1.3) million in the fourth quarter of fiscal year 2010. In fiscal year 2011, our profit (loss) before tax, including the effects of employee share-based compensation costs, was a profit of $1.3 million, a loss of $(1.8) million, a profit of $1.6 million and a profit of $1.0 million in the first, second, third and fourth quarters, respectively.
 
Liquidity and Capital Resources
 
Historically, our sources of liquidity have principally been proceeds from the sale of our convertible preferred shares and ordinary shares, 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.
 
As of March 31, 2011, our primary sources of liquidity were $47.9 million of cash and cash equivalents and $16.9 million in term deposits with various banks in India, which are available on demand. Such term deposits are used to secure bank overdraft facilities with various banks in India, including HDFC Bank and ICICI Bank, which are used for working capital purposes. As of March 31, 2011, our total bank overdrafts were $3.9 million, which were all from HDFC Bank.
 
Our trade and other receivables primarily comprise commissions, incentive or other payments owing to us from airlines, 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 increased from $12.4 million as of March 31, 2010 to $12.9 million as of March 31, 2011, primarily as a result of the growth of our business.
 
Our trade and other receivables increased from $5.4 million as of March 31, 2009 to $12.4 million as of March 31, 2010, primarily as a result of increased receivables of $2.1 million from our GDS supplier as a result of the payment terms under our contract with our current GDS supplier. We entered into an agreement with Amadeus in February 2009 under which our service fees are paid on a semi-annual basis, compared to a quarterly basis under our contract with our previous GDS supplier. Also contributing to the increase in our trade and other receivables was an increase in trade receivables of $1.2 million mainly in performance-linked incentives due from airlines and an increase in receivables of $2.3 million due from our corporate and retail customers in line with the growth of our business. We also recorded a higher amount of interest accrued but not due on our term deposits of $1.7 million as of March 31, 2010, compared with $0.9 million as of March 31, 2009, as a result of higher interest due on one of our term deposits.


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Our other current assets primarily consist of deposits and advances to our suppliers to secure better prices and availability of inventory in future periods. Our other current assets increased significantly from $7.5 million as of March 31, 2010 to $17.9 million as of March 31, 2011, primarily due to increases in advances to airlines primarily for fiscal year 2012 by $7.4 million and increases in advances to hotels by $1.9 million due to the growth of our business.
 
Our other current assets increased significantly from $3.7 million in fiscal year 2009 to $7.5 million in fiscal year 2010, primarily due to increases in advances made to our airline and hotel suppliers. The increase in advances to our suppliers as of March 31, 2010 as compared with March 31, 2009 was also due to a four-day bank holiday and weekend period in India from April 1 to April 4, 2010, during which we extended advances to our suppliers to take into account the increase in business during this holiday period.
 
We also have a secured working capital facility from HDFC Bank for cash credit of up to Rs. 100 million ($2.3 million) and an overdraft facility of Rs. 400 million ($9.0 million) and an overdraft facility from YES Bank of Rs. 150 million ($3.4 million). The cash credit is secured by an assignment of certain of our credit card receivables and charges over our current assets and fixed assets. As of March 31, 2011, interest is payable monthly on such facilities, at a rate of 12.25%, 8.49% (weighted average fixed deposit rate plus 1.00%) and 11.75% (base rate plus 3.75%) per annum, respectively. As of March 31, 2011, we had drawn down $3.9 million against our HDFC Bank facilities and had not drawn down against our YES Bank facility.
 
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 obtain bank guarantees to secure our obligations to them. As of March 31, 2011, MMT India had obtained approximately $18.4 million in bank guarantees mainly from YES Bank in favor of International Air Transport Association, or IATA, against any payment default by us to all airlines participating in IATA’s bill settlement plan, and MakeMyTrip.com Inc. had obtained certificates of deposit totaling approximately $0.7 million for purposes of providing guarantees to various international airlines. Apart from the foregoing borrowings, 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, cash flow from operations and the proceeds from this offering 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 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
    2009   2010   2011
    (in millions)
 
Net cash from/(used in) operating activities
  $ (3.1 )   $ 5.2     $ (6.3 )
Net cash from/(used in) investing activities
    (11.8 )     3.5       (3.0 )
Net cash from/(used in) financing activities
    14.3       (0.2 )     52.4  
Net increase/(decrease) in cash and cash equivalents
    (0.6 )     8.5       43.0  
Cash and cash equivalents at beginning of period
    (2.4 )     (2.4 )     5.3  
Effect of exchange rate fluctuations on cash held
    0.6       (0.7 )     (0.5 )
Cash and cash equivalents at end of period
    (2.4 )(1)     5.3 (2)     47.9 (3)
 
 
*  not meaningful
 
Notes:
(1) Includes $7.9 million of bank overdrafts and excludes $16.0 million of term deposits not classified as “cash and cash equivalents.”
 
(2) Includes $4.0 million of bank overdrafts and excludes $14.5 million of term deposits not classified as “cash and cash equivalents.”
 
(3) Includes $3.9 million of bank overdrafts and excludes $16.9 million of term deposits not classified as “cash and cash equivalents.”


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Net Cash From/(Used In) Operating Activities.  In fiscal year 2011, net cash flows used in operating activities were $6.3 million, primarily resulting from total collections against revenue of $120.2 million, offset by total cash payments to suppliers in relation to service costs incurred of $73.2 million and total cash outflows in respect of personnel and other operating expenses of $53.3 million.
 
Total collections against revenue were $120.2 million, compared to revenue of $124.7 million recognized in fiscal year 2011. This was primarily due to an increase in receivables from airlines of $2.3 million, partially offset by an increase in advances received from our customers of $3.6 million. There was also an increase in withholding tax deductions for commissions or payments received from airlines and other suppliers by $3.1 million which reduced our collections. We also recognized deferred income of $2.6 million as revenue during fiscal year 2011 in relation to an upfront incentive payment which was received in the previous fiscal year from our current GDS service provider.
 
Total cash payments to suppliers in relation to service costs incurred in fiscal year 2011 were $73.2 million, as compared with $63.7 million in service costs accrued. This was primarily due to deposits and advances paid to suppliers for the promotion of holiday products, including advances to airlines for fiscal year 2012.
 
Total cash outflows in respect of personnel and other operating expenses were $53.3 million, in comparison to $55.1 million in such expenses accrued in fiscal year 2011. This was primarily due to an increase in other current liabilities by $1.1 million and non-cash employee share-based compensation costs of $0.5 million.
 
Total collections against revenue were $80.9 million, compared to revenue of $83.6 million recognized in fiscal year 2010. This was primarily due to the payment terms under our contract with our current GDS service provider entered into in February 2009, which provided for the payment of segment incentives and service fees on a semi-annual basis. Service fees for October 2009 to March 2010 were due within a 45-day period following the end of such period. As a result, as of March 31, 2010, we had an increase of $1.9 million in outstanding receivables due from our GDS service provider. During fiscal year 2010, we also had an arrangement with one of our airline suppliers, which provided for incentive payments for the period from November 2009 to March 2010 to be paid by May 2010. Primarily, as a result, our receivables due from airlines increased by $1.1 million. We also recorded an increase in receivables due from our corporate and retail customers of $2.0 million in line with the overall growth of our business. We also recognized deferred income amounting to $0.6 million as revenue during fiscal year 2010 in relation to an upfront incentive payment which was received in the previous fiscal year from our current GDS service provider. Such reduction in collections from customers was partially offset by an increase of $2.7 million in advances received from or refunds due to customers primarily in line with the growth in our business.
 
Total cash payments to suppliers in relation to service costs incurred in fiscal year 2010 were $40.1 million, as compared with $43.3 million in service costs accrued. This was primarily due to an increase in credit of $5.1 million made available to us from a number of our airline and hotel suppliers due to the growth in our business. We also recorded service costs of $0.8 million in respect of air ticket coupons utilized in fiscal year 2010 but which had already been paid for in fiscal year 2009, so no cash outflow was required in fiscal year 2010. The foregoing was partly offset by an increase of $2.9 million in advances paid to our suppliers, as a result of an increase in $1.8 million in floating deposits held with our low cost airline suppliers. Such floating deposits are provided to the airlines in respect of ticket sales and are generally utilized within a one week period. The increase in advances to low cost airlines as of March 31, 2010 as compared with March 31, 2009 was also due to a four-day bank holiday and weekend period in India from April 1, 2010 to April 4, 2010, during which we extended advances to our low cost airline suppliers to ensure regular sale of tickets during such period. Further increasing our advances to suppliers in fiscal year 2010 was a $0.3 million floating advance provided to IRCTC in respect of our rail ticketing business which commenced in fiscal year 2010.
 
Total cash outflows in respect of personnel and other operating expenses were $35.5 million, in comparison to $44.7 million in such expenses accrued in fiscal year 2010. This was primarily due to an expense relating to non-cash employee share-based compensation of $6.8 million, an increase in accrued variable bonus expense of $0.6 million which were not paid as of March 31, 2010 and also an increase in marketing and other expenses in the


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last quarter of fiscal year 2010 due to the growth of our business and in respect of the upcoming summer season in 2010, which remained unpaid as of March 31, 2010. These increases in expenses were partly offset by an increase in prepaid expenses by $0.2 million primarily as a result advances made to our CRM service provider.
 
In fiscal year 2009, cash flows used in operating activities exceeded cash flows generated from operating activities by $3.1 million, primarily resulting from total collections against revenue of $75.1 million, offset by total cash payments to suppliers in relation to service costs incurred of $44.4 million as well as cash outflows in respect of personnel and other operating expenses of $33.9 million.
 
Total collections against revenue were $75.1 million, compared to revenue of $68.6 million recognized in fiscal year 2009. Our cash collections were higher than revenue recognized as we achieved an increase in deferred income of $1.4 million as a result of upfront incentives received from Amadeus, our current GDS provider, as well as Apollo Munich Health Insurance Company Limited. We also achieved better collections and collected receivables from the previous fiscal year from our GDS service provider and airlines, which resulted in a reduction in outstanding receivables due from our GDS service provider by $1.6 million and receivables due from airlines by $1.8 million. There were also increases in advance received from customers or refunds due to customers by $2.7 million due to the growth of our business. This was partly offset by increases in receivables due from our corporate and retail customers by $0.7 million in line with the growth of our business. There was also an increase in withholding tax deductions for commissions or payments received from airlines and other suppliers by $0.3 million which reduced our collections.
 
Total cash payments to suppliers in relation to service costs incurred in fiscal year 2009 was $44.4 million, as compared with $43.6 million in service costs accrued. This was primarily due to $0.8 million we paid for pre-purchased air ticket coupons during fiscal year 2009 which were utilized and expensed in fiscal year 2010.
 
Total cash outflows in respect of personnel and other operating expenses were $33.9 million, in comparison to $34.0 million in such expenses accrued in fiscal year 2009.
 
Net Cash From/(Used In) Investing Activities.  In fiscal year 2011, cash used in investing activities was $3.0 million, primarily as a result of cash deposited in our term deposits with banks amounting to $2.5 million (computed using average exchange rates for the period), and net investment of $1.2 million in fixed assets, as well as investment of $1.6 million in software and website development projects, partially offset by interest received on our term deposits. In fiscal year 2010, cash from investing activities was $3.5 million, primarily as a result of withdrawal of certain of our term deposits with banks amounting to $3.7 million (computed using average exchange rates for the year), which were used to pay down our bank overdrafts, and interest received on our term deposits of $0.9 million, partially offset by our investment of $0.7 million in fixed assets as well as investment of $0.5 million in software. In fiscal year 2009, cash used in investing activities was $11.8 million, primarily as a result of our term deposits with banks amounting to $11.5 million (computed using average exchange rates for the year), our investment of $7.8 million and subsequent sale of our investment amounting to $7.8 million in certain short term mutual funds, our investment of $0.6 million in fixed assets as well as investment of $0.3 million in our websites, partially offset by interest received on our term deposits of $0.6 million.
 
Net Cash From/(Used In) Financing Activities.  In fiscal year 2011, cash from financing activities was $52.4 million, primarily as a result of net proceeds from the issuance of ordinary shares in our initial public offering of $52.0 million. Additionally, we collected $1.3 million as proceeds from the issuance of shares on exercise of share options by certain of our employees. The cash from these issuances was partially offset by $0.3 million paid for the acquisition of additional interest in MMT India that we purchased from certain of our ex-employees and $0.6 million interest paid on our bank overdrafts and working capital facilities. In fiscal year 2010, cash used in financing activities was $0.2 million, primarily as a result of interest paid on bank overdrafts and our working capital facilities of $0.3 million, partially offset by the increase in certain motor vehicle loans. In fiscal year 2009, cash from financing activities was $14.3 million, primarily as a result of the $15.0 million proceeds from our issuance of convertible preferred shares in May 2008. The cash from this issuance was partially offset by interest paid on bank overdrafts and our working capital facilities of $0.6 million in fiscal year 2009.


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Capital Expenditures
 
We have historically financed our capital expenditure requirements with cash flows from operations, as well as through the sale of our convertible and redeemable preferred shares and ordinary shares.
 
We made capital expenditures of $0.9 million, $1.1 million and $2.8 million in fiscal years 2009, 2010 and 2011, respectively. As of March 31, 2011, we had committed capital expenditures of $2.5 million, of which we expect to spend $2.0 million during fiscal year 2012 and the remainder over the next five years. In addition, we expect to spend an additional approximately $5.0 million to $6.0 million on capital expenditures during fiscal year 2012. The capital expenditures in the past principally consisted of purchases of servers, workstations, computers, computer software, leasehold improvements and other items related to our technology platform and infrastructure, upgrading of our websites, as well as improvements to our leasehold premises.
 
Contractual Obligations
 
The following table sets forth our contractual obligations as of March 31, 2011. Other than the lease obligations specified below, we do not have any long-term commitments:
 
                                         
    Payment Due by Period
                    More than
Contractual Obligations   Total   Less than 1 year   1-3 years   3-5 years   5 years
    (in thousands)
 
Operating lease obligations(1)
  $ 8,564.0     $ 1,561.8     $ 3,169.4     $ 2,638.2     $ 1,194.6  
Finance lease obligations(2)
    30.3       11.3       19.0              
Purchase obligations(3)
    2,464.7       1,967.9       331.2       165.6        
Bank overdraft(4)
    3,856.0       3,856.0                    
Employee Benefits(5)
    667.1                          
 
 
Notes: (1) Operating lease obligations relate to our leasing arrangements for our various office premises.
 
(2) Finance lease obligations relate to our leasing arrangements for motor vehicles used in our business.
 
(3) We enter into purchase orders from time to time for various equipment or other requirements for our business.
 
(4) Secured against term deposits.
 
(5) Employee benefits in the statement of financial position include $667,050 in respect of employee benefit obligation. For this amount, the extent of the amount and timing of repayment/settlement is not reliably estimable or determinable at present and accordingly have not been disclosed in the table above.
 
Off-Balance Sheet Arrangements
 
As of March 31, 2011, MMT India had obtained approximately $18.4 million in bank guarantees mainly from YES Bank in favor of IATA, against any payment default by us to all airlines participating in IATA’s bill settlement plan, and MakeMyTrip.com Inc. had obtained certificates of deposit totaling approximately $0.7 million for purposes of providing guarantees to various international airlines. 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.
 
Inflation
 
Inflation in India has not had a material impact on our historical results of operations included in this prospectus.
 
Quantitative and Qualitative Disclosures about Market Risk
 
Our business activities are exposed to a variety of market risks, including credit risk, foreign currency risk and interest rate risk.
 
Credit Risk.  Financial instruments that potentially subject us to concentrations of credit risk consist principally of term deposits, cash equivalents, and trade and other receivables. By their nature, all such financial instruments involve risks, including the credit risk of non-performance by counterparties. Our cash


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equivalents, bank balances and term deposits are placed with banks with high investment grade credit ratings, and our term deposits may be withdrawn at any time prior to maturity except that this would result in a lower interest rate. Trade and other receivables are typically unsecured and arise mainly from commissions and incentive payments owing to us from our airline suppliers, receivables from our hotel suppliers which represent amounts owing to us from deposits we place with such hotels, and receivables from our corporate and retail customers to whom we typically extend credit periods. We review the credit worthiness of our clients to which we have granted credit terms in the normal course of the business. We believe there is no significant risk of loss in the event of non-performance of the counterparties to these financial instruments, other than the amounts already provided for in our financial statements. See note 30 to our audited consolidated financial statements for additional information relating to our exposure to credit risk.
 
Foreign Exchange Risk.  We are exposed to movements in currency exchange rates, particularly those related to the US dollar and the Indian Rupee. As the functional currency of MMT India, our key operating subsidiary, is the Indian Rupee, our exposure to foreign currency risk primarily arises in respect of our non-Indian Rupee-denominated trade and other receivables, trade and other payables and cash and cash equivalents, which were $3.6 million, $11.0 million and $1.0 million, respectively, as of March 31, 2011, and $6.8 million, $5.6 million and $1.1 million, respectively, as of March 31, 2010. Based on our operations in fiscal year 2011, a 10.0% appreciation of the US dollar against the Indian Rupee as of March 31, 2011, assuming all other variables remained constant, would have decreased our profit for the year by $0.6 million. Similarly, a 10.0% depreciation of the US dollar against the Indian Rupee as of March 31, 2011, assuming all other variables remained constant, would have increased our profit for the year by $0.4 million. Based on our operations in fiscal year 2010, a 10.0% appreciation of the US dollar against the Indian Rupee as of March 31, 2010, assuming all other variables remained constant, would have decreased our loss for the year by $0.2 million. Similarly, a 10.0% depreciation of the US dollar against the Indian Rupee as of March 31, 2010, assuming all other variables remained constant, would have increased our loss for the year by $0.2 million.
 
We are also exposed to movements between the US dollar and the Indian Rupee in our operations, as approximately 9.1% and 7.2% of our revenue for fiscal years 2010 and 2011, respectively, was generated by MMT India from its air ticketing business and received in US dollars although our expenses are generally incurred in Indian Rupees. 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. While we do incorporate margins in our pricing to cover any adverse fluctuations in foreign exchange rates, there can be no assurance that such margins will adequately protect us from adverse fluctuations in foreign exchange rates and hence our earnings remain susceptible to foreign exchange rate fluctuations. However as this risk associated with currency exchange is largely confined to our non-Indian Rupee revenue, we believe our exposure is minimal and immaterial.
 
Interest Rate Risk.  Our exposure to interest rate risk for changes in interest rates relates primarily to our term deposits and bank overdrafts. As of March 31, 2011, we had fixed rate financial instruments totaling $16.9 million, consisting of our term deposits, and variable rate financial instruments totaling $3.9 million, consisting of our bank overdrafts. As of March 31, 2010, we had fixed rate financial instruments totaling $55.4 million (including term deposits totaling $14.5 million and $40.8 million of preferred shares which converted into ordinary shares upon the completion of our initial public offering), and variable rate financial instruments totaling $4.0 million, consisting of our bank overdrafts. We have not used any derivative financial instruments to hedge interest rate risk. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. Our future interest income and financing cost may fluctuate in line with changes in interest rates. We do not account for any fixed rate financial instruments at fair value through profit or loss. Accordingly, a change in interest rates as of March 31, 2011 would not have affected our profit or loss. Based on our consolidated balance sheet as of March 31, 2011, a sensitivity analysis shows that an increase of 100 basis points in interest rates as of March 31, 2011 would have decreased profit or increased loss by $0.04 million and would not have had any impact on our equity. Similarly, a decrease of 100 basis points in interest rates as of March 31, 2011 would have increased profit or decreased loss by $0.04 million and would not have had any impact on our equity.


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New Accounting Standards and Interpretations Not Yet Adopted by Our Group
 
IFRS 9 ’Financial Instruments’, is part of the IASB’s wider project to replace IAS 39 ’Financial Instruments: Recognition and Measurement’. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets, amortized cost and fair value. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. The effective date for IFRS 9 is annual periods beginning on or after January 1, 2013 with early adoption permitted. The Group is in the process of evaluating the impact of the new standard.
 
Improvements to IFRS- In May 2010, the IASB published “Improvements to IFRSs 2010” — a collection of eleven amendments to six International Financial Reporting Standards — as part of its program of annual improvements to its standards, which is intended to make necessary, but non-urgent, amendments to standards that will not be included as part of another major project. The amendments resulting from this standard mainly have effective dates for annual periods beginning on or after July 1, 2010, although entities are permitted to adopt them earlier. The Group is evaluating the impact of these amendments on the Group’s consolidated financial statements.
 
IAS 24, “Related Party Disclosure (revised 2009)”, requires disclosure of related party relationships, transactions and outstanding balances, including commitments, in the consolidated and separate financial statements of a parent, venturer or investor presented in accordance with IAS 27 Consolidated and Separate Financial Statements. This Standard also applies to individual financial statements. These amendments are effective for accounting periods beginning on or after January 1, 2011. The Group is evaluating the impact of these amendments on the Group’s consolidated financial statements.


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INDUSTRY OVERVIEW
 
The information in this section is derived from market research reports, analyst reports, news articles and other publicly available sources, including the United States Central Intelligence Agency “World Factbook,” or the CIA factbook; Euromonitor International, “Consumer Finance in India,” 2010 and Tourism Flows Outbound — India, June 2010, or Euromonitor; Forrester Research, Inc. “Global Online Population Forecast, 2009 to 2014,” August 2010, or Forrester; Internet World Stats (statistics available at www.internetworldstats.com), or Internet World Stats; Netscribes Inc. “Competitive Intelligence on leading OTA players in India,” March 2010 and “Online Travel Industry — India,” June 2009, or Netscribes; World Travel & Tourism Council “Travel & Tourism Economic Impact 2010: India,” February 2010 and “Top 10 Tables,” March 2010, or the WTTC; and The Economic Times.
 
We have also relied on reports by PhoCusWright, a company founded and controlled by Mr. Philip C. Wolf, one of our directors, including “Indian Online Travel Overview,” September 2010, “Indian Online Travel Intermediary Overview,” March 2010, “Asia Pacific Online Travel Overview,” August 2009, and “U.S. Online Travel Overview,” November 2009. See “Related Party Transactions — Transactions with PhoCusWright” for details of our transactions with PhoCusWright.
 
Overview of the Indian Economy
 
According to the CIA factbook, India is one of the world’s most populous countries with an estimated population of over 1.19 billion by July 2011. India’s gross domestic product, or GDP, on a purchasing power parity basis was approximately $4,046 billion in 2010, making it the fifth largest economy in the world after the European Union, the United States, China and Japan. According to the CIA factbook, economic liberalization, including reduced controls on foreign trade and investment, began in the early 1990s and has served to accelerate the country’s GDP growth, which has averaged more than 7.0% annually since 1997. In 2010, the Indian economy rebounded robustly from the global financial crisis, in large part because of strong domestic demand, and grew at 8.3% year-on-year, making it the third fastest growing economy globally in 2010 for countries with GDP over $150 billion.


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Changing Demographics in India
 
Economic liberalization in India, which began in 1991, transformed Indian demographics through rising income levels and changing consumption patterns. As reported by The Economic Times on February 6, 2011, the country’s income pyramid is expected to change, with India’s middle class (India’s middle class is defined as households with annual income of between Rs. 340,000 to Rs. 1,700,000) expected to grow by over three times from 160 million people currently to 547 million people by 2026. With a growing population, the creation of a large middle class and rising incomes, the percentage of spending on discretionary items is expected to rise. According to Netscribes, travel is one of the major areas of discretionary spending in India.
 
(CHART)
 
 
Source: The Economic Times
 
Travel and Tourism Industry in India
 
The Indian travel and tourism industry is large and growing rapidly. According to the WTTC, India’s travel and tourism industry contributed Rs. 1,741.2 billion to India’s GDP in 2009 and is expected to contribute Rs. 1,970.1 billion to India’s GDP in 2010. India is one of the fastest growing countries in the world in terms of its travel and tourism industry. The Indian travel and tourism industry is expected to grow at an annual rate of 10.2% over the next 10 years. Further, the WTTC expects that, as a result of the strong growth rate in the Indian travel and tourism industry, over the next 10 years, India will become one of the top 10 travel and tourism markets in the world in terms of the absolute size of its market.


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Country Rankings for Travel and Tourism Direct Industry GDP in 2020
 
                 
Rank   Country    
        ($ in billions)
 
  1     United States     916.5  
  2     China     500.7  
  3     Japan     215.8  
  4     United Kingdom     148.2  
  5     France     143.0  
  6     Spain     123.7  
  7     Italy     121.8  
  8     India     110.6  
  9     Germany     103.7  
  10     Australia     79.7  
 
 
Source: WTTC
 
The Government of India has also recognized the importance of the travel and tourism industry and has over the past several years enacted or announced several initiatives to give further impetus to the industry:
 
  •  the “Incredible India” campaign helps showcase India as a leading tourist destination globally;
 
  •  the provision of one-month tourist visas on arrival for citizens of 11 countries (i.e., Japan, Finland, New Zealand, Singapore, Luxembourg, Laos, Vietnam, Philippines, Cambodia, Myanmar and Indonesia);
 
  •  support of an “open-skies” policy in India;
 
  •  the modernization or expansion of major metro airports in Mumbai, Bengaluru, Kolkata, Delhi, Chennai, and Hyderabad;
 
  •  the modernization or development of 35 existing non metro-airports;
 
  •  the construction of international convention centers in cities including Delhi, Mumbai, Goa, Jodhpur, Udaipur, Cochi, Agra and Jaipur to attract more business travelers to India; and
 
  •  air transportation policies permitting airlines in India which have been in operation on domestic routes for over five years to fly on international routes.


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According to Euromonitor, by 2014, the United Arab Emirates, Singapore and Malaysia will emerge as the most frequented destination for Indian travelers.
 
                 
Top 10 Destinations by Departures from India for 2014   2010   2014
    (in thousands)
 
United Arab Emirates
    727.5       983.7  
Singapore
    793.7       940.9  
Malaysia
    644.0       915.9  
United Kingdom
    685.7       800.8  
Egypt
    541.6       773.3  
USA
    559.7       606.8  
Thailand
    524.5       572.4  
China
    388.2       433.9  
Italy
    290.4       403.2  
France
    299.0       392.3  
 
 
Source: Euromonitor
 
Overview of the Indian Online Travel Industry
 
Growth of the Indian Online Travel Industry
 
According to PhoCusWright, the Indian online travel market grew 31% to reach $4.4 billion in 2010 as compared to $3.4 billion in 2009. PhoCusWright further estimates the market to record a compound annual growth rate of 27% over 2011 and 2012 to reach a total size of $7.0 billion by 2012. According to PhoCusWright, while India’s online leisure and unmanaged business is just five years old and still nascent, in 2009, it accounted for 21% of all travel industry bookings.
 
Robust growth is expected in both online air and online hotel bookings, according to PhoCusWright. Low-cost airlines will continue to rely heavily on online travel agencies for distribution, with online travel agencies accounting for nearly half of their gross bookings. Online hotel bookings are estimated to grow at 54% in 2012.
 
According to PhoCusWright, more than one third of India’s total online population uses Internet to search, shop and buy their travel, and online travel continues to drive the country’s e-commerce growth to a large extent. PhoCusWright estimates that by 2012, 31% of the industry’s total gross bookings will be transacted online.
 
                                         
    2008   2009   2010   2011   2012
    (in $ millions, except percentages)
 
Total Indian Travel Market
    16,223       15,808       17,652       19,922       22,813  
% Change
    4 %     (3) %     12 %     13 %     15 %
Total Indian Online Travel Market
    2,907       3,342       4,362       5,524       7,027  
% Change
    72 %     15 %     31 %     27 %     27 %
Online as % of Total Indian Travel Revenue
    18 %     21 %     25 %     28 %     31 %
 
 
Source: PhoCusWright
 
Key Drivers of Growth
 
We believe that the online travel industry in India is under-penetrated and will continue to grow faster than the overall Indian travel industry, primarily because of the following drivers of growth:
 
Increasing Internet Penetration.  According to Internet World Stats, as of December 2010, Internet penetration was at 8.5% (or approximately 100 million users) in India, making India the world’s third largest


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population of internet users after China and the United States, as compared to over 77.3% in the United States. We therefore believe that the Indian online travel industry is well-positioned for long-term growth. Increased Internet usage as well as the growing breadth of travel products offered online are expected to drive this growth. There is significant potential to serve small and medium businesses through websites rather than traditional corporate travel agencies. Forrester expects the Internet penetration in India and other emerging markets such as China and Indonesia to grow annually at an average rate of 10% to 20% over the next five years. PhoCusWright estimates that by 2012, 31% of travel industry gross bookings will be completed online and that availability of Third Generation, or 3G, services will enable mobile travel planning tools to gain popularity and mobile bookings are expected to gain traction after 2012.
 
Growth in Low-Cost Airlines.  We believe that increasing competition in the Indian airline industry and the emergence of more airlines, particularly low-cost airlines, has spurred more and more travelers to choose air travel over the traditional rail travel due to affordability and convenience. With the increase in low-cost airlines, online air travel bookings have also increased. We believe this is in part due to the fact that low-cost airlines typically prefer to use cost-effective distribution channels such as the Internet, using it as their primary distribution channel, either directly or through online travel agents.
 
(CHART)
 
 
Source: Netscribes, “Competitive Intelligence on leading OTA players in India”


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Increasing Credit Card Penetration and Secure Payment Mechanism.  Indian travelers are able to pay online for travel services and products using a variety of payment methods, including credit cards, debit cards, cash cards and Internet banking. According to Euromonitor, the number of credit cards in India was over 24.3 million in 2009, having grown at an annualized growth rate of 19% since 2000, while the number of debit cards in India was over 130 million, having grown at an annualized growth rate of 84% since 2000. Euromonitor expects the number of credit cards in India to reach 73.7 million by 2014 (i.e., an annual growth rate of over 25%) and the number of debit cards in India to reach 350 million by 2014 (i.e., an annual growth rate of over 22%).
 
Number of Credit Cards and Debit Cards in India
 
(CHART)
 
 
Source: Euromonitor, “Consumer Finance in India”
 
We believe that with increasing sophistication of the banking infrastructure in India and the provision of more secure online payment interfaces, Internet users in India are overcoming their apprehensions about security in online transactions and thereby adding to the online consumer base.
 
Competition in the Indian Online Travel Agency Industry
 
PhoCusWright estimates that the total “business-to-customer” online travel agency market (i.e. businesses serving end consumers with travel products and/or services through an online channel) in India is valued at $1 billion and is dominated by four players — MakeMyTrip, Yatra, Cleartrip and Travelguru (which was acquired by Travelocity in August 2009). Of these, MakeMyTrip commands a market share of 48%, followed by Yatra at 24% and Cleartrip at 18%, based on gross bookings for 2009. These online travel agencies face competition from traditional travel agents as well as meta search engines, such as Ixigo and Zoomtra.
 
     
 
(CHART)   (CHART)
 
 
Source: The PhoCusWright “Indian Online” Report


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Travel Products Sold by Online Travel Agents
 
Online travel agencies in India primarily facilitate travel arrangements by selling or arranging for air tickets, hotel and package reservations, rail tickets, bus tickets and car hire. According to Netscribes, online travel agencies are the most used online method for the booking of air tickets, hotels and packages and train tickets. The following chart shows the services and products offered by the top four online travel agents in India:
 
(CHART)
 
 
Source: Netscribes, “Competitive Intelligence on leading OTA players in India”
 
According to PhoCusWright, air ticket bookings contributed to approximately 61% of the online travel market in India in 2010. However, the non-air ticket segments are also growing in the Indian online travel market. Online rail revenues grew in excess of 21% in 2009-2010 according to PhoCusWright. Rail and bus tickets are increasingly popular new offerings by online travel agencies.


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BUSINESS
 
Overview
 
We are the largest online travel company in India, based on gross bookings for 2009, according to PhoCusWright. Through our primary website, www.makemytrip.com, and other technology-enhanced 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 tickets, hotels, packages, rail tickets, bus tickets, car hire and ancillary travel requirements such as facilitating access to travel insurance.
 
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. During the initial years of our operations, we invested significant capital in our infrastructure as well as in sales and marketing efforts to build our brand and gain recognition, and we recorded net losses for all our completed fiscal years. In fiscal year 2008, our second full fiscal year since we commenced our Indian business, we recorded a net loss of $(18.9) million. We reduced our net loss in fiscal years 2009 and 2010, recording a net loss of $(7.3) million and $(6.2) million, respectively, and recorded a net profit of $4.8 million in fiscal year 2011. We also reduced our operating loss in fiscal years 2009 and 2010, recording an operating loss of $(10.6) million and $(6.0) million, respectively, and recorded an operating profit of $4.1 million in fiscal year 2011. Excluding the effects of employee share-based compensation costs, we would have recorded an operating loss of $(10.2) million in fiscal year 2009, an operating profit of $0.8 million in fiscal year 2010 and an operating profit of $4.6 million in fiscal year 2011; and we would have recorded a net loss of $(6.9) million in fiscal year 2009, a net profit of $0.6 million in fiscal year 2010 and a net profit of $5.4 million in fiscal year 2011.
 
We believe the strength of our brand, 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 tickets market in India, while driving increased bookings of the international outbound air tickets market. In fiscal year 2010, 1.6 million transactions for domestic air tickets in India were booked through us, and we generated $31.1 million in revenue less service cost from our air ticketing business. In fiscal year 2011, 2.6 million transactions for domestic air tickets in India were booked through us, and we generated $47.6 million in revenue less service cost from our air ticketing business. We leverage our strength in air travel to grow into non-air travel and other segments of the travel industry, specifically hotels and packages. Revenue less service cost from our hotels and packages business totaled $8.0 million in fiscal year 2010, accounting for 19.8% of our total revenue less service cost, and $10.9 million in fiscal year 2011, accounting for 17.9% of our total revenue less service cost.
 
We have designed our websites to provide our customers with a user-friendly experience. We had an average of over 2.7 million unique visitors per month in fiscal year 2011. In fiscal year 2010, 2.0 million transactions were executed through our websites, accounting for approximately 94.5% of our total transactions, and in fiscal year 2011, 3.6 million transactions were executed through our websites, accounting for approximately 96.0% of our total transactions. We recently launched a booking engine on our website that allows our customers to search and book some of our domestic holiday packages online. We also added a new “Flight plus Hotel” tab on our website to describe the potential cost savings from booking bundled packages compared to booking flights and hotels separately. Furthermore, we recently launched our BlackBerry application, which allows customers to book domestic flights in India and automatically synchronizes the flight details with the calendar on their BlackBerry devices. We have built an advanced and secure technology platform, which integrates our sales, customer service and fulfillment operations. Our technology platform is scalable and can be upgraded to handle increased traffic and complexity of products with limited additional investment. As reported by The Economic Times on February 6, 2011, the Indian middle class is expected to grow over three times from 160 million people currently to 547 million people by 2026. In order to meet the requirements of this growing Indian middle class travel market where Internet penetration is relatively low, we also utilize other technology-enhanced distribution channels, including call centers and travel stores in India, as well as our travel agents’ network in India.
 
We provide 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 4,500 hotels in India and a wide selection of hotels outside India, Indian Railways and several major Indian bus operators. On the other hand, we believe we are a cost-


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effective distribution channel for our suppliers, providing reach to a large and expanding customer base in India as well as non-resident Indians.
 
In our air ticketing business, we generate revenue through commissions and incentive payments from airlines, service fees charged to our customers and fees from our GDS service provider. We currently use Amadeus GDS. 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 evaluate our financial performance based on revenue less service cost, which is a non-IFRS measure, as we believe that revenue less service cost reflects more accurately the value addition of the travel services that we provide to our customers. Our total revenue less service cost increased from $16.5 million in fiscal year 2008 to $61.1 million in fiscal year 2011.
 
We believe the overall Indian travel industry will experience continued growth due to income growth in India and the increased spending by Indians on travel and recreation. According to Internet World Stats, as of December 2010, Internet penetration was at 8.5% in India, making India the world’s third largest population of internet users after China and the United States, as compared with 77.3% in the United States. We therefore believe that the Indian online travel industry is well-positioned for long-term growth and that our well-recognized brand, leadership in the online travel market in India and broad and technology-enhanced distribution channels position us well to capitalize on these growth opportunities.
 
Furthermore, MMT India was ranked second overall and first in the professional services industry in a ranking published on June 21, 2010 of “India’s Best Companies to Work For 2010” by the Great Place to Work Institute, an independent global research and consulting firm, and The Economic Times, a daily business newspaper in India.
 
Recent Acquisition
 
On May 9, 2011, we acquired approximately 79% equity stake in Luxury Tours & Travel Pte Ltd, a Singapore-based travel agency that provides hotel reservations, excursion tours and other related services to inbound and outbound travelers in Singapore and the region, in accordance with the terms of the share purchase agreement dated February 9, 2011 entered into with Luxury Tours & Travel Pte Ltd and its existing shareholders. We paid cash consideration of approximately $3.0 million, subject to working capital adjustment in accordance with the terms of the share purchase agreement. We plan to invest approximately $0.75 million in one or more tranches until June 2012 for the subscription of new equity shares to be issued by Luxury Tours & Travel Pte Ltd.
 
We have also agreed to acquire the remaining shares of Luxury Tours & Travel Pte Ltd from the existing shareholders in cash, in three tranches, over a three year earn-out period ending June 2014. The earn-out will be based on valuation linked to future profitability of Luxury Tours & Travel Pte Ltd. We intend to leverage this acquisition to build a position of strength in Southeast Asia through relationships with local hotels and vendors.
 
Our Strengths
 
We have the following competitive strengths:
 
The Largest Online Travel Company in India with a Well-Recognized Brand.  Since commencing our travel business in India in 2005, we have become the largest company in the Indian online travel market, based on gross bookings for 2009, according to PhoCusWright. In fiscal year 2010, 1.6 million transactions for domestic air tickets in India and 109,672 transactions for hotels and packages were booked through us. In fiscal year 2011, 2.6 million transactions for domestic air tickets in India and 175,869 transactions for hotels and packages were booked through us. We had an average of over 2.7 million unique visitors per month in fiscal year 2011.
 
We believe that our brand is well-recognized in the Indian travel industry. We were the first and only online travel agency brand to be selected as a Superbrandtm in India for 2009-2010. We have invested in developing and promoting our 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 viral marketing and online display banners, to broaden our reach to travelers in India and overseas.


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We believe that our reputation and market position have also provided us with better leverage when contracting with airlines, hotels and other suppliers.
 
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 well as non-resident Indians and others traveling to India from the United States and other countries. Our services and products include air tickets, hotels, packages, rail tickets, bus tickets, car hire and ancillary travel requirements such as travel insurance and visa processing. We provide 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 4,500 hotels in India and a wide selection of hotels outside India, Indian Railways and several major Indian bus operators. We believe our comprehensive selection of travel services and products makes us a “one stop shop” 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, where Internet penetration is still relatively low. Our distribution network is centered on our India-focused website, www.makemytrip.com (which includes our US sub-domain website), our United Arab Emirates-focused website, www.makemytrip.ae, and our Canadian website, www.makemytrip.ca, our call centers, and our various travel stores in 19 cities in India, as of March 31, 2011. As of March 31, 2011, we had a network of approximately 9,300 agents across more than 700 cities and towns in India who can access our business-to-business, or B2B, website enabling them to sell our full suite of online travel services to their customers. We have recently launched a BlackBerry application through which mobile users can access MakeMyTrip mobile offerings. Our broad distribution network gives us widespread access to travelers both in India as well as abroad.
 
Advanced, Secure and Scalable Technology Platform.  We have built an advanced and secure technology platform, which integrates our sales, customer service and fulfillment operations. We have designed our websites 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 also recently launched a booking engine on our website that allows our customers to search and book some of our domestic holiday packages online.
 
Our web-based booking engine has been designed to link to our suppliers’ systems either through “direct connects” or a GDS (we currently use Amadeus GDS), and is capable of delivering real time availability and pricing information for multiple options simultaneously.
 
Our technology platform is able to handle up to 500,000 website requests per day. This platform is scalable, and can be upgraded to handle increased traffic and complexity of products with limited additional investment. We estimate that an additional investment in hardware costing approximately $360,000 would increase the capacity of our technology platform to 1.0 million website requests per day. As a result of our scalable platform, we were able to launch our B2B platform in 2009 in only a few months by leveraging our existing technology.
 
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 chat support as well as our toll-free call centers, our travel stores and e-mail. Our mobile service platform also enables customers to receive e-tickets and flight alerts via text messages (SMS) on their mobile phones. We recently launched our BlackBerry application, which allows customers to book domestic flights in India and automatically synchronizes the flight details with the calendar on their BlackBerry devices. We also added a new “Flight plus Hotel” tab on our website to describe the potential cost savings from booking bundled packages compared to booking flights and hotel separately. We provide important travel information on our websites, such as the on-time performance of airlines, user-generated travel reviews and destination guides to help customers conduct research and make travel decisions. We primarily outsource our call center operations and fulfillment process to IBM Daksh, iEnergizer IT Services, Intelenet Global Services and Motif India Infotech in India, as we believe these experienced and reputable service providers are able to adhere to our customer service standards and enhance our service quality. We also have a dedicated in-house escalation


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service which operates 24 hours a day, seven days a week, and is responsible for addressing issues or complaints raised by our customers.
 
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, the United States and the United Kingdom. Our management team also has in-depth experience in the Internet and information technology industries, having worked with companies such as GE Capital, Amazon, Google and IBM, and in the consumer industry, including Pepsi. 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 the relatively low but fast growing Internet penetration in India, coupled with income growth in India provide us with significant growth opportunities. Our objective is to grow profitably by building on our current leadership position to become India’s dominant travel company. The key elements of our strategy include:
 
Expand Our Hotels and Packages Business.  Our hotels and packages business generally yields higher net revenue margins than our air ticketing business. We intend to acquire or build technology platforms to enable more hotel suppliers to be directly-connected to our websites, as this allows our suppliers to upload information about available rooms, services and rates directly from their central reservation systems onto our websites, as well as automatically confirm hotel reservations made by our customers on a real time basis. We also recently launched a booking engine on our website that allows our customers to search and book some of our domestic holiday packages online. As of March 31, 2011, only approximately 2.1% of our hotel suppliers in India were directly-connected to us. We believe that our Indian hotels and packages business will grow as more of our suppliers become directly-connected to us and as we expand our travel agents’ network in India. Increasing the number of “direct connects” with our hotel suppliers will also allow us to reduce the costs of fulfillment associated with confirmations and reconfirmations of reservations made under our direct allocation arrangements. 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 overseas packages. See ‘— Pursue Selective Strategic Partnerships and Acquisitions.”
 
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 allow us to cross sell higher-margin services and products to them. We actively market additional travel services to our customers. For example, we market non-air services directly to customers after they have booked their air tickets with us.
 
We seek to continue expanding our travel offerings beyond core air tickets, hotels and packages to mass market products including bus, rail and car hire. We introduced the sale of bus tickets in 2008 and the sale of rail tickets in 2009. We commenced the provision of chauffeur-driven car hire services online in May 2010. Currently, such services are available for flight transfers in five cities in India (Delhi, Mumbai, Hyderabad, Ahmedabad and Bangalore), and we intend to further expand our coverage to all major cities in India as well as expand our services to provide chauffeur-driven car rentals not linked to flight transfers in the third quarter of calendar year 2011. Previously car hire was only available through our offline channels and tended to be sold as part of packages.
 
Expand Our Travel Agents’ Network.  We are focused on expanding our travel agents’ network in India, to enable more travel agents to gain access to our B2B website and sell our complete suite of travel services and products. We have a dedicated call center to service requests and queries from these agents, and provide training to assist these agents in the operation of our B2B web-based booking system. As of March 31, 2011, approximately 9,300 agents had joined our travel agents’ network, covering more than 700 cities and towns in India, increasing significantly from 4,000 agents working in more than 450 cities and towns in India as of June 15, 2010.
 
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. For example, we plan to integrate our Indian domestic air tickets booking system with our international air tickets booking system and allow cross fare class bookings in one


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transaction. 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 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 recently launched our BlackBerry application, which allows customers to book domestic flights in India and automatically synchronizes the flight details with the calendar on their BlackBerry devices.
 
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. 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 Eastern countries to India as well as on their travels elsewhere. We also launched our Canadian website, www.makemytrip.ca, in July 2010 to serve the travel needs of the Indian residents there.
 
Pursue Selective Strategic Partnerships and Acquisitions.  In addition to growing our business organically, we may also pursue strategic partnerships and targeted acquisitions that complement our service offerings or strengthen or establish our presence in our targeted overseas markets. Our purchase of certain assets of Travis Internet Private Limited, which operated www.ticketvala.com, in March 2010 was a step in this direction for our bus network. We also recently acquired approximately 79% of Luxury Tours & Travel Pte Ltd, a Singapore-based travel agency, 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 Southeast Asia. We believe our existing technology platform will enable us to successfully and cost-effectively integrate our partners or new companies we acquire into our network and allow us to ensure our best practices are followed. As of the date of this prospectus, we have not entered into any advanced discussions or negotiations or any agreements or commitments for material acquisitions of any businesses.
 
Our Services and Products
 
We offer a comprehensive selection travel and travel-related services and products catering to the needs of residents in India and non-resident Indians and others traveling to India from the United States and other countries. 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, rail tickets, bus tickets, car hire and ancillary travel requirements such as visa processing and facilitating access to travel insurance. Our key customers include leisure travelers and small businesses.
 
Air Tickets
 
Our air tickets business is primarily targeted at domestic travel within India and international travel originating in India; and inbound travel to India from the United States and other countries.
 
Indian Domestic and Outbound Travel.  We have experienced significant growth in our air ticketing business covering domestic travel within India and international travel from India since we commenced our Indian operations in 2005. The following table sets forth the number of transactions for air travel booked through us in this business in the last three fiscal years.
 
                         
    Number of Transactions
    for Fiscal Year Ended March 31
    2009   2010   2011
 
Indian domestic air travel
    1.2 million       1.6 million       2.6 million  
Outbound air travel
    45,497       93,757       146,033  
 
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 Airlines, Jet Airways,


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Kingfisher Airlines and SpiceJet; and all major international flights that originate from cities in India, including Air India, British Airways, Emirates, Jet Airways, Lufthansa, Malaysia Airlines, Singapore Airlines, Thai Airways and Virgin Atlantic. We obtain inventory from these airlines either through a GDS (we currently use Amadeus GDS) or via “direct connects” to the airlines’ booking systems.
 
We believe our websites 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, on 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. Our website then displays fare and flight offerings matching those specifications. Customers can also easily filter and sort the results of their search according to their preferences.
 
Inbound Travel to India.  We began selling air tickets for the United States-to-India sector in 2000. Our customers are mainly non-resident Indians and persons of Indian origin traveling to India. Our customers may search and book their flights on our US sub-domain website, us.makemytrip.com, which is linked to our primary website, www.makemytrip.com, and uses a similar search and display interface as our primary website, and may also call our toll-free US hotline, 1800-INDIA-10. The total number of transactions for inbound air travel to India booked through us were 22,441 in fiscal year 2009, 36,135 in fiscal year 2010, and 47,765 in fiscal year 2011.
 
In December 2009, we launched our website in the United Arab Emirates, www.makemytrip.ae, catering mainly to non-resident Indians traveling to India as well as on their travels to other countries. We intend to expand our business in other markets outside India, particularly those with a significant non-resident Indian population as well as those with proximity to India and favored by Indian travelers. We launched our Canadian website, www.makemytrip.ca, in July 2010. Our Canadian website is currently owned by a company which we have registered in Canada. We are evaluating the transfer of legal ownership of this company to us by September 2011.
 
Hotels and Packages
 
We introduced our hotels and packages business in 2005 and have since experienced significant growth in this area. The total number of transactions in our hotels and packages business were 81,357 in fiscal year 2009, 109,672 in fiscal year 2010, and 175,869 in fiscal year 2011.
 
Hotels.  Through our websites, customers can search, compare and make reservations at more than 4,500 hotels in India and a wide selection of hotels outside India. We procure room inventory from our hotel suppliers through three methods: “direct connects,” “direct allocation” and “on request.” As of March 31, 2011, approximately 2.1% of our hotel suppliers were directly-connected to our booking system. Through these “direct connects,” our booking systems are integrated with the central reservations systems of the hotels and reservations to be made and confirmed on a real time basis. All our other hotel suppliers have a “direct allocation” arrangement with us whereby they allocate rooms directly to us either by managing their room inventory on an extranet supported by us or via telephone or through “on request” booking. In our “on request” booking process, customers may request a reservation and we will liaise with the relevant hotel to try and confirm the room reservation. We do not assume any inventory risk for such “direct allocation” room inventory as any unsold inventory is released to the hotels upon an agreed number of days prior to the relevant date of travel.
 
Customers may search for hotels based on their destination, preferred dates for check-in and check-out, and may easily filter our search results by selecting star ratings, specific hotel chains and location. Customers can also indicate amenity preferences such as business services, Internet access, fitness centers, swimming pools and travel assistance. Our “City Map View” also offers customers the ability to compare hotel locations on an interactive neighborhood map. Customers can also preview the property by viewing hotel pictures and read hotel reviews from other MakeMyTrip customers on our website and on our travel community website, www.oktatabyebye.com. We recently launched a booking engine on our website that allows our customers to search and book some of our domestic holiday packages online. We also added a new “Flight plus Hotel” tab on our website to describe the potential cost savings from booking bundled packages compared to booking flights and hotels separately.


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Packages.  We offer pre-packaged vacations designed by our in-house product specialists, under arrangements with various travel suppliers and our GDS service provider to cater to both individual and group travelers. Our packages also include various travel services such as travel insurance, 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 are corporate executives.
 
For our customers travelling within India, our Indian website offers a flight plus hotel option, using a similar search and display interface as our separate air ticketing and hotels web-interface, which enables customers to view multiple combinations of airlines and hotels to assemble a trip which satisfies his or her unique requirements. Our website allows customers to customize their trips by combining two or more travel products and selecting their desired air and hotel supplier, often at a discounted price, compared to booking the individual components separately.
 
  •  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 group offers services to organizations as well as other groups, including students or families who wish to plan meetings, conferences or other events or organize group trips. Our MICE group 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 group will accompany the group during the travel in order to ensure that all plans and activities run smoothly. Our MICE group also assists employees of these organizations with their personal travel needs.
 
Other Services and Products
 
Rail Tickets.  We introduced the sale of railway tickets in India in 2009 after entering into an agreement with IRCTC, which granted us “direct-connect” access to Indian Railways’ passenger reservation system online and enabled our customers to reserve and purchase Indian Railways tickets on a real time basis through our Indian website. Indian Railways is India’s state-owned railway which owns and operates most of India’s rail transport. Since we commenced this business in June 2009, we have booked 185,948 and 576,585 transactions for rail tickets in fiscal year 2010 and fiscal year 2011, 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. Our customized interface allows a customer 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. For example, customers are able to see the wait list status for relevant train trips and are able to plan their travel accordingly. Like other products, customers can also easily filter the results of their search according to their specific preferences. However, as a result of Indian Railways’ regulations, although customers may search for rail tickets 24 hours a day and seven days a week, reservations may not be made between 11.30 pm and 12.30 am India time.
 
Bus Tickets.  We have agreements with several major Indian 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 four 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; inventory from operators who manage their inventory on an extranet supported by us; and inventory obtained by agreement with operators where a certain number of tickets are pre-allocated to us or sold to us “on request.” Since we commenced this business in May 2008, we have booked 11,792, 57,529 and 147,640 transactions for bus tickets for the nine months ended March 31, 2009, fiscal year 2010 and fiscal year 2011, respectively.


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Customers can search for bus tickets based on their preferred travel dates and routes and our website 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.
 
With the acquisition of certain assets of Travis Internet Private Limited (which operated www.ticketvala.com) in March 2010, we have obtained access to a technology platform offering real time bus booking services, quotations and cost comparison, allowing last minute bookings as well, which we have integrated with our booking systems. We intend to leverage this platform to enable more bus operators to be directly-connected to our booking system to further expand our bus offering.
 
Car Hire.  We offer customers the ability to rent a chauffeur driven car within India provided by two operators mainly in major metropolitan cities through our call centers and travel stores. Typically, this service is requested in conjunction with a flight and hotel booking or a package booking. We introduced these services on our Indian website in May 2010. Currently, such services are available for flight transfers in five cities in India (Delhi, Mumbai, Hyderabad, Ahmedabad and Bangalore), and we intend to further expand our coverage to all major cities in India as well as expand our services to provide chauffeur-driven car rentals not linked to flight transfers in the third quarter of calendar year 2011.
 
Ancillary Services and Products
 
As an ancillary service offered to our customers, we provide our customers with the option to purchase travel insurance from Apollo Munich Health Insurance Company Limited, with whom we entered into a memorandum of understanding in April 2008. We facilitate access to this travel insurance through our Indian website, as well as via our call centers and travel stores. On our Indian website, prior to confirming and proceeding with the reservation of and payment for a flight or hotel, our customers are prompted to purchase such travel insurance. We also provide visa processing services, and sell telephone calling cards to our customers. In addition, we offer travel-related businesses and other third parties the opportunity to advertise on our websites.
 
Distribution Channels
 
We utilize a variety of technology-enhanced distribution channels to target the growing Indian middle class travel market, where Internet penetration is still relatively low. 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 travel stores as well as our travel agents’ network in India and mobile service platform, giving us multiple channels to access these customers.
 
Our customers’ varied needs are served by different distribution channels. During fiscal year 2011, over 95.0% of our sales of air tickets for travel in India and the majority of sales of air tickets for outbound travel from India were made through our website. Sales of air tickets for inbound travel to India tend to be made mainly through our call centers, with our call centers accounting for approximately 63.8% of such sales. Our customers can book standard flight plus hotel packages on our websites but the majority of the sales of packages within or outside India are concluded through our call centers or travel stores. All of our rail and bus ticket sales are made through our Indian website.
 
In fiscal year 2011, transactions executed through our websites, call centers and travel stores accounted for approximately 95.9%, 3.3% and 0.8%, respectively, of our total transactions.
 
Internet Websites
 
We currently operate the websites www.makemytrip.com (including the sub-domain us.makemytrip.com), www.makemytrip.ae and www.makemytrip.ca 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 United Arab Emirates as well as neighboring Middle East countries and the Canada-India market, respectively. Our Canadian website, www.makemytrip.ca, is currently owned by a company which we have registered in Canada. We are evaluating the transfer of legal ownership of this company to us by September 2011. Our websites have been designed to provide a user-friendly experience to our customers and are reviewed and upgraded from time to time. We recently updated the look of our website www.makemytrip.com based on our customers’ feedback.


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In March 2010, we acquired certain assets of Travis Internet Private Limited, an online bus ticket company in India. As part of this acquisition, we acquired the website www.ticketvala.com, which enables customers to obtain quotations and book bus tickets online on a real time basis, which we have integrated with our booking system and our Indian website.
 
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 within minutes. Customers can also purchase ancillary travel-related services and products such as travel insurance 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. We recently introduced 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.
 
Typically, a transaction on our websites involves the following steps:
 
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 90% of our search results come from cache. Our web-based booking engine, which has been designed to link to our suppliers’ systems either through “direct connects” or a GDS (we currently use Amadeus GDS), allows us to deliver real time information.
 
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, or AJAX, 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 Amadeus 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 air tickets or hotels will also be shown options to purchase travel insurance and other related ancillary services.
 
Payment.  We offer our customers a variety of payment methods. On our Indian website, customers may pay with credit cards, debit cards issued by several major banks in India (including Citibank, ICICI Bank, HDFC Bank and AXIS Bank), bank transfers or cash cards, and in Indian Rupees. On our US website, customers may pay with credit cards or Paypal and in US dollars. On our United Arab Emirates website, customers may pay with credit cards in United Arab Emirates Dirham, or AED. The payment gateway for sales on our Indian website is secured by “Verified by VISA” and “MasterSecure”.
 
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 TripAssist on our websites to check their flight or train details, print e-tickets and cancel flight and rail bookings and track progress of refunds.


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Call Centers
 
Our in-house call centers, which mainly handle our sales and post-sales customer service support for our international hotels and packages business as well as domestic Indian packages with more complicated itineraries, are run out of Gurgaon in India. These call centers operate 24 hours a day, seven days a week and customers can call these centers through various toll-free numbers in India to consult with our sales representatives, receive comprehensive, real time hotel and package information, and make travel bookings. As of March 31, 2011, we employed approximately 67 sales representatives in our in-house call centers, as compared with approximately 94 sales representatives as of March 31, 2009. This decline in numbers of sales representatives was primarily due to outsourcing. All of our sales representatives participate in a formal four-week training program before commencing work and have an in-depth knowledge of their relevant local market. Our 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 for all international flights (both inbound to India and outbound from India), and most of our domestic Indian 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), domestic Indian hotel reservations and packages, and rail and bus ticketing, as well as back office fulfillment and ticketing services. Our key outsourcing service providers are IBM Daksh, iEnergizer IT Services, Intelenet Global Services and Motif India Infotech in India, where agents provide both English and Hindi language options to our customers. We believe these experienced and reputable service providers are able to adhere to our customer service standards and enhance our service quality. Our agreements with IBM Daksh and iEnergizer IT Services provide our customers the options of using Gujarati and Tamil, respectively, for their transactions. These external call centers also operate 24 hours a day, seven days a week. In aggregate, we had 767 external sales agents from IBM Daksh, iEnergizer IT Services, Intelenet Global Services and Motif India Infotech constituting our outsourced call center sales force as of March 31, 2011, compared to 232 as of March 31, 2009. Our external agents must undergo a formal four-week training program as well as periodic refresher training courses in order to understand our processes and systems and be able to effectively service our customers.
 
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 offered to our customers.
 
Travel Stores
 
As of March 31, 2011, we had various travel stores in 19 cities including metropolitan areas across India, which primarily sell packages. Our main office in Gurgaon also serves customers seeking to purchase outbound packages from India. We believe that these travel stores and offices are important for our overall growth as they represent a direct interface between our customers and us. At our 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. Our travel stores are also equipped with our ERP application and linked to our CRM system.


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(MAP)
 
Travel Agents’ Network
 
We have a travel agents’ network in India which we started in 2009, where approximately 9,300 travel agents across more than 700 cities and towns in India can access our B2B website enabling them to sell our full suite of online travel products to their customers. Our B2B website uses a similar interface as our external customer-facing websites and we were able to launch our B2B platform in a few months by leveraging technology already being used by us for our customer-facing websites. We believe our network is attractive to travel agents as we provide access to a range of travel services and products which such agents may not 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.
 
Mobile
 
In 2008, we launched “makemytrip.mobile,” our mobile service platform. Our mobile services allow customers to search, book and pay for Indian domestic air tickets on their mobile phones at no additional cost. The tickets and bookings are delivered through email and SMS. Apart from flight bookings, customers can view their booking details, cancel bookings, request e-tickets and track refund status on their mobile devices. Customers can also check flight status, look for new deals and use location-based services to find nearby places of interest. Currently, BlackBerry users can access MakeMyTrip mobile offerings through our recently-launched BlackBerry application, which allows customers to book domestic flights in India and automatically synchronizes the flight details with the calendar on their BlackBerry devices. As of March 31, 2011, there were more than 35,000 downloads of this application. Customers with reserved tickets, whether booked through a desktop computer or mobile device, have the ability to access flight information or cancel reservations through this application. We are also in the process of developing similar mobile applications for both Android and iPhone. We plan to increase the scope of services available on smartphones and other mobile devices. We also intend to increase the penetration and usage of mobile offerings by targeting more mobile service platforms in the future. We recently re-launched “makemytrip.mobile” with a better design and user interface which lets customers search and book flights using many smartphone browsers.


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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. Our system is capable of handling up to 500,000 website requests a day. We have the ability to scale up and down to meet our needs without incurring substantial costs as we use virtual machines and infrastructure when required. We estimate that an additional investment in hardware costing approximately $360,000 would increase the capacity of our technology platform to 1 million website requests per day. Our technology stack is also modular and can be easily modified for multiple lines of business. For example, we were able to launch our B2B platform in a few months by leveraging our existing technology used for our customer-facing websites.
 
We believe we have core technology advantages in multiple areas, including:
 
  •  website logic that simplify and improve a customer’s ability to book a trip most suited to his or her 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;
 
  •  scalable search and caching technologies that return comprehensive results and allow us to provide more flight and hotel options to customers without sacrificing search response times or creating added stress on our suppliers’ operating or cost infrastructure; and
 
  •  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 the customers.
 
As part of our business continuity plan, our systems infrastructure and web and database servers are housed in Gurgaon, Delhi and Mumbai, and have monitoring and engineering support 24 hours a day, seven days a week. All our servers installed at all our data centers as well as at all our offices are also secured with firewalls.
 
Our applications and infrastructure are configured in a manner that support our business continuity plan. All data is backed up on a weekly basis across our two data centers. In addition, all data is also backed up on tapes on a weekly basis. These tapes are kept at a safe and secure location outside the data centers.
 
Fully Integrated Technology Platform
 
Our CRM system uses software by RightNowtm CRM, which integrates our sales, customer service and fulfillment operations. Our web-enabled centralized booking system 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” and “MasterSecure” payment gateways, which provides additional security for transactions via our Indian website using credit cards issued by Indian institutions. We also offer payment options via netbanking and other instruments.
 
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.
 
We integrate our ERP application (which uses Microsoft Dynamicstm) with our CRM system which enables our agents to create packages, make and amend bookings as well as attend to customer inquiries. Our CRM system is designed to analyze customer needs for better servicing. It generates reports identifying areas of opportunity or weakness and thereby helps us in improving our service and product quality. We also use Omniture Web Analytics software to assist us in analyzing our web-based business, such as the rate of conversion of visitors to our websites to purchasing customers.
 
Our systems include automation for ticketing, monitoring of schedule changes and providing alerts to customers, as well as auto-cancelation of reservations made through a GDS 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.
 
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. 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. We believe that, as of March 2011, we are the only travel portal in India which is compliant with the 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 improve the rate at which visitors become