20-F 1 d378697d20f.htm 20-F 20-F
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 20-F

 

 

(Mark One)

 

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

OR

 

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

For the fiscal year ended March 31, 2017

OR

 

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

For the transition period from             to             

OR

 

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

Date of event requiring this shell company report

Commission file number 001-34837

 

 

MakeMyTrip Limited

(Exact Name of Registrant as specified in its charter)

 

 

 

Not Applicable   Mauritius
(Translation of Registrant’s Name Into English)   (Jurisdiction of Incorporation or Organization)

19th Floor, Building No. 5

DLF Cyber City

Gurgaon, India, 122002

(Address of Principal Executive Offices)

Mohit Kabra

Group Chief Financial Officer

19th Floor, Building No. 5

DLF Cyber City

Gurgaon, India, 122002

(91-124) 439-5000

groupcfo@makemytrip.com

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

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

 

Ordinary Shares, par value $0.0005 per share   Nasdaq Global Market
(Title of Class)   (Name of Exchange On Which Registered)

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

None

(Title of Class)

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

None

(Title of Class)

 

 

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

 

Class    Number of Shares Outstanding as of March 31, 2017

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

   52,706,194 shares outstanding

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

   38,971,539 shares outstanding

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

Yes  ☒            No  ☐

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

Yes  ☐            No  ☒

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

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

Yes  ☒            No  ☐

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

Yes  ☐            No  ☐

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

 

Large accelerated filer  ☒    Accelerated filer  ☐    Non-accelerated filer  ☐
      Emerging growth company  ☐

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

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

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

 

US GAAP ☐

   International Financial Reporting Standards as issued    Other ☐
   by the International Accounting Standards Board ☒   

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

Item 17  ☐            Item 18  ☐

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

Yes  ☐            No  ☒

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

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

Yes  ☐            No  ☐

 

 

 


Table of Contents

TABLE OF CONTENTS

 

     PAGE  

PART I

  

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

     5  

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

     5  

ITEM 3. KEY INFORMATION

     5  

ITEM 4. INFORMATION ON THE COMPANY

     32  

ITEM 4A. UNRESOLVED STAFF COMMENTS

     58  

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     58  

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

     88  

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

     103  

ITEM 8. FINANCIAL INFORMATION

     109  

ITEM 9. THE OFFER AND LISTING

     116  

ITEM 10. ADDITIONAL INFORMATION

     118  

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     144  

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

     145  

PART II

  

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     147  

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

     147  

ITEM 15. CONTROLS AND PROCEDURES

     147  

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

     150  

ITEM 16B. CODE OF ETHICS

     150  

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     150  

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

     151  

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

     151  

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

     151  

ITEM 16G. CORPORATE GOVERNANCE

     151  

ITEM 16H. MINE SAFETY DISCLOSURE

     152  

PART III

  

ITEM 17. FINANCIAL STATEMENTS

     153  

ITEM 18. FINANCIAL STATEMENTS

     153  

ITEM 19. EXHIBITS

     153  

SIGNATURES

     159  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

     F-1  


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CONVENTIONS USED IN THIS ANNUAL REPORT

In this Annual Report, we refer to information regarding the travel service industry and our competitors from market research reports, analyst reports and other publicly available sources. We also refer to data from the United States Central Intelligence Agency “World Factbook,” or CIA World Factbook, the Directorate General of Civil Aviation, the Indian governmental regulatory body for civil aviation, or DGCA, SimilarWeb, App Annie and the Internet and Mobile Association of India, or IAMAI.

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

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

Solely for the convenience of the reader, this Annual Report contains translations of certain Indian Rupee amounts into US dollars at specified rates. Except as otherwise stated in this Annual Report, all translations from Indian Rupees to US dollars are based on the noon buying rate of Rs. 64.62 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 June 30, 2017. No representation is made that the Indian Rupee amounts referred to in this Annual Report could have been or could be converted into US dollars at such rates or any other rates. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding.

Unless otherwise indicated, the consolidated statement of profit or loss and other comprehensive income (loss) and related notes for fiscal years 2015, 2016 and 2017 and consolidated statement of financial position as of March 31, 2016 and 2017 included elsewhere in this Annual Report have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. References to a particular “fiscal year” are to our fiscal year ended March 31 of that year. Our fiscal quarters end on June 30, September 30, December 31 and March 31. References to a year other than a “fiscal” year are to the calendar year ended December 31. Our financial and operating results for fiscal year 2017 include the financial and operating results of the ibibo Group for the two months ended March 31, 2017 following the completion of our acquisition of the ibibo Group on January 31, 2017.

 

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CERTAIN NON-IFRS MEASURES

We also refer in various places within this Annual Report to “adjusted operating profit (loss),” “adjusted net profit (loss),” “revenue less service cost,” and “adjusted diluted earnings (loss) per share” which are non-IFRS measures.

For a description of the components and calculation of “adjusted operating profit (loss),” adjusted net profit (loss),” and “adjusted diluted earnings (loss) per share” and a reconciliation of these non-IFRS measures to the most directly comparable IFRS measures, see “Item 5. Operating and Financial Review and Prospects — Certain Non-IFRS Measures” elsewhere in this Annual Report. We believe that our current calculations of adjusted operating profit (loss), adjusted net profit (loss) and adjusted diluted earnings (loss) per share represent a balanced approach to adjusting for the impact of certain discrete, unusual or non-cash items which are useful in measuring, provide a more accurate representation of, our operating results.

Revenue less service cost is calculated as revenue less cost for the acquisition of relevant services and products for sale to customers. Our revenues are recognized on a “net” basis when we are acting as an agent, and on a “gross” basis when we are the “primary obligor.” See “Item 5. Operating and Financial Review and Prospects — Our Revenue, Service Cost and Other Revenue and Expenses — Revenue.” Income from packages, including income on airline tickets sold to customers as a part of tours and packages is accounted for on a gross basis since we are the primary obligor in the arrangement and assume the risks and responsibilities, including the responsibility for delivery of services. Revenue from the packages business which is accounted for on a “gross” basis represents the total amount paid by customers for these travel services and products, while our cost of procuring the relevant services and products for sale to our customers in this business is classified as service cost. We believe that revenue less service costs reflects more accurately the value addition of the travel services that we provide to customers in our packages business where we are the primary obligor and is similar to the revenue on a “net” basis for our air ticketing and hotels business where we act as an agent.

We believe that adjusted operating profit (loss), adjusted net profit (loss), revenue less service cost and adjusted diluted earnings (loss) per share are useful in measuring our results. We believe that our current calculations of adjusted operating profit (loss), adjusted net profit (loss), revenue less service cost and adjusted diluted earnings (loss) per share represent a balanced approach to adjusting for the impact of certain discrete, unusual or non-cash items which are useful in measuring our results and provide investors and analysts a more relevant representation of our operating results. We believe that investors and analysts in its industry use these non-IFRS measures to compare our company and our performance to that of our global peers.

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

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

 

    our ability to maintain and expand our supplier relationships;

 

    our reliance on technology;

 

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

 

    our ability to successfully implement our growth strategy;

 

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

 

    increasing competition in the Indian travel industry;

 

    risks associated with online commerce security; and

 

    political and economic stability in and around India, Thailand, and other key travel destinations in Asia and Europe.

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

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

 

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PART I

 

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

 

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

 

ITEM 3. KEY INFORMATION

A. Selected Consolidated Financial Data

The following selected consolidated statement of profit or loss and other comprehensive income (loss) data for fiscal years 2015, 2016 and 2017 and the selected consolidated statement of financial position data as of March 31, 2016 and 2017 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report. Our financial and operating results for fiscal year 2017 include the financial and operating results of the ibibo Group for the two months ended March 31, 2017 following the completion of our acquisition of the ibibo Group on January 31, 2017.

 

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The selected consolidated statement of profit or loss and other comprehensive income (loss) data for fiscal years 2013 and 2014 and the selected consolidated statement of financial position data as of March 31, 2013, 2014 and 2015 have been derived from our audited consolidated financial statements not included in this Annual Report. The financial data set forth below should be read in conjunction with, and is qualified by reference to, “Item 5. Operating and Financial Review and Prospects” and the consolidated financial statements and notes thereto included elsewhere in this Annual Report. Our consolidated financial statements are prepared and presented in accordance with IFRS as issued by the IASB. Our historical results do not necessarily indicate results expected for any future period.

 

     Fiscal Year Ended March 31,  
     2013     2014     2015     2016     2017  
     (in thousands, except per share data and share count)  

Consolidated Statement of Profit or Loss and Other Comprehensive Income (loss) Data:

          

Revenue:

          

Air ticketing

   $ 60,889     $ 66,523     $ 74,325     $ 78,172     $ 118,514  

Hotels and packages

     164,129       184,501       220,512       251,713       314,254  

Other revenue

     3,804       4,351       4,825       6,169       14,848  

Total revenue

     228,822       255,375       299,662       336,054       447,616  

Other Income

     —         1,312       853       1,014       363  

Service cost:

          

Procurement cost of hotels and packages services

     (136,537     (144,508     (157,897     (165,264     (173,919

Cost of air ticket coupons

     (4,120     (4,471     (2,816     (1,770     —    

Personnel expenses

     (34,520     (37,221     (44,318     (49,018     (73,736

Marketing and sales promotion expenses(1)

     (19,690     (27,885     (42,724     (108,966     (224,424

Other operating expenses

     (48,264     (52,231     (59,345     (67,954     (81,585

Depreciation, amortization and impairment

     (3,753     (5,692     (7,955     (10,923     (29,702

Results from operating activities

     (18,062     (15,321     (14,540     (66,827     (135,387

Net finance income (costs)

     (742     (5,334     (3,544     (18,741     26,979  

Impairment in respect of an equity-accounted investee

     —         —         —         (959     —    

Share of loss of equity-accounted investees

     (186     (171     (139     (1,860     (1,702

Loss before tax

     (18,990     (20,826     (18,223     (88,387     (110,110

Income tax benefit (expense)

     (8,599     (79     (135     (155     (193

Loss for the year

   $ (27,589   $ (20,905   $ (18,358   $ (88,542   $ (110,303

Loss per share (including Class B Shares):

          

Basic

   $ (0.74   $ (0.55   $ (0.44   $ (2.12   $ (2.09

Diluted

   $ (0.74   $ (0.55   $ (0.44   $ (2.12   $ (2.09

Weighted average number of shares outstanding (including Class B Shares):

          

Basic

     37,315,434       37,832,246       41,808,897       41,714,518       52,607,986  

Diluted

     37,315,434       37,832,246       41,808,897       41,714,518       52,607,986  

 

Note:

(1) Marketing and sales promotion expenses were earlier referred to as “Advertising and business promotion expenses” and reported as part of “Other operating expenses” for the years ended on or before March 31, 2015, and have been presented as a separate line in our consolidated statements of profit or loss and other comprehensive income (loss) included elsewhere in this Annual Report. This presentation is in line with the current manner in which we evaluate our business performance and manage our operations.

 

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The following table sets forth a summary of our consolidated statement of financial position as of March 31, 2013, 2014, 2015, 2016 and 2017:

 

     As of March 31,  
     2013      2014      2015      2016      2017  
     (in thousands)  

Consolidated Statement of Financial Position Data:

              

Trade and other receivables

   $ 26,111      $ 29,356      $ 29,852      $ 29,168      $ 37,284  

Term deposits

     48,115        105,170        93,492        169,312        95,673  

Cash and cash equivalents

     36,502        38,011        49,857        53,434        101,704  

Net current assets

     57,758        37,264        98,173        157,925        128,787  

Total assets

     194,620        269,837        279,615        400,989        1,544,784  

Total equity (deficit)

     101,994        162,300        157,854        77,609        1,405,462  

Loans and borrowings

     420        318        499        197,300        749  

Trade and other payables

     80,592        86,214        103,655        110,296        127,077  

Total liabilities

     92,626        107,537        121,761        323,380        139,322  

Total equity (deficit) and liabilities

   $ 194,620      $ 269,837      $ 279,615      $ 400,989      $ 1,544,784  

Other Data:

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

 

     Fiscal Year Ended March 31,  
     2013     2014     2015     2016     2017  
     (in thousands, except percentages)  

Number of transactions:

          

Air ticketing

     3,794.1       3,999.2       5,432.8       6,960.5       9,379.7  

Hotels and packages

     568.1       869.8       1,385.5       3,137.3       6,874.1  

Revenue less service cost:(1)

          

Air ticketing

   $ 56,769     $ 62,052     $ 71,509     $ 76,402     $ 118,514  

Hotels and packages

     27,592       39,993       62,615       86,449       140,335  

Other revenue

     3,804       4,351       4,825       6,169       14,848  
   $ 88,165     $ 106,396     $ 138,949     $ 169,020     $ 273,697  

Gross bookings:(2)

          

Air ticketing

   $ 939,637.5     $ 943,699.1     $ 1,175,379.2     $ 1,275,747.8     $ 1,545,151.9  

Hotels and packages

     229,921.0       317,518.4       472,997.6       565,764.7       745,135.6  

Net revenue margins:(3)

          

Air ticketing

     6.0     6.6     6.1     6.0     7.7 %(4) 

Hotels and packages

     12.0     12.6     13.2     15.3     18.8

 

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 relevant information regarding 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

 

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  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,  
    2013     2014     2015     2016     2017     2013     2014     2015     2016     2017     2013     2014     2015     2016     2017     2013     2014     2015     2016     2017  
    (in thousands)  

Revenue

  $ 60,889     $ 66,523     $ 74,325     $ 78,172     $ 118,514     $ 164,129     $ 184,501     $ 220,512     $ 251,713     $ 314,254     $ 3,804     $ 4,351     $ 4,825     $ 6,169     $ 14,848     $ 228,822     $ 255,375     $ 299,662     $ 336,054     $ 447,616  

Less:

                                       

Service Cost

    4,120       4,471       2,816       1,770       —         136,537       144,508       157,897       165,264       173,919       —         —         —         —         —         140,657       148,979       160,713       167,034       173,919  

Revenue less service cost

  $ 56,769     $ 62,052     $ 71,509     $ 76,402     $ 118,514     $ 27,592     $ 39,993     $ 62,615     $ 86,449     $ 140,335     $ 3,804     $ 4,351     $ 4,825     $ 6,169     $ 14,848     $ 88,165     $ 106,396     $ 138,949     $ 169,020     $ 273,697  

 

(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, discounts and refunds.
(3) Net revenue margins is defined as revenue less service cost as a percentage of gross bookings.
(4) In fiscal year 2017, we recognized incremental revenue of $9.2 million based on quarterly evaluation of trends of refund rights exercised by our customers along with a change in the estimate for provisions for cancelled tickets pursuant to confirmation from vendor. Assuming such incremental revenue is excluded, our net revenue margin for air ticketing for fiscal year 2017 would be 7.1%.

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

 

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D. Risk Factors

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

Risks Related to Us and Our Industry

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

Our business and financial performance is affected by the health of the travel industry in India and worldwide, including changes in supply and pricing. Events specific to the travel industry that could negatively affect our business include continued fare increases, travel-related strikes or labor unrest, general civil unrest, fuel price volatility and bankruptcies or liquidations of our suppliers. For example, events in the Middle East over the past several years have resulted in an adverse impact on travel to that region. Such events also impact crude oil prices which may have an adverse impact on the travel industry globally, including our business. Similarly, political unrest in Bangkok, Thailand, has negatively impacted travel to those locations. Sudden disruptions in travel have also followed terrorist attacks such as the events of September 11, 2001 in the United States, the terrorist attacks in Paris, Brussels and the United Kingdom between 2015 and 2017 and adverse weather conditions or other natural disasters such as Hurricane Katrina, the April 2015 Nepal earthquake, the September 2014 Kashmir (India) floods and pandemic situations. In addition, the drop in the average value of the Indian Rupee as compared to the US dollar in fiscal year 2014 adversely impacted the Indian travel industry as it made travel for Indian consumers outside of India more expensive.

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

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

Consumer purchases of discretionary items generally decline during periods of recession and other periods in which disposable income is adversely affected. As a substantial portion of travel expenditure, for both business and leisure, is discretionary, the travel industry tends to experience weak or reduced demand during economic downturns.

 

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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.

Since the beginning of the global financial crisis in the third quarter of 2008, adverse developments in the international financial markets have created challenging economic conditions for businesses and governments around the world. These adverse developments have included increased market volatility, tightened liquidity in credit markets, diminished expectations for economic growth and a reduction in consumer and business spending. While the global economy has since recovered to some extent, recovery remains fragile and slow-paced as high-income countries continue to suffer from volatility and slow growth. The global economy may be adversely impacted by unforeseen events beyond our control including incidents of actual or threatened terrorism, regional hostilities or instability, unusual weather patterns, natural disasters, political instability and health concerns (including epidemics or pandemics), defaults on government debt, tax increases and other matters that could reduce discretionary spending, tightening of credit markets and further declines in consumer confidence. In addition, the uncertainty of macro-economic factors and their impact on consumer behavior, which may differ across regions, makes it more difficult to forecast industry and consumer trends and the timing and degree of their impact on our markets and business, which in turn could adversely affect our ability to effectively manage our business and adversely affect our results of operations. The weakness and uncertainty in the global economy have negatively impacted both corporate and consumer spending patterns and demand for travel services, globally and in India, and may continue to do so in the future.

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

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

Our business is dependent on our ability to maintain our relationships and arrangements with existing suppliers, such as airlines which supply air tickets to us directly, Amadeus IT Group SA and Travelport Worldwide Ltd, our global distribution system, or GDS, service providers, Indian Railways, hotels, hotel suppliers and destination management companies, bus operators and car hire companies, as well as our ability to establish and maintain relationships with new travel suppliers. 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 or renew 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. For example, we have experienced short-term disruptions in the supply of tickets from domestic airlines in the past.

In addition, adverse economic developments affecting the travel industry could also adversely impact our ability to maintain our existing relationships and arrangements with one or more of our suppliers. In particular, adverse changes to the overall business and financial climate for the airline industry in India due to various factors including, but not limited to, rising fuel costs, high taxes, significant depreciation of the Indian Rupee as compared to the US dollar making travel for Indian consumers outside India more expensive, and increased liquidity constraints, could affect the ability of one or more of our airline suppliers to continue to operate or otherwise meet our demand for tickets, which, in turn, could materially and adversely affect our financial results. For example, during fiscal year 2013, Kingfisher Airlines, one of the major airlines in India and one of our airline

 

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suppliers, shut down its operations, which resulted in a decline in the total capacity in the airline industry in India. In addition, adverse changes to the overall business and financial climate for the airline industry in India due to various factors including, but not limited to, rising fuel costs, high taxes, significant depreciation of the Indian Rupee as compared to the US dollar making travel for Indian consumers outside India more expensive, and increased liquidity constraints, resulted in airlines in India reducing the base commissions paid to travel agencies. During fiscal year 2015, the domestic airlines in India continued to reduce the base commissions paid to travel agencies and we spent significantly on marketing and sales expenses to promote transactions on our mobile platforms in India and to promote our international hotels. These factors were mainly responsible for our net loss of $(18.4) million in fiscal year 2015. Any consolidation in the airline industry involving our suppliers may also adversely affect our existing relationships and arrangements with such suppliers. During fiscal year 2016 and 2017, we made significant investments in our ongoing customer inducement and acquisition programs, such as cash incentives and select loyalty program incentive promotions, to accelerate growth in our standalone hotel booking business in response to increased competition in the domestic travel market in India. This was the primary factor that resulted in our net loss of $(88.5) million and $(110.3) million in fiscal years 2016 and 2017, respectively.

No assurance can be given that our agreements or arrangements with our travel suppliers or GDS service providers will continue or that our travel suppliers or GDS service providers will not further reduce or eliminate fees or commissions or attempt to charge us for content, terminate our contracts, make their products or services unavailable to us as part of exclusive arrangements with our competitors or default on or dispute their payment or other obligations towards us, any of which could reduce our revenue and 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. See also “— Some of Our Airline Suppliers (Including Our GDS Service Providers) May Reduce or Eliminate the Commission and Other Fees They Pay to Us for the Sale of Air Tickets and This Could Adversely Affect Our Business and Results of Operations.”

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

We rely on various travel suppliers to facilitate the sale of our travel services. We do not have formal agreements with many of our travel suppliers, 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, requiring periodic renewal and providing our counterparties with a right to terminate at short notice or without notice. Some of these agreements are scheduled to expire in the near future and we are in the process of renewing those agreements. Many of our suppliers with whom we have formal agreements, including airlines, are also able to alter the terms of their contracts with us at will or at short notice. 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 or temporarily suspended by IRCTC without prior notice and at its sole discretion. Termination, non-renewal or suspension or an adverse amendment of any of the abovementioned agreements and/or arrangements could have a material adverse effect on our business, financial condition and results of operations.

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

We sustained operating losses in fiscal years from 2013 to 2017 and in all our fiscal years prior to and including fiscal year 2010. While we generated operating profits in fiscal years 2011 and 2012, there can be no assurance that we will be able to return to profitability or that we can avoid operating losses in the future. We expect to continue making investments in mobile technology, marketing and sales promotion (including brand building) and customer acquisition programs and expanding our hotels and packages offerings as part of our long-term strategy to increase the net revenue contribution of our hotels and packages business and to increase the share of customers visiting and transacting with us over our mobile platforms. The degree of increase in these

 

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expenses will be largely based on anticipated organizational growth and revenue trends, the competitive environment, pricing trends and trends in online penetration of the Indian travel market. As a result, any decrease or delay in generating additional sales volumes and revenue could result in substantial operating losses. For example, during fiscal years 2016 and 2017, we made significant investments in our ongoing customer inducement and acquisition programs, such as cash incentives and select loyalty program incentive promotions, to accelerate growth in our standalone hotel booking business in response to increased competition in the domestic travel market in India. This was the primary factor that resulted in our net loss of $(88.5) million and $(110.3) million in fiscal year 2016 and 2017, respectively.

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

The Indian hotels industry is intensely competitive. We face increased competition in our hotels and packages segment primarily from established Indian travel market players, such as Cox & Kings, Yatra and Thomas Cook, and new entrants such as OYO Rooms and Paytm. In order to drive our growth strategy in the hotels business, we have incurred increased marketing and sales promotion expenses. For example, during fiscal year 2017, our marketing and sales promotion expenses increased to $224.4 million (including the contribution of marketing and sales promotion expenses from the ibibo Group, which we acquired in January 2017) from $109.0 million in fiscal year 2016 as we made significant investments in our ongoing customer acquisition programs, such as cash incentives and select loyalty program incentive promotions, to accelerate growth in our standalone hotel booking business in response to increased competition in the domestic travel market in India. We may continue to incur such expenses in future, including expenses associated with our strategy of converting our traditional offline customers into online customers. We have incurred and expect to continue to incur significant expenses associated with customer inducement and acquisition programs in our hotels and packages business to offer cash incentives and select loyalty program incentive promotions from time to time on our booking platforms. We may also increase our marketing and sales promotion expenses as a result of our expansion into new markets and such expenses may not be offset by increased revenue particularly at the initial commencement of business in these new markets. We may also be required to lower our fees and commissions charged to hotel suppliers to retain and increase our market share in response to competitors that are able to negotiate better rates and higher performance linked and other incentives from such suppliers, including new entrants with greater financial resources than us. We may also incur increasing marketing and sales promotion expenses as we grow our redBus business (which we acquired as part of our acquisition of the ibibo Group), which competes with, among others, Abhibus, Paytm and other regional competitors. Such expenses and any loss of revenue from competitive pressures may adversely affect our business, financial condition and results of operations.

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

We currently rely on a variety of third-party systems, service providers and software companies, including the GDS and other electronic central reservation systems used by airlines, various offline and online channel managing systems and reservation systems used by hotels and accommodation suppliers and aggregators, systems used by Indian Railways, and systems used by bus and car operators and aggregators, as well as other technologies used by payment gateway providers. 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, debit card, net banking and e-wallet payments;

 

    provide computer infrastructure critical to our business; and

 

    provide customer relationship management, or CRM, software services.

 

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

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

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

Part of our growth strategy is the pursuit of strategic investments and acquisitions, and we have made a number of investments and acquisitions in the past. For example, in 2012, we acquired a 100% equity interest in the group of companies known as the Hotel Travel Group, including its principal operating subsidiaries, Hotel Travel Limited, Malaysia and HTN Co., Ltd., Thailand. The Hotel Travel Group is an established travel company operating in Southeast Asia. In 2014, we acquired a 100% equity interest in the group of companies known as the Easytobook.com group, or the ETB Group, which primarily operates through its website www.easytobook.com and offers its customers online hotel reservations in Europe, North America and other global travel destinations. In January 2017, we acquired a 100% equity interest in the ibibo Group, which provides online travel services in India. We believe that our investments and acquisitions serve to strengthen our presence in key geographic markets and expand the travel products and services that we offer our customers.

There can be no assurance that our investments and acquisitions will achieve their anticipated benefits. During fiscal year 2017, we significantly reduced our Hotel Travel Group operations and recognized an impairment of related goodwill and brands of $14.6 million. Following the completion of our acquisition of the ibibo Group in January 2017, we now own three brands, MakeMyTrip and goibibo, through which we operate similar businesses in the online travel industry and redBus, through which we operate our bus ticketing platform. There can be no assurance that we will be able to operate all our businesses successfully or that one brand will not attract business from the other. We may not be able to integrate acquired operations, personnel and technologies successfully or effectively manage our combined business following the acquisition. Our investments and acquisitions may subject us to uncertainties and risks, including potential ongoing and unforeseen or hidden liabilities, diversion of management resources and cost of integrating acquired businesses. We may also experience difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business and retaining suppliers and customers of the acquired business.

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

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

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

Our presentation currency is the US dollar. However, the functional currency of MMT India and ibibo India, our key operating subsidiaries, is the Indian Rupee. We receive a substantial portion of our revenue in Indian Rupees and most of our costs are incurred in Indian Rupees. Any fluctuation in the value of the Indian Rupee against the US dollar, such as the approximately 2.5% depreciation in the average value of the Indian Rupee as

 

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compared to the US dollar in fiscal year 2017 as compared to the average value of the Indian Rupee against the US dollar in fiscal year 2016, will affect our results of operations. The drop in the average value of the Indian Rupee as compared to the US dollar in fiscal year 2017 adversely impacted the Indian travel industry as it made outbound travel for Indian consumers more expensive. In addition, our exposure to foreign exchange risk also arises in respect of our non-Indian Rupee-denominated trade and other receivables, trade and other payables, and cash and cash equivalents.

Based on our operations in fiscal year 2017, a 10.0% appreciation of the US dollar against the Indian Rupee as of March 31, 2017, assuming all other variables remained constant, would have increased our loss for fiscal year 2017 by $5.5 million. Similarly, a 10.0% depreciation of the US dollar against the Indian Rupee as of March 31, 2017, assuming all other variables remained constant, would have decreased our loss for fiscal year 2017 by $5.5 million.

We are also exposed to movements between the US dollar and the Indian Rupee in our operations, as 1.8%, 1.1% and 0.2% of our revenue for fiscal years 2015, 2016 and 2017, respectively, was generated by MMT India and, in respect of fiscal year 2017, also by the ibibo Group from its air ticketing business, and received in US dollars, although our expenses are generally incurred in Indian Rupees. Additionally, we primarily receive revenue from our hotels and packages business in Indian Rupees, but a portion of our expenses in this segment (those relating to outbound hotels and 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. Fluctuation in the Indian Rupee-US dollar exchange rate could have a material adverse effect on our business and our financial condition and results of operations as these are reported in US dollars.

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

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

Further, many of our contracts with outsourcing service providers are short-term or have short notice periods. For example, our agreement with Intelenet Global Services Private Limited, or Intelenet, which provides call center services for our hotels and packages business is for a renewable term of three years but may be terminated by either party on two months’ notice. The agreements with some of our outsourcing service providers, including 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 in the case of Motif India Infotech and after the initial one-year term for iEnergizer IT Services. In the event one or more of our contracts with our outsourcing service providers is terminated on short notice, we may be unable to find alternative outsourcing service providers on commercially reasonable terms, or at all. Further, the quality of the service provided by a new or replacement outsourcing service provider may not meet our requirements, including during the transition and training phase. Hence, termination of any of our contracts with our outsourcing service providers could cause a decline in the quality of our services and disrupt and adversely affect our business, results of operations and financial condition.

 

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

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 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, mobile applications, 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 in India and Worldwide is Intensely Competitive, and We May Not Be Able to Effectively Compete in the Future.

The 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 both in India and abroad, such as cleartrip.com, expedia.co.in, travelocity.co.in, yatra.com, booking.com and agoda.com, as well as traditional travel agencies, tour operators, travel suppliers and operators of travel industry reservation databases. Large, established Internet search engines and more recent entrants in the industry have also 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. Certain of our competitors have launched brand marketing campaigns to increase their visibility with customers. For example, trivago has advertised extensively on television in India since 2015. In addition, we face price competition from new entrants that offer discounted rates and other incentives from time to time. 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 like us, by promoting direct distribution channels. Many airlines, hotels, car rental companies and tour operators have call

 

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centers and have established their own travel distribution websites and mobile applications. From time to time, travel suppliers offer advantages, such as bonus loyalty awards and lower transaction fees or discounted prices, when their services and products are purchased from supplier-related channels. We also compete with competitors who may offer less content, functionality and marketing reach but at a relatively lower cost to suppliers. If our access to supplier-provided content or features were to be diminished either relative to our competitors or in absolute terms or if we are unable to compete effectively with travel supplier-related channels or other competitors, our business could be materially and adversely affected.

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

In our air ticketing business, we generate revenue through commissions and incentive payments from airline suppliers, service fees charged to our customers and fees from our GDS service providers. Our airline suppliers may reduce or eliminate the commissions and incentive payments they pay to us. For example, few airlines in India have reduced the base commissions paid to travel agencies during fiscal year 2015. To the extent any of our airline suppliers further reduce or eliminate the commissions or incentive payments they pay to us in the future, our revenue may be further reduced unless we are able to adequately mitigate such reduction by increasing the service fees we charge to our customers in a sustainable manner. Any increase in service fees, to mitigate reductions in or elimination of commissions or otherwise, may also result in a loss of potential customers. Further, our arrangements with the airlines that supply air tickets to us may limit the amount of service fees that we are able to charge our customers. Our business would also be negatively impacted if competition or regulation in the travel industry causes us to reduce or eliminate our service fees.

We Depend on and Expect to Continue to Depend on a Small Number of Airline Suppliers in India for a Significant Percentage of our Air Ticketing Revenue.

As a substantial portion of our air ticketing revenue is represented by base commissions and incentive payments paid to us by a relatively small number of domestic airlines, a reduction or elimination in base commissions and incentive payments by any one or all of these airlines could have a material adverse effect on our revenue.

In addition, our reliance on a small number of airline suppliers in India gives those airline suppliers additional bargaining power in negotiating agreements with us. A reduction or elimination of base commissions and incentive payments by any of these domestic airline suppliers, the loss of any of these domestic airline suppliers or a domestic airline supplier exerting significant price and margin pressure on us could materially and adversely affect our business, financial condition and results of operations.

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

We believe continued investment in our 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. 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. With the acquisition of the ITC Group in November 2012, we acquired the “ITC” brand, which we believe is a well-known brand in Southeast Asia. We also acquired the “goibibo” and “redBus” brands, which we believe are well-known in India, through our strategic combination with the ibibo Group by way of an acquisition of the ibibo Group in January 2017. We have invested and intend to continue to invest in developing and promoting these brands. There is no assurance that we will be able to

 

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successfully maintain or enhance consumer awareness of our brands. Even if we are successful in our branding efforts, such efforts may not be cost-effective. Our marketing costs may also increase as a result of inflation in media pricing (including search engine keywords). If we are unable to maintain or enhance consumer awareness of our brands and generate demand in a cost-effective manner, it would negatively impact our ability to compete in the travel industry and would have a material adverse effect on our business. 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 strategies involve expanding our hotels and packages business (including through our travel agents’ network), expanding our service and product offerings, enhancing our service platforms by investing in technology, expanding into new geographic markets and pursuing strategic partnerships and acquisitions.

Our success in implementing our growth strategies is affected by:

 

    our ability to expand our businesses through strategic acquisitions and successfully integrate such acquisitions, including the ibibo Group;

 

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

 

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

 

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

 

    our ability to build or acquire required technology;

 

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

 

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

 

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

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

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

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

We generally do not assume inventory risk in our air ticketing business as we typically act as an agent. However, 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. When we sell pre-purchased tickets to our customers, revenue is accounted for on a “gross” basis (representing the price of the tickets paid by our customers) and the amount spent to pre-purchase the ticket is classified as a service cost. We obtain inventory for most hotels outside India

 

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through contracts with online travel agents and aggregators outside India. In some instances, in order to enjoy special negotiated rates for these hotels, we pre-purchase hotel room nights and assume inventory risk on them. If we are unable to sell pre-purchased tickets or hotel room nights inventory as anticipated either at all or at expected rates, our revenue and business may be adversely affected.

Our International Operations Involve Additional Risks.

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

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

 

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

 

    differences in consumer preferences in such markets;

 

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

 

    competition from providers of travel services in such foreign countries;

 

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

 

    currency exchange rate fluctuations.

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

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

We utilize Internet search engines such as Google and Yahoo! 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 Google or Yahoo! 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.

 

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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 brands 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 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. In fiscal year 2017, our key operating subsidiaries in India and Malaysia incurred losses of $0.3 million and $0.7 million, respectively, due to unauthorized credit card transactions. These losses pertained to credit card or digital commerce fraud committed by third parties on our websites through the purchase of air tickets and hotels and packages products using fraudulent credit cards.

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 and through international credit and debit cards are secured by “Verified by VISA,” “MasterCard SecureCode,” “American Express SafeKey,” “Diners ProtectBuy” or “RuPay Pay Secure” 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.

Our Processing, Storage, Use and Disclosure of Customer Data of Our Customers or Visitors to Our Websites 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

 

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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 Indian 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. India has also implemented privacy laws, including the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, which impose limitations and restrictions on the collection, use and disclosure of personal information. Any liability we may incur for violation of such laws and regulations and related costs of compliance and other burdens may adversely affect our business and profitability.

We 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.

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

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

We have registered the domain names www.makemytrip.com (which includes the sub-domain “us.makemytrip.com” for our US website), www.makemytrip.ae, www.makemytrip.com.sg, www.goibibo.com, www.redbus.in, www.luxury.com.sg and www.indiaahoy.com and have full legal rights over these domain names for the period for which such domain names are registered. We primarily conduct our business under the “MakeMyTrip,” “goibibo” and “redBus” brand names and logos. We have registered the trademark “MakeMyTrip” in India, Mauritius, Bhutan, Nepal, Singapore, Taiwan, Indonesia, European Union, Canada, Australia, Malaysia, Saudi Arabia, Qatar, United Arab Emirates and Bahrain, and we have applied for registration in Sri Lanka, Kuwait, Oman and Japan. We have also registered the following logos and word marks in India: “IBIBO,” “GOIBIBO,” “redBus.in,” “Ryde,” “Ryde by Ibibo,” “Ibibo Ryde” and “goCash.” The word

 

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mark “MakeMyTrip” and trademark “MakeMyTrip.com-India in every trip” are registered in the United States. We have applied for registration of our new “MY” MakeMyTrip logo and our MakeMyTrip mark with our new logo in India. We have registered copyrights of our logos and brand names “MakeMyTrip,” “goibibo” and “redBus” in India and copyright registration of certain specific representations of the logo “my.”

The logos “India Ahoy” and the word mark “Travel Talkies,” logo and word mark “tripalong,” “MakeMyTrip — Memories Unlimited,” “MakeMyTrip-Dil Toh Roaming Hai,” “Dil Toh Roaming Hai” are also registered trademarks in India. We have applied for trademark registration of the logos and word marks “MakeMyTrip — Hotels Unlimited,” “routeplanner” and “Uncancel,” the logo “my” and the word mark “MMT,” in India and such applications are currently pending. We have filed responses to objections raised by the Trademark Registry to certain of these applications. Our word mark “Dil Toh Roaming Hai” and word mark and logo “MakeMyTrip.com-India in every trip” are registered as trademarks in the United States. We have registered the service mark for “ITC” in Thailand and have applied for registration of the trademark “ITC” in Thailand. We have also obtained an assignment over the trademark “Luxury Tours & Travel.” We have also applied for patents in India for certain aspects of our technological systems.

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

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

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

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

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

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

 

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The Companies Act, 2013 and the rules thereunder, or the Companies Act, contains significant changes to Indian company law, including in relation to the issue of capital by companies, related party transactions, corporate governance, audit matters, shareholder class actions and restrictions on the number of layers of subsidiaries. While most of the provisions of the Companies Act are currently effective, certain provisions of the Companies Act, 1956 remain in effect.

The Government of India has rolled out comprehensive national goods and services tax, or GST, law that combines taxes and levies by the Central and State Governments into a unified tax structure with effect from July 1, 2017. The implementation of GST has significant impact on overall tax computation and compliance. We have implemented necessary changes to our business processes, accounting and IT systems in compliance with GST law. However, some of our suppliers are still in process of making necessary changes to their pricing strategies, product designs and IT system which may pose additional challenges for a near short term. We would also incur additional tax compliance costs under the new tax law.

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

A company is said to be a resident in India if it is incorporated in India or if the control and management of its affairs is situated wholly in India. Individuals and companies that do not fulfil the above criteria are treated as non-residents for purposes of the Income-tax Act. The Finance Act, 2015 has amended this definition and brought in the concept of Place of Effective Management (PoEM) whereby a company would be considered a resident in India if its PoEM in that year is in India. Thus, a foreign company will be resident in India if its PoEM in that year is in India. The definition of PoEM has been explained to mean a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole, are in substance made. PoEM is an internationally recognized concept and given due consideration by the Organisation for Economic Co-operation and Development. The Finance Act 2016 had deferred the applicability of PoEM by one year and accordingly it shall be applicable from Financial Year 2017-18 onwards. The final guidelines for determining PoEM are yet to be notified and may have underlying tax consequences.

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

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

 

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

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 websites and our mobile offerings. According to the IAMAI’s forecasts, India is projected to have 314 million mobile internet users by 2017 and 369 million by 2018. 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. Any slowdown or negative deviation in the anticipated increase in Internet penetration in India may also adversely affect our business and prospects. Finally, a slowdown in smartphone adoption or usage in India may lead to slower growth in the number of transactions completed through our mobile applications, which may adversely affect our business and prospects.

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

As of March 31, 2017, each of Ctrip.com International, Ltd., or Ctrip, Wasatch Advisors Inc. and Capital World Investors beneficially owned 18.70%, 9.92% and 8.94% of our issued and outstanding ordinary shares, respectively. As of March 31, 2017, Naspers Limited, or Naspers, (through its wholly-owned indirect subsidiary, MIH Internet) beneficially owned 100.0% of our issued and outstanding Class B Shares.

By virtue of such significant shareholdings, these shareholders 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. In particular, MIH Internet and its affiliates are entitled to representation on our board of directors in proportion to their beneficial ownership in MakeMyTrip and to representation on all board committees, for so long as MIH Internet and its affiliates beneficially own 10% or more of our issued and outstanding voting securities. The fact that MIH Internet and its affiliates are not restricted from purchasing additional ordinary shares of MakeMyTrip on the open market and can further increase their ownership in MakeMyTrip means that MIH Internet and its affiliates may be able to acquire enough ordinary shares of MakeMyTrip to control more than a majority of our issued and outstanding voting securities and consequently the right to appoint a majority of our board of directors. In addition, important matters facing MakeMyTrip which constitute Reserved Matters (as defined herein) must be approved by a majority of the total number of directors (including the Class B directors) and a majority of the Class B directors, which provides MIH Internet and its affiliates with significant veto rights over such matters. The Terms of Issue governing the Class B Shares, or the Terms of Issue, also provide that certain transferees of Class B Shares may, subject to certain minimum ownership thresholds, acquire some of the same rights with respect to board representation and Reserved Matters that MIH Internet currently has.

 

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The interests of these shareholders and their affiliates, as well as certain transferees of Class B Shares described above, may be different from or conflict with the interests of our other shareholders and their influence may result in the delay or prevention of a change of management or control of our company or other significant actions affecting our company, even if such transactions or actions may be beneficial to our other shareholders.

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

Our business and future success is substantially dependent on the continued services and performance of our key executives, senior management and 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 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.

Inaccurate Information from Suppliers May Lead to Customer Complaints.

Our customers that purchase hotel room inventory or packaged tours booked online through our websites may rely on the description of the accommodation presented on such websites to ascertain the quality of amenities and services provided at the relevant accommodation. We receive information utilized in the accommodation description on our websites directly from the accommodation provider. To the extent that the information presented on our websites does not reflect the actual quality of amenities and services at the accommodation, we may face customer complaints that may have an adverse effect on our reputation and the likelihood of repeat customers, which in turn may adversely affect our business.

Risks Related to Operations in India

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

A substantial portion of our business and most of our employees are located in India, and we intend to continue to develop and expand our business in India. Consequently, our financial performance and the market price of our ordinary shares will be affected by changes in exchange rates and controls, interest rates, 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 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.

 

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

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

In fiscal years 2015, 2016 and 2017, 84.4%, 87.3% and 92.8%, respectively, of our revenue was derived directly from sales by our subsidiaries in India. The performance and growth of our business are necessarily dependent on economic conditions prevalent in India, which may be materially and adversely affected by political instability or regional conflicts, a general rise in interest rates, inflation, and economic slowdown elsewhere in the world or otherwise. The CIA World Factbook estimates that consumer inflation in India was 4.9% in 2015 and 5.6% in 2016. 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 in recent years, although it has experienced economic slowdowns in the past. A change in government or a change in the economic and deregulation policies could adversely affect economic conditions prevalent in the areas in which we operate and our business. In November 2016, the Government of India and the Reserve Bank of India issued notifications withdrawing certain high-value denominations of currency notes as legal tender. While the long-term effects of these measures are unclear, the measures may adversely affect India’s economy and growth rate in the short term. 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 continued or 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.

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

Terrorist attacks and other acts of violence or war, such as the terrorist attacks in Paris, Brussels and the United Kingdom between 2015 and 2017, as well as those 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. 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

 

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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. For example, in September 2014, the state of Jammu and Kashmir in northern India, a popular tourism destination, experienced widespread floods and landslides, in April 2015, an earthquake occurred in the Federal Democratic Republic of Nepal with aftershocks and landslides subsequently affecting the country and in December 2015, floods affected the Chennai region. 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 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 and May Require Us to Make Changes to Our Business, 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, or FDI 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 pricing, valuations of shares and sources of funding for such investments and may in certain cases include prior notice to or approval of the Government of India, may adversely affect our ability to make investments in India, including through MMT India. Further, India’s Foreign Exchange Management Act, 1999, as amended, and the rules and regulations promulgated thereunder, or FEMA, restrict us from lending to or borrowing from our Indian subsidiaries. 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. Further, the Government of India has recently made and may continue to make revisions to the FDI Policy on e-commerce in India (including in relation to business model and permitted services). Such changes may require us to make changes to our business in order to comply with Indian law.

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

The Competition Act, 2002, as amended, or the Competition Act, regulates practices that could have an appreciable adverse effect on competition in India. Under the Competition Act, any arrangement, understanding or action, whether formal or informal, which causes or is likely to cause an appreciable adverse effect on competition in India is void and may result in substantial penalties and compensation to be paid to persons shown to have suffered losses. Any agreement among competitors which directly or indirectly determines purchase or sale prices, results in bid rigging or collusive bidding, limits or controls production, supply, markets, technical development, investment or the provision of services, or shares the market or source of production or provision of services in any manner, including by way of allocation of geographical area or types of goods or services or number of customers in the market, is presumed to have an appreciable adverse effect on competition. Further, the Competition Act prohibits the abuse of a dominant position by any enterprise either directly or indirectly,

 

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including by way of unfair or discriminatory pricing or conditions in the sale of goods or services, using a dominant position in one relevant market to enter into, or protect, another relevant market, and denial of market access, and such practices are subject to substantial penalties and may also be subject to compensation for losses and orders to divide the enterprise. Further, the Competition Commission of India has extraterritorial powers and can investigate any agreements, abusive conduct or combination occurring outside India if such agreement, conduct or combination has an appreciable adverse effect on competition in India.

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

Acquisitions, mergers and amalgamations which exceed certain revenue and asset thresholds require prior approval by the Competition Commission of India. Any such acquisitions, mergers or amalgamations which have an appreciable adverse effect on competition in India are prohibited and void. There can be no assurance that we will be able to obtain approval for such future transactions on satisfactory terms, or at all.

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

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

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

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

 

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shareholders. Taken together with the provisions of our Constitution, some of these differences may result in your having greater difficulties in protecting your interests as our shareholder than you would have as a shareholder of a United States corporation. This affects, among other things, the circumstances under which transactions involving an interested director are voidable, whether an interested director can be held accountable for any benefit realized in a transaction with us, what rights you may have as a shareholder to enforce specified provisions of the Mauritius Companies Act or our Constitution, and the circumstances under which we may indemnify our directors and officers.

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

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

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 License, 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 15.0% in Mauritius. Our company holds a specific Tax Residence Certificate for India, valid until May 4, 2018 and a general Tax Residence Certificate for all jurisdictions, valid until May 8, 2018, from the Mauritius Revenue Authority, as per the guidelines prescribed by the Mauritius Revenue Authority. These tax residence certificates are renewed annually and we have applied for their renewal and currently await the renewed certificates.

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

 

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Risks Related to Our Ordinary Shares

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

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

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

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

As a foreign private issuer whose ordinary shares are listed on the Nasdaq Global Market, we are permitted to, and we will, follow certain home country corporate governance practices in lieu of certain Nasdaq 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 currently intend 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 to have a majority of our board of directors to be independent; do not require us 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.

 

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

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

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

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

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

As of March 31, 2017, we had 52,706,194 ordinary shares and 38,971,539 Class B Shares outstanding. All of the ordinary shares sold in our prior public offerings are freely tradable without restriction or further registration under the US Securities Act of 1933, or the Securities Act, unless held by our “affiliates” as that term is defined in Rule 144 under the Securities Act. Subject to applicable restrictions and limitations under Rule 144 of the Securities Act, all of our shares outstanding before our prior public offerings will be eligible for sale in the public market. If these shares are sold, or if it is perceived that they will be sold, in the public market, the trading price of our ordinary shares could decline. We cannot predict what effect, if any, market sales of ordinary shares held by our significant shareholders or any other shareholder or the availability of these ordinary shares for future sale will have on the market price of our ordinary shares.

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

On January 31, 2017, we issued 38,971,539 Class B Shares to MIH Internet as consideration for the acquisition of the ibibo Group and a cash contribution of $83.3 million from MIH Internet (representing 40% of our consolidated net working capital upon the completion of the acquisition, after giving effect to the cash contribution from MIH Internet). In addition, we issued 413,035 ordinary shares to MIH Internet for an aggregate consideration of $8.75 million. On May 5, 2017, we completed a private placement of 5,500,000 of our ordinary shares to various investors (including 916,666 of our ordinary shares to Ctrip) at a price of $36.00 per ordinary share and 3,666,667 of our Class B Shares to MIH Internet at a price of $36.00 per Class B Share, which generated total gross proceeds of $330 million. The issuance of ordinary shares upon the conversion of our Class B Shares may result in substantial dilution to each holder of ordinary shares by reducing that shareholder’s percentage ownership of our total outstanding shares. In addition, any future issuance of equity securities could dilute the interests of our shareholders and could substantially decrease the trading price of our ordinary shares. 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.

 

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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 Shareholders’ Ability to Receive Dividends on Our Ordinary Shares.

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

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

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

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

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

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

 

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

Provisions under the US Foreign Account Tax Compliance Act and Treasury Regulations thereunder, commonly referred to as “FATCA,” generally may impose 30.0% withholding on certain “withholdable payments” and “foreign passthru payments” (each as defined in the US Internal Revenue Code) made by a “foreign financial institution” (as defined in the US Internal Revenue Code) that has entered into an agreement with the IRS to perform certain diligence and reporting obligations with respect to the foreign financial institution’s US-owned accounts (each such foreign financial institution, a “Participating Foreign Financial Institution”). If we were treated as a foreign financial institution and if we become a Participating Foreign Financial Institution, to the extent payments on the ordinary shares are considered foreign passthru payments, such withholding may be imposed on such payments to any foreign financial institution (including an intermediary through which a holder may hold the ordinary shares) that is not a Participating Foreign Financial Institution or any other investor who does not provide information sufficient to establish that the investor is not subject to withholding under FATCA, unless such foreign financial institution or investor is otherwise exempt from FATCA. Under current guidance, the term “foreign passthru payment” is not defined and it is therefore not clear whether or to what extent payments on the ordinary shares would be considered foreign passthru payments, although IRS guidance has indicated that the definition of “foreign passthru payment” is intended to cover payments that are attributable to underlying US source income. Withholding on foreign passthru payments would not be required with respect to payments made before January 1, 2019. The United States has entered into intergovernmental agreements with certain non-US jurisdictions that will modify the FATCA withholding regime described above. It is not yet clear how the intergovernmental agreements will address foreign passthru payments and whether such intergovernmental agreements may relieve foreign financial institutions of any obligation to withhold on foreign passthru payments.

 

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of our Company

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

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

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

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

 

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

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

On January 7, 2016, we entered into an agreement for the issue of $180.0 million of 4.25% convertible notes due in 2021, redeemable at par value, in two tranches to Ctrip. On October 28, 2016, we issued an aggregate of 9,857,028 ordinary shares (comprising 659,939 ordinary shares issued from treasury shares held by us and 9,197,089 new ordinary shares) to Ctrip upon conversion of all its convertible notes.

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

On January 31, 2017, we issued 38,971,539 Class B Shares to MIH Internet as consideration for the acquisition of the ibibo Group and a cash contribution of $83.3 million from MIH Internet (representing 40% of our consolidated net working capital upon the completion of the acquisition, after giving effect to the cash contribution from MIH Internet). As part of the consideration for the acquisition, we also issued 413,035 ordinary shares to MIH Internet for an aggregate value of $8.75 million.

As of March 31, 2017, our stated capital was $1,695,327,193.42 comprising 52,706,194 ordinary shares and 38,971,539 Class B Shares with a par value of $0.0005 each.

On May 5, 2017, we completed a private placement of 5,500,000 of our ordinary shares to various investors

(including 916,666 of our ordinary shares to Ctrip) at a price of $36.00 per ordinary share and 3,666,667 of our Class B Shares to MIH Internet at a price of $36.00 per Class B Share, which generated total gross proceeds of $330 million.

As of June 30, 2017, our stated capital was $2,025,329,229.23 comprising 58,357,828 ordinary shares and 42,638,206 Class B Shares with a par value of $0.0005 each.

Investments and Acquisitions

Acquisition of the ibibo Group

On January 31, 2017, we undertook a strategic combination with the ibibo Group by way of an acquisition of 100% equity interest in the ibibo Group from MIH Internet, an indirect subsidiary of Naspers, pursuant to a Transaction Agreement dated October 18, 2016 (“Transaction Agreement”). In consideration for the acquisition of the ibibo Group and MIH Internet’s cash contribution of $83.3 million to our holding company (representing 40% of our consolidated net working capital upon the completion of the acquisition after giving effect to the cash contribution from MIH Internet), we issued 38,971,539 Class B Shares to MIH Internet and MIH Internet exercised its option to purchase 413,035 new ordinary shares for a total cash consideration of $8.75 million. Upon completion of the acquisition, the size of our board of directors was decreased from eleven members to ten members, of which MIH Internet is entitled to nominate four (one of whom will be a resident of Mauritius). For further details, see “Item 10. Additional Information — B. Memorandum and Articles of Association — Class B Shares,” “Item 3. Key Information — D. Risk Factors — Risks Related to Us and Our Industry — Our Strategic Investments and Acquisitions May Not Bring Us Anticipated Benefits, and We May Not Be Successful in Pursuing Future Investments and Acquisitions.”

The ibibo Group was founded in 2007 and provides online travel services in India through its consumer travel brands. The ibibo Group owns and operates www.goibibo.com, a hotel and travel packages aggregator and

 

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booking service focused on the Indian consumer travel market. The ibibo Group’s standalone hotels business is substantially similar to MMT India’s standalone hotels business and, following the completion of the acquisition of the ibibo Group, we continue to operate our hotels and packages business through MMT India under the MakeMyTrip brand, and ibibo India under the goibibo brand.

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

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

Notwithstanding our plans to continue to operate the ibibo Group’s businesses separately from MMT India’s, we plan to integrate certain backend functions, such as technology development, to support both businesses. Further, we believe that bringing together the MakeMyTrip, ibibo and redBus brands will strengthen each individual business. See also “Item 3. Key Information — D. Risk Factors —Risks Related to Us and Our Industry — Our Strategic Investments and Acquisitions May Not Bring Us Anticipated Benefits, and We May Not Be Successful in Pursuing Future Investments and Acquisitions.”

Other Acquisitions

In September 2014, we announced the establishment of our innovation fund, or the Innovation Fund, through which we will consider investing up to $3.0 million in each start-up or early-stage companies in the travel technology space. Through the Innovation Fund, we acquired a minority equity interest in Simplotel Technologies Private Limited, or Simplotel, in December 2014, and thereafter acquired additional shares of Simplotel in June and November 2015, and December 2016, which increased our equity shareholding in Simplotel to approximately 33%. Simplotel aims to provide hotels with responsive and optimized websites along with booking engines. We believe our investment in Simplotel will help to promote the online distribution of accommodation inventory in India.

In April 2015, we acquired certain assets of the online travel-planning service, Mygola.com, and the entire Mygola team joined our Company to focus on innovation in online travel. In April 2015, we acquired approximately 20.6% of the equity shares of Inspirock, Inc., which owns and operates www.inspirock.com, an online planning tool for developing custom-made itineraries. We believe that this investment will help us to further enhance our capabilities in the online tour planning space.

In July 2015, we acquired an approximate 30% stake in HolidayIQ Pte. Ltd., which owns and operates www.HolidayIQ.com, a travel information portal and recommendation search engine that is popular within the Indian travel community. We believe that this strategic investment will enable both companies to scale up hotel reviews and other content for Indian customers and to offer more compelling offerings on their platforms. Also in July 2015, we acquired an approximate 74.4% stake in Bona Vita Technologies Private Limited, a newly-incorporated company which operates an online travel marketplace for domestic and outbound India holiday and business travel packages through its website www.gofro.com.

Other Recent Developments

On May 5, 2017, we completed a private placement of 5,500,000 of our ordinary shares to various investors (including 916,666 of our ordinary shares to Ctrip) at a price of $36.00 per ordinary share and 3,666,667 of our

 

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Class B Shares to MIH Internet at a price of $36.00 per Class B Share, which generated total gross proceeds of $330 million.

B. Business Overview

Our financial and operating results for fiscal year 2017 include the financial and operating results of the ibibo Group for the two months ended March 31, 2017 following the completion of our acquisition of the ibibo Group on January 31, 2017.

We are a leading online travel company in India. Through our primary websites, www.makemytrip.com, www.goibibo.com and www.redbus.in, and mobile platforms, travelers can research, plan and book a wide range of travel services and products in India as well as overseas. Our services and products include air ticketing, hotels and packages, rail tickets, bus tickets, car hire and ancillary travel requirements such as facilitating access to third-party travel insurance and visa processing. As of March 31, 2017, we provided our customers with access to all major domestic full-service and low-cost airlines operating in India and all major airlines operating to and from India, over 40,000 hotels and over 13,500 alternative accommodations in India, over 240,000 hotels and properties outside India, Indian Railways and over 1,900 bus operators, including several major Indian and Singapore bus operators.

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

We have invested significant capital in our infrastructure and in sales and marketing efforts to build our brand, acquire customers and gain recognition, and recorded net losses for each of our fiscal years except for fiscal years 2011 and 2012. We recorded net losses in fiscal years 2009 and 2010 of $(7.3) million and $(6.2) million, respectively, and recorded net profits of $4.8 million and $7.0 million, respectively, in fiscal years 2011 and 2012. We recorded a net loss of $(27.6) million, $(20.9) million, $(18.4) million, $(88.5) million and $(110.3) million in fiscal years 2013, 2014, 2015, 2016 and 2017, respectively.

We have leveraged our significant market share in air tickets and our strong brand to rapidly diversify into the hotels and packages business, which represented 51.3% of our revenue less service cost during fiscal year 2017 and 51.1% in fiscal year 2016. The number of transactions for air tickets and hotels and packages booked through us was 5.4 million and 1.4 million, respectively, in fiscal year 2015, 7.0 million and 3.1 million, respectively, in fiscal year 2016 and 9.4 million and 6.9 million, respectively, in fiscal year 2017. Our revenue less service cost was $138.9 million in fiscal year 2015, $169.0 million in fiscal year 2016, and $273.7 million in fiscal year 2017.

Our websites and mobile platforms are designed to provide our customers with a user-friendly experience. According to SimilarWeb, our www.makemytrip.com desktop and mobile websites had a total average of over 11.2 million active users per month in fiscal year 2017, our www.goibibo.com desktop website had an average of over 1.7 million active users per month in fiscal year 2017, and our www.redbus.in desktop website had an average of over 1.9 million active users per month in fiscal year 2017. While we experienced a slight decrease in the average of number of active users per month on our desktop websites during fiscal year 2017, we believe that this is due to more customers shifting towards using our mobile website and mobile applications instead of our desktop website as a result of the increased use of smartphones and mobile devices in India.

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

 

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transactions are increasing rapidly and our mobile customer base has increased from 10,394 as of December 31, 2011 to 11.3 million as of March 31, 2017. As of March 31, 2017, our MakeMyTrip mobile application had been downloaded approximately 33.7 million times on Android, approximately 4.8 million times on iOS and approximately 0.5 million times on Windows Mobile. As of March 31, 2017, our goibibo mobile application had been downloaded approximately 20.8 million times on Android and approximately 2.5 million times on iOS. As of March 31, 2017, our redBus mobile application had been downloaded approximately 9.3 million times across mobile platforms. According to App Annie, our MakeMyTrip, goibibo and redBus mobile applications had over 24.1 million, 13.4 million and 8.6 million active users per month respectively in fiscal 2017. As of March 31, 2017, we have over 71 million users on our various MakeMyTrip, goibibo and redBus mobile and application platforms.

We have built advanced and secure technology platforms, which integrate our sales, customer service and fulfillment operations. Our technology platforms are scalable and can be upgraded to handle increased traffic and complexity of products with limited additional investment such as high traffic generated by promotional rates offered simultaneously by multiple travel operators. In order to meet the requirements of this growing Indian middle class travel market 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 have made selective acquisitions in the past to grow our business, enhance our hotel inventory in popular travel destinations for our user base and to gain access to technology. In January 2017, we undertook a strategic combination with the ibibo Group by way of an acquisition of 100% equity interest in the ibibo Group, which provides online travel services in India. The ibibo Group was founded in 2007 and provides online travel services in India through its consumer travel brands. The ibibo Group owns and operates www.goibibo.com, a hotel and travel packages aggregator and booking service focused on the Indian consumer travel market. The ibibo Group’s standalone hotels business is substantially similar to MMT India’s standalone hotels business and, following the completion of the acquisition of the ibibo Group, we continue to operate our hotels and packages business through MMT India under the MakeMyTrip brand and ibibo India under the goibibo brand. Goibibo also offers budget room bookings through GoStays on goibibo and air ticketing services on www.goibibo.com, which are comparable to the RightStay by MakeMyTrip and air ticketing services offered by MMT India. In addition, the ibibo Group also owns and operatesredBus, a leading online bus ticketing platform with a presence across India through www.redbus.in and in select countries overseas through other regional redBus websites.

We believe the strength of our brands, quality of our services, user-friendliness of our website experience, focus on our customers and efficacy of our marketing programs have enabled us to capture a significant share of the domestic air travel market in India, while increasing online penetration of the primarily-offline international air and hotels market in India. Our MakeMyTrip, goibibo and redBus brands have won a number of awards, including:

MakeMyTrip

 

    Gold in the category of Travel and Holidays at the Businessworld Golden Cart Awards (2017)

 

    Gold in the category of Best Travel and Tourism Brand by Social Samosa Social Media Awards (2017)

 

    Most Favorite Online Tour Operator award by Readers’ Travel Awards 2016

 

    Conde Nast Traveler Mobile Appies (2015) for the Most Innovative Travel App

 

    Best Travel Portal India (2014) by World Travel Awards

 

    Conde Nast Traveler Readers’ Travel Award – Favorite Online Travel Agent (2014, 2013)

 

    Favorite Travel Portal by Outlook Traveler (2015, 2014 and 2013)

 

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goibibo

 

    Silver in the category of Travel and Holidays at the Businessworld Golden Cart Awards (2016)

 

    Best Tech Travel Aggregator Brand Award by The Economic Times (2015)

 

    India’s No. 1 Brand in the category of Online Travel and Leisure by Business Standard (2015)

 

    Best website in the category of Leisure and Travel by Website of the Year (2014 and 2015)

redBus

 

    Bronze award (Effective Use Of Consumer Feedback category) at the ACEF Customer Engagement Awards (2017)

 

    Bronze award for the redBus annual calendar at the Bangalore Big Bang Awards (2016)

 

    Most Trusted Brand by IBC InfoMedia (2015)

 

    Most Trusted Brand (online travel category) and 13th Most Trusted Internet Brand (overall) in The Brand Trust Report, India Study (2015)

 

    mBillionth South Asia Award and Global Mobile Innovation Award by Eyefortravel (2014)

Our Strengths

We have the following competitive strengths:

A Leading Online Travel Company in India with Well-Recognized Brands. Since commencing our travel business in India in 2005, we have become a leading company in the Indian online travel market for air ticketing and hotels and packages bookings. In fiscal year 2015, 4.8 million transactions for domestic air tickets in India and 1.4 million transactions for hotels and packages were booked through us. In fiscal year 2016, 6.2 million transactions for domestic air tickets in India and 3.1 million transactions for hotels and packages were booked through us. In fiscal year 2017, 8.6 million transactions for domestic air tickets in India and 6.9 million transactions for hotels and packages were booked through us. While we experienced a slight decrease in the average number of active users per month on our desktop websites during fiscal year 2017, we believe that this is due to more customers shifting towards using our mobile website and mobile applications instead of our desktop website as a result of the increased use of smartphones and mobile devices in India. According to App Annie, our MakeMyTrip, goibibo and redBus mobile applications had over 24.1 million, 13.4 million and 8.6 million active users per month, respectively, in fiscal 2017. As of March 31, 2017, we have over 71 million users on our various MakeMyTrip, goibibo and redBus mobile and application platforms. Based on data from the DGCA, we estimate that one in five domestic air passengers in India booked their air ticket through our company in fiscal year 2017.

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

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

 

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well as non-resident Indians and others traveling to India from the United States, Southeast Asia, the United Arab Emirates and other countries. Our services and products include air tickets, hotels and packages, rail tickets, bus tickets, car hire and ancillary travel requirements such as facilitating access to travel insurance and visa processing. As of March 31, 2017, we provided our customers with access to all major domestic full-service and low-cost airlines operating in India and all major airlines operating to and from India, over 40,000 hotels and over 13,500 alternative accommodations in India, over 240,000 hotels and properties outside India, Indian Railways and over 1,900 bus operators, including several major Indian and Singapore bus operators. Our selection of hotels is diverse, with choices for travelers from one-star to five-star offerings and home stays and budget rooms through GoStays on ibibo and RightStay by MakeMyTrip for budget travelers seeking alternative accommodations. 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 websites, www.makemytrip.com, www.goibibo.com and www.redbus.in, our MakeMyTrip, goibibo and redBus mobile applications for Android and iOS, our United Arab Emirates-focused website, www.makemytrip.ae, our call centers, our airport counters and our various travel stores in 43 cities in India as of March 31, 2017. As of March 31, 2017, we had a network of approximately 3,191 registered agents across approximately 323 cities and towns in India. Such travel agents can access our MakeMyTrip business-to-business, or B2B, website which enables them to sell our full suite of online travel services to their customers. Our customers are now able to make bookings on our MakeMyTrip, goibibo and redBus mobile sites accessible through www.makemytrip.com, www.goibibo.com and www.redbus.in, and through our mobile applications for iOS and Android, which allow bookings for Indian and international flights, hotels and holiday packages, Indian bus offerings, trains and inter-city cabs. 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 continuously make improvements to our online hotel booking platforms to enhance the user experience for researching and booking air tickets, hotels, packages and bus tickets on www.makemytrip.com, www.goibibo.com and www.redbus.in. We also continue to focus on automation, for example by making changes to our MakeMyTrip and goibibo extranet sites to allow more of our hotel suppliers to use a self-service mode in managing their rates and inventory.

Our web-based booking engines have been designed to link to our suppliers’ systems either through “direct connects” or a GDS (we use both Amadeus CRS and Galileo GDS), and are capable of delivering real-time availability and pricing information for multiple options simultaneously. Our goibibo platform is hosted on Amazon Web Services, or AWS, which provides a high degree of reliability, security and scalability and helps us to maintain adequate capacity. In addition, we also provide extranet access to our hotel suppliers where they can update their rates, inventory and content on our websites.

Our technology platforms in India are able to handle up to a maximum of 3.0 million website requests at one time on our MakeMyTrip platform and 4.0 million on our goibibo platform. Our platforms are scalable, and can be upgraded to handle increased traffic and complexity of products with limited additional investment. In the past, we have experienced peak traffic on our websites when multiple airlines have offered promotional rates, simultaneously. On those occasions, on average our www.makemytrip.com website handled approximately 42,000 transactions and over 2.0 million searches in a day and our www.goibibo.com website handled approximately 80,000 transactions and over 4.0 million searches in a day. We intend to continue to invest in mobile offerings and applications.

 

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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 airport counters, our travel stores and e-mail. We have access to a large amount of customer data on account of our size and our acquisition of the ibibo Group, which allows us to optimize our online marketing and provide customized product offerings. Our mobile service platforms allow customers to receive e-tickets and flight alerts via text messages (SMS) on their mobile phones. Our customers are also able to make bookings on our mobile sites and web application mobile sites, accessible through www.makemytrip.com, www.goibibo.com and www.redbus.in. In addition to being able to make different types of travel bookings on their smartphones and mobile devices, customers can view their booking details, cancel bookings, request e-tickets, track refund status, check flight status, look for new deals and use location-based services to find nearby places of interest. Our websites provide an enhanced user experience for researching and booking hotels, as well as valuable travel information not available on our mobile sites, such as user-generated travel reviews and destination guides to help customers conduct research and make travel decisions. Our MakeMyTrip website also includes a search tool for international flights called “Inspire” targeted towards leisure travelers. This tool recommends international destinations to customers based on their selected interests and budget, shows fare trends for the next few months and facilitates the purchase of flight tickets. We have also launched “RoutePlanner,” a service on our MakeMyTrip website that helps users choose among various transportation options, including air, bus, rail and hired car, for travel between any two of over 4,000 cities in India.

We primarily outsource our call center operations and fulfillment process to Concentrix Daksh Services India Pvt. Ltd., or Concentrix, InterGlobe Technologies Private Limited, or InterGlobe, Radical Minds Technologies Private Ltd., or Radical Minds Technologies, iEnergizer IT Services, Bird Information System, iSON BPO India Private Ltd., or iSON BPO India, Intelenet, Motif India Infotech and 31 Parallel as we believe that these providers are experienced, reputable and able to adhere to our customer service standards and enhance our service quality. We also have a dedicated in-house escalation service team which operates 24 hours a day, seven days a week, and is responsible for addressing issues or complaints raised by our customers. As of March 31, 2017, we employed 544 representatives (including supervisors) in all of our in-house call centers across all of our brands. All of our representatives participate in a formal training program before commencing work and have in-depth knowledge of their relevant local market. Our representatives also attend periodic training programs to familiarize themselves with our new services and products.

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

Our Strategy

We believe that the relatively low but fast growing Internet penetration and mobile internet in India, coupled with income growth in India provide us with significant growth opportunities. Our objective is to pursue market share growth opportunities and to grow profitably by building on our current position as one of India’s leading travel companies. 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, and we intend to continue shifting our business mix towards this segment. We recently undertook a strategic combination with the ibibo Group by way of an acquisition of the ibibo Group, which operates a hotels and packages business substantially similar to our existing business under the MakeMyTrip brand, making us one of the leading hotels and packages providers in India. We intend to

 

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improve our profitability and further expand the market share of our hotels and packages business through the integration of the ibibo Group’s hotels and packages business.

We will proactively invest to gain further market share, through increasing automation, adopting new technologies and a deep customer focus. Our objective is to enable more hotel suppliers to be seamlessly connected to our various websites with the latest technology methods which include direct connects, channel managers and direct integrations with various aggregators. We also continue to focus on automation by making changes to our extranet to allow more of our hotel suppliers to use a self-service mode in managing their rates, inventory, content, payments and confirm bookings made by our customers on a real-time basis. Given the high penetration of smart phones in India, we have also introduced our extranet application which allows hotels to directly update inventory and rates, and confirm bookings through the application. We are investing heavily on improving the customer experience by improving our offering on various devices (especially mobile and tablets) which the customers use to connect with us and becoming more content-focused. We also intend to grow our packages business outside India through strategic partnerships and acquisitions, as well as by strengthening our relationships with key aggregators from whom we procure inventory for our packages products.

Expand Our Service and Product Portfolio to Enhance Cross-Selling Opportunities. We believe that expanding our service and product offerings is an important means of customer acquisition as the diversity of our services and products will improve our offerings to customers, attract more customers to our websites and mobile applications and allow us to cross sell higher-margin services and products to them. We 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 and rail. We introduced the sale of bus tickets in 2008 and the sale of rail tickets in 2009 under our MakeMyTrip brand. In January 2017, we expanded both of these businesses through the acquisition of the ibibo Group and the addition of its redBus bus ticketing and goibibo rail ticketing businesses to our offerings. We also provide car hire services in conjunction with our holiday package bookings and other value-added ancillary services such as facilitating access to insurance and visa processing to enhance our customers’ travel experience.

Enhance Our Service Platforms by Investing in Technology. We intend to continue to invest in technology to enhance the features of our services and our platforms. For example, we plan to integrate our various hotel booking systems across our various websites. We also intend to extend user feedback features to more products, enable more user-friendly bookings to be saved by our customers and used across all our services and products, enhance our mobile service platform to make mobile transactions more user-friendly and allow real-time fingerprinting to prevent online credit card fraud. We intend to sell more of our holiday packages online in addition to selling through our call centers, which we believe will result in increasing our operating margins. We believe that our continued investments in technology will enable us to enhance our customer service and to capitalize on the expected growth opportunities in the online travel market in India. We intend to continue to focus on increasing our online and mobile customer base. We intend to continue to invest in mobile offerings and applications. We also intend to strengthen our focus on analytics, and upgrading our technology platform.

Expand into New Geographic Markets. We believe we are well positioned for growth in other overseas markets, particularly those with a significant non-resident Indian population as well as destinations with proximity to India and favored by Indian travelers, particularly popular regional destinations that are located within a five-hour flight from India. In December 2009, we launched our website, www.makemytrip.ae, in the United Arab Emirates, following, among other things, the registration of our website’s domain name with the relevant registry as well as the procurement of additional servers to handle the increased traffic from this new international website. The United Arab Emirates has a significant non-resident Indian population, and our website is intended to serve the travel needs of non-resident Indian travelers traveling from the United Arab Emirates and neighboring Middle Eastern countries to India as well as on their travels elsewhere. We entered the Singapore market by acquiring Luxury Tours in May 2011. In July 2011, we incorporated Luxury Tours

 

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(Malaysia) to expand our operations in Malaysia and adjacent markets. In November 2012, we expanded in Thailand and Southeast Asia through our acquisition of the ITC Group and Hotel Travel Group. In January 2017, as part of our acquisition of the ibibo Group, we entered the Colombia and Peru markets through our redBus ticketing business.

Pursue Selective Strategic Partnerships and Acquisitions. In addition to growing our business organically, we have in the past and may continue to pursue strategic partnerships and targeted acquisitions that complement our service offerings, strengthen or establish our presence in our targeted domestic and overseas markets or to gain access to technology. On January 31, 2017, we undertook a strategic combination with the ibibo Group by way of an acquisition of 100% equity interest in the ibibo Group, which owns and operates air ticketing, hotels and packages and rail and bus ticketing businesses under its goibibo and redBus brands. In 2015, we acquired an approximate 30% stake in HolidayIQ Pte. Ltd., which owns and operates www.HolidayIQ.com, a travel information portal and recommendation search engine that is popular within the Indian travel community, an approximate 74.4% stake in Bona Vita Technologies Private Limited, a newly-incorporated company which operates an online travel marketplace for domestic and outbound India holiday and business travel packages through its website www.gofro.com, and an approximately 20.6% in Inspirock, Inc., which owns and operates www.inspirock.com, an online planning tool for developing custom-made itineraries. In 2014, we acquired a minority equity interest in Simplotel in December 2014, and thereafter we acquired additional shares of Simplotel in June and November 2015, and December 2016, which increased our equity shareholding in Simplotel to approximately 33%. In fiscal year 2013, we became the sole owner of Luxury Tours, a Singapore-based travel agency which is engaged in the business of providing hotel reservations, excursion tours and other related services to inbound and outbound travelers in Singapore and the rest of Southeast Asia, following our initial investment in 2011. We became the sole owner of the ITC Group in 2015, a well-established hotel aggregator and tour operator focused on Thailand in which we initially invested in 2012. We believe that our acquisitions and partnerships, together with our technology platform that enables us to successfully and cost-effectively integrate our new acquisitions and partners, have helped to strengthen our positions in our different businesses. We expect to continue to monitor strategic partnerships and acquisitions in the future.

Our Services and Products

We offer a comprehensive selection of travel and travel-related services and products catering to the 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 Ticketing

Our air ticketing business is primarily targeted at domestic travel within India and international travel originating in India; and inbound travel to India from the United States and other countries. We further expanded our air ticketing business in 2017 through our acquisition of the ibibo Group, through which we continue to operate the ibibo Group’s similar goibibo business.

Indian Domestic and Outbound Travel. We commenced our Indian operations under our MakeMyTrip brand in 2005 and have experienced significant growth in our air ticketing business covering domestic travel within India and international travel from India. The following table sets forth the number of transactions for air travel booked through our MakeMyTrip and goibibo platforms in recent prior periods.

 

     Number of Transactions  
     For Fiscal Year March 31  
     2015      2016      2017  

Indian domestic air travel

     4.8 million        6.2 million        8.6 million  

Outbound air travel

     0.5 million        0.6 million        0.8 million  

 

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

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

Inbound Travel to India. We began selling air tickets for the United States-to-India sector in 2000 through our MakeMyTrip platform. Following our acquisition of the ibibo Group in January 2017, we also sell air tickets for inbound travel to India through our goibibo platform. 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 MakeMyTrip primary website, www.makemytrip.com, and uses a similar search and display interface. The total number of transactions for inbound air travel to India booked primarily from the United States and the United Arab Emirates through us was 180,243 in fiscal year 2015, 155,251 in fiscal year 2016 and 106,054 in fiscal year 2017.

Hotels and Packages

We introduced our hotels and packages business in 2005 and have since experienced significant growth in this area, including through our acquisition of the ibibo Group in January 2017. The ibibo Group’s standalone hotels business is substantially similar to MMT India’s standalone hotels business and, following the completion of the acquisition of the ibibo Group, we continue to operate our hotels and packages business through MMT India under the MakeMyTrip brand and the ibibo Group under the goibibo brand. The total number of transactions in our hotels and packages business was 1.4 million in fiscal year 2015, 3.1 million in fiscal year 2016 and 6.9 million in fiscal year 2017.

Hotels. Customers can search, compare and make reservations at more than 40,000 hotels, 13,500 alternative accommodations in India and over 240,000 hotels and properties outside India on our MakeMyTrip and goibibo websites. We procure room inventory from our hotel suppliers through three methods: “direct connects,” “direct allocation” and for most hotels outside India, through contracts with online travel agents and aggregators outside India. Substantially all of our hotel suppliers in India have a “direct allocation” arrangement with us whereby they allocate rooms directly to us either by managing their room inventory on an extranet provided by us, or through channel managers, or supported by us via telephone. We do not assume any inventory risk for such “direct allocation” as unsold inventory is released to the hotels within an agreed period of time. The remaining hotels in India are connected through direct connects. “Direct connect” is the method by which our booking systems are integrated with the central reservations systems of the hotels and reservations made are confirmed on a real-time basis, although this applies to a small proportion of our total hotel bookings. Through our ongoing efforts to increase the automation of and otherwise improve our extranet, our hotel suppliers are now able to perform more of the necessary functions for executing transactions through our system without our direct involvement. We obtain inventory for most hotels outside India through contracts with other online travel agents and aggregators outside India. In some instances, in order to enjoy special negotiated rates for these hotels, we pre-purchase hotel room nights and assume inventory risk on them. Our inventory also includes home stays and budget rooms through GoStays on ibibo and RightStay by MakeMyTrip for budget travelers seeking alternative

 

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accommodations. In 2017, we also introduced MakeMyTrip Assured Hotels, which categorizes based on quality and service reviews to provide quality assurance to customers at the time of booking.

Our customer base is primarily residents in India and non-resident Indians and others traveling to India from the United States and other countries. With respect to our websites and applications, the focus of our technological improvement and sales efforts is on consolidating multiple supply sources and identifying the best rates possible for our customers. In addition, we have invested in multi-lingual products and marketing, with in-house translation and customer service teams for twelve different languages. On our www.makemytrip.com and www.goibibo.com websites and through our applications on various mobile platforms, customers may search for hotels based on their destination, preferred dates for check-in and check-out, and may easily filter their search results by selecting star ratings, specific hotel chains and location etc. Customers can also indicate amenity preferences, such as business services, internet access, fitness centers, swimming pools and travel assistance. MakeMyTrip’s “View Map” offers customers the ability to compare hotel locations on an interactive neighborhood map. Our online hotel booking platforms provide an enhanced user experience for researching and booking hotels on the desktop and mobile devices.

Packages. We offer pre-packaged vacations designed by our in-house product specialists, under arrangements with various travel suppliers and our GDS service providers to cater to both individual and group travelers. Our packages also include various travel services such as 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 is 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 websites, which enables customers to view multiple combinations of airlines and hotels to assemble a trip which satisfies his or her unique requirements. Our www.makemytrip.com and www.goibibo.com websites allow 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 team offers services to organizations and other groups who wish to plan meetings, conferences or other events or organize group trips. Our MICE team assists such customers in planning and booking travel arrangements for large groups of travelers and delivers tickets and other documentation, and, on request of the customers, a member of our MICE team will accompany the group during the travel in order to ensure that all plans and activities run smoothly. Our MICE team also assists employees of these organizations with their personal travel needs.

We also operate www.gofro.com, an online travel marketplace for domestic and outbound India holiday and business travel packages, through our subsidiary, Bona Vita Technologies Private Limited. GoFro also offers assisted booking through destination experts and customizable travel plans, flight itineraries, transfers and activity schedules.

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

 

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Other Services and Products

Rail Tickets. We sell railway tickets in India on our MakeMyTrip and goibibo platforms through “direct-connect” access to Indian Railways’ passenger reservation system online, allowing customers to reserve and purchase Indian Railways tickets on a real-time basis through our websites. Indian Railways is India’s state-owned railway which owns and operates most of India’s rail transport. We booked 194,856, 242,398 and 298,585 transactions for rail tickets in fiscal years 2015, 2016 and 2017 respectively.

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

Bus Tickets. Following our acquisition of the ibibo Group in 2017, we own and operate our bus ticketing business primarily through redBus, a leading online bus ticketing platform with a presence across India through www.redbus.in and in select countries overseas through our other regional redbus websites. Customers are able to make bookings on our desktop site, www.redbus.in and mobile site, m.redbus.in, and on major mobile platforms through our redBus mobile applications for iOS and Android. Through our redBus mobile application, customers can also access YourBus, a vehicle tracking tool.

redBus mobile traffic and transactions are increasing rapidly and its mobile customer base has increased from approximately 20,000 customers as of March 31, 2013 to 2.1 million as of March 31, 2017. As of March 31, 2017, our Android application had been downloaded approximately 8.8 million times and our iOS application had been downloaded approximately 680,000 times. As of March 31, 2017, we had approximately 9.3 million mobile users. Customers are also able to book bus tickets through our MakeMyTrip platform.

We have agreements with several major Indian and Singapore 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.”

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

redBus also sells bus tickets and hotel room reservations through agent platform, SeatSeller, which comprises more than 19,000 agents across India, Southeast Asia and Latin America. In addition, redBus inventory is sold through more than 200 application programming interface, or API, partners. We have also launched our redBus self-service web-support, My Account, which allows customers to check their booking details, print e-tickets and vouchers, send themselves an SMS containing their ticket details, cancel their bookings and track the status of their refunds.

Car Hire. We provide car hire services in conjunction with holiday package bookings on our Indian website.

 

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Ancillary Services and Products

As an ancillary service offered to our customers, we provide our customers with the option to purchase travel insurance for trips and packages booked on our MakeMyTrip, goibibo and redBus platforms. On www.makemytrip.com, www.goibibo.com and www.redbus.in, 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. Travel insurance is also available for purchase through our call centers and travel stores. 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, airport counters 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 2017, 98.6% of our sales of air tickets for travel were made through our websites and mobile applications, 1.4% of our sales for air tickets, which were most commonly for inbound travel, were made through our call centers. Our sales of hotel rooms are also primarily made through our websites and our mobile applications. Our customers can book standard flight plus hotel packages on our websites and our mobile applications, but the majority of the sales of packages within or outside India are concluded through our call centers, travel stores and travel agents’ network. All of our rail and bus ticket sales in India are made through our Indian website.

In fiscal year 2017, transactions executed through our websites, call centers and travel stores accounted for approximately 98.7%, 0.8% and 0.5%, respectively, of our total transactions. Further, in fiscal year 2017, our mobile platforms contributed approximately 56.2% of the total transactions carried out through our websites.

Internet Websites

We operate the websites www.makemytrip.com (including the sub-domain us.makemytrip.com), www.makemytrip.ae and www.makemytrip.com.sg 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, Singapore and neighboring Southeast Asian countries, respectively. Following our acquisition of the ibibo Group in January 2017, we also operate the websites www.goibibo.com and www.redbus.in.

Our websites and their content are tailored to our predominantly Indian user base. For example, on www.makemytrip.com, we have localized our top-selling hotel webpages with information and using language that we believe would be more attractive and relevant to an Indian user. Following our acquisition of the ibibo Group in January 2017, we are integrating the in-house development capabilities of MMT India and the ibibo Group to continuously maintain and improve our various platforms, including our www.makemytrip.com, www.goibibo.com and www.redbus.in websites.

Using our websites, customers can easily and quickly review the pricing and availability of nearly all our services and products, evaluate and compare options, and book and purchase such service and products online. We have also designed our websites to offer personalized recommendations and offers based on a customer’s history. In addition, we have self-service customer support modules on our websites to let our customers check their refund status, modify or cancel reservations and view their travel itineraries. Customers can also purchase ancillary travel-related services and products, such as travel insurance as part of the booking process. Certain

 

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packages for MICE or other customized packages cannot be purchased online although customers can submit inquiries through our websites and our sales representatives will contact such customers to follow up and process the transaction, if required.

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

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

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

Review. After a customer has selected a particular option, our websites will provide the customer with an opportunity to review the details of the product being purchased and the terms and conditions of such purchase. At this stage, our websites connect to the GDS (Amadeus CRS and Galileo GDS) or the websites of our travel suppliers to confirm the availability and pricing of the product selected, and in the event the customer’s choice is not available, the customer will be informed of the next-best alternative to the selected product. Customers booking 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 websites, customers may pay in Indian Rupees with credit cards, debit cards issued by several major banks in India (including Citibank, ICICI Bank, HDFC Bank, State Bank of India and AXIS Bank), bank transfers or e-Wallets (including PayTM, Freecharge and PayU). We also offer partial payment options for large value transactions. The payment gateway for sales on our Indian websites are secured by “Verified by VISA,” “MasterCard SecureCode,” “Diners ProtectBuy,” “RuPay PaySecure” and “American Express SafeKey.” Customers may also use our propriety prepaid wallets (“MyWallet,” “GoCash” and “RedBus Wallet”) to obtain instant refunds and a quicker checkout experience. We recently began accepting payment through the Bharat Interface for Money (BHIM) Pay Android app and through the unified payment interface for our redBus Android app. On our US MakeMyTrip website, customers may pay in US dollars with credit cards or through PayPal. On our United Arab Emirates website, customers may pay in United Arab Emirates Dirhams with credit cards. On our other international websites, customers may pay in multiple currencies with credit cards.

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

 

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We use single factor authentication for Latam transactions in our redBus ticketing business and have enabled fraud verification with the payment gateway which processes these transactions. We do not support foreign credit cards on our Indian channels currently as we have not engaged any external party to conduct fraud verification for foreign credit card transactions. We support offline payments for Indonesia and Latam markets, where customers can reserve seats for a fixed number of hours and subsequently pay for such seats in cash at ATM stores and other offline locations.

Call Centers

Our in-house call centers that handle our sales and post-sales customer service support for MMT India’s international hotels and packages business as well as domestic Indian packages with more complicated itineraries, are run out of Gurgaon in India, as well as out of Singapore and Thailand. Our in-house call centers that handle our sales and post-sales customer service support for our bus-related services are run out of Bangalore and Pune, as well as out of Singapore and Thailand. Our call centers in India 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, 2017, we employed 544 representatives (including supervisors) in all of our in-house call centers across all of our brands. All of our sales representatives in India participate in a formal four-week training program before commencing work and have an in-depth knowledge of their relevant local market. Our sales representatives are also trained and updated with our new services and products.

To achieve cost-efficiency and scalability, we utilize various third-party vendors in India to manage our call center service and we outsource our call center service for sales and service for all international flights (both inbound to India and outbound from India), and most of our hotel reservations and packages to such vendors. Our outsourcing service providers also handle our post-sales customer service support for all flights (domestic and international), hotel reservations and packages, and rail and bus ticketing, as well as back office fulfillment and ticketing services. We primarily outsource our call center operations and fulfillment process to Concentrix, InterGlobe Radical Minds Technologies, iEnergizer IT Services, Bird Information System, iSON BPO India, Intelenet, Motif India Infotech and 31 Parallel as we believe that these providers are experienced, reputable and able to adhere to our customer service standards and enhance our service quality. Our external agents 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. We also have a third-party partner, Celtycs Outsourcing Services Private Limited, which audits the inbound and outbound calls and emails of our call center agents.

Travel Stores

As of March 31, 2017, we had 16 company-owned travel stores in 15 cities, including one in our office in Gurgaon, 35 franchisee-owned travel stores which primarily sell packages in 32 cities, and counters in four major airports in India under our MakeMyTrip brand.

At all of 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. Unlike agents in our travel agents’ network described below, agents in our

 

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travel stores sell our products exclusively. All our travel stores are also equipped with our ERP application and linked to our CRM system. We believe that our travel stores are important for our overall growth as they represent a direct interface between our customers and us, in addition to giving us access to customers who still prefer to meet representatives to make their travel bookings.

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

Travel Agents’ Network

As of March 31, 2017, we had a network of 3,191 registered agents across 323 cities and towns in India. Such travel agents can access our MakeMyTrip and redBus B2B websites which enable them to sell our full suite of online travel services to customers. Our B2B websites uses a similar interface as our external customer-facing websites. We believe our network is attractive to travel agents as we provide access to products which such agents may not otherwise be able to access cost-effectively or at all. These travel agents earn commissions from us depending on the volume and type of travel services and products sold. Furthermore, our travel agents’ network allows us to expand our footprint in India and distribution network in a cost-effective manner.

Mobile

Our MakeMyTrip, goibibo and redBus mobile platforms, including our mobile websites and mobile applications, allow customers to search, book and pay for Indian domestic and international air tickets, hotels and packages, rail and bus tickets and car bookings on their mobile phones at no additional cost. The tickets and bookings are delivered through email and SMS. In addition to being able to make different types of travel bookings on their smartphones and mobile devices, customers can view their booking details, cancel bookings, request e-tickets, track refund status, look for new deals and use location-based services to find nearby places of interest. Our mobile applications are available for Android, iOS, Blackberry and Windows devices.

As of March 31, 2017, our MakeMyTrip mobile application had been downloaded approximately 33.7 million times on Android, approximately 4.8 million times on iOS and approximately 0.5 million times on Windows Mobile. As of March 31, 2017, our goibibo mobile application had been downloaded approximately 20.8 million times on Android and approximately 2.5 million times on iOS. As of March 31, 2017, our redBus mobile application had been downloaded approximately 9.3 million times across mobile platforms. According to App Annie, our MakeMyTrip, goibibo and redBus mobile applications had over 24.1 million, 13.4 million and 8.6 million active users per month respectively in fiscal 2017. Our mobile platforms have been a key driver of our transaction growth in fiscal year 2017. Approximately 55.7% of our Indian online visitors reached us through our mobile platforms in fiscal year 2017. We have invested significantly in customer acquisition and inducement programs in order to increase mobile application downloads and accelerate growth in our India standalone hotel booking business. In our hotels and packages booking business, more than 72% of online transactions in fiscal year 2017 were completed through our mobile platforms.

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.

 

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We operate our technology platform through external and internal data centers in India located in Mumbai, Chennai and Gurgaon. Our Indian external data centers run together in “active-active” mode so that each serves approximately half of our website traffic at any given time. Our internal data center runs independently and serves all the data needs of our internal operations, such as e-mail.

In the event one of our Indian external data centers shuts down, our other Indian external data center will automatically take over for it. This capability helps us to ensure business continuity and minimize potential damage in the event of a disruption. Our www.makemytrip.com platform is able to handle up to 3.0 million website requests and 8.5 million page views per day and our www.goibibo.com platform is able to handle up to 10.0 million website requests and 4.0 million page views per day.

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

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

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

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

 

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

 

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

 

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

 

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

 

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

 

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

Fully Integrated Technology Platform

Our CRM systems in India use software by Oracle, SalesForce Cloud and FreshDesk, which integrate our sales, customer service and fulfillment operations. Our CRM systems are designed to analyze customer needs for better servicing. They generate reports identifying areas of opportunity or weakness and thereby help us in improving our service and product quality. Our web-enabled centralized booking system in India enables our customers and B2B partners to search and book travel services and products we sell and provide on a real-time

 

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basis. We also have “Verified by VISA,” “MasterCard SecureCode,” “Diners ProtectBuy,” “RuPay PaySecure” and “American Express SafeKey” enabled payment gateways, which provides additional security for transactions via our Indian website using credit cards and debit cards issued by Indian institutions. We also offer payment options via netbanking and other instruments. Telephone services are powered by Genesys.

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

Our ERP application uses Microsoft Dynamics in the case of MMT India, Oracle Financial Services Software for ibibo India and Tally in the case of our redBus business. These systems are integrated with our midoffice systems which enable our agents to create and amend bookings as well as to attend to customer inquiries raised in our CRM systems.

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

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

Our systems include automation for ticketing, monitoring of schedule changes and providing alerts to customers, as well as auto-cancelation of reservations made through GDS or airlines’ central reservations systems. We are continually looking for opportunities to automate our processes in order to further increase our productivity and improve the scalability of our business.

Our rebus bus ticketing business also relies on an in-house built advanced and secure technology platform, which integrates our sales, customer service and fulfillment operations. Our core technology platform is scalable and can be scaled to handle increased traffic and complexity of products with limited additional investment.

Security

We are committed to protecting the security of our customers’ information. We maintain an information security team that is responsible for implementing and maintaining controls to prevent unauthorized users to access our systems. These controls include the implementation of information security policies and procedures, security monitoring software, encryption policies, access policies, password policies, physical access limitations, and detection and monitoring of fraud from internal staff. We have acquired a fraud detection system which uses transaction patterns and other data sources which seek to prevent fraudulent transactions in real-time. All sensitive data transmitted through our systems is encrypted using SSL 1024 bit encryption technology. Our information security team also coordinates internal and external audits every six months. Our travel portal in India is compliant with the PCI-DSS (Payment Card Industry Data Security Standard) (a set of requirements for enhancing payment account security developed by the Payment Card Industry Security Standards Council, which include key credit card and financial services companies).

 

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Marketing and Brand Awareness

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

Our marketing channels on desktop and mobile web primarily include online advertising, such as paid search engine marketing and optimization with leading Internet search engines (such as Google, Bing and Yahoo!), social media advertising (such as on Facebook, Twitter and YouTube) and display advertising on other websites (such as Yahoo! India and Times of India), participation in meta search engines (such as hotels product ads by Google and Ixigo), offline advertising using print or broadcast media, such as television or radio, e-mails and short messages, and other marketing channels, such as through our call centers and travel stores. We also advertise on mobile applications including Google and Facebook. We have consistently invested in building our brand and expanding our reach to travelers in India as well as overseas, through mass media campaigns as well as through innovative digital marketing tools such as viral marketing and online display banners. We also have a strong presence in social media, such as Facebook, YouTube, LinkedIn and Twitter.

Our marketing programs and initiatives include broad-based campaigns, promotional or seasonal offers, as well as, brand campaigns to drive brand building with our customers. In March 2016, we redesigned our logo for the tradename “makemytrip” and launched an advertising campaign with leading Bollywood celebrities as our brand ambassadors. Our advertising campaigns promote the competitive pricing of our offerings (including no cancellation charges or no advanced payment requirements) and wide inventory of travel offerings. We have also begun to leverage our customers’ social networks to reach new and younger segments of the market, particularly for our goibibo brand. For example, GoContacts syncs our goibibo mobile application with a user’s address book and allows the user to earn travel currency by engaging with their social media network.

As part of our marketing efforts, we also entered in to strategic alliances and partnerships with several major banks in India including Citibank, HDFC Bank, State Bank of India (SBI), Axis Bank and ICICI Bank, which provide access to our partners’ customers. We also have co-branded MakeMyTrip and goibibo travel cards with American Express, which offers a number of travel related products and benefits to cardholders. Our marketing efforts have also included strategic partnerships with tourism boards in Singapore, Hong Kong, Australia and Dubai to help them better market and promote these destinations to Indian travelers.

These alliances and arrangements provide us access to our partners’ customer base where targeted marketing can be made at relatively low costs. In January 2014 we expanded our loyalty program to allow for automatic enrollment of all MakeMyTrip customers. This allows our customers to earn and redeem loyalty points with greater ease for both online and offline bookings.

Customer Service

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

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

Web-based Support. We offer two web-based customer support services. Our self-service web-support available through free online accounts on our websites allow customers to check the status of their domestic and

 

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international flight, train, bus or hotel bookings, cancel bookings and track the progress of their refund, among other things. Customers who require assistance or have inquiries about certain products also have an option to contact our sales representatives via our websites and we have dedicated personnel available 24 hours a day, seven days a week, who provide assistance to our customers on a real-time basis.

Call Centers. We provide our customers with comprehensive and real-time assistance through our call centers which are available 24 hours a day, seven days a week. Currently, we outsource a portion of our customer service call center operations to Concentrix, InterGlobe, Radical Minds Technologies, iEnergizer IT Services, Bird Information System, iSON BPO India, Intelenet, Motif India Infotech and 31 Parallel in India, whose employees have been trained by our respective outsourcing service providers and us. We had 2,482 outsourced call center representatives as of March 31, 2017.

We also have a dedicated in-house escalation service which operates 24 hours a day, seven days a week, and is responsible for addressing issues or complaints raised by our customers, as well as in-house call centers in India, Singapore and Malaysia which mainly handle customer service support for all our bus-related services. We are able to log on to customer calls enabling us to perform random checks on our call centers on a real-time basis. Our system also enables us to monitor the number of waiting calls, the number of active call center agents, and the real-time activity status of agents. We have an in-house quality team which monitors the quality of interaction across lines of business, including through analysis of the tone and voice of our customers, in order to ensure high quality service is consistently offered to our customers. As of March 31, 2017, we employed 544 representatives across our in-house call centers. All of our representatives participate in a formal training program before commencing work and have in-depth knowledge of their relevant local market. Our representatives also attend periodic training programs to familiarize themselves with our new services and products.

Travel Stores. Customers may also visit our MakeMyTrip brand travel stores and airport counters in 43 cities in India and obtain assistance from our sales and customer service representatives.

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

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

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

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

Supplier Relationships

We believe we have cultivated and maintain good relationships with our travel suppliers. We have a dedicated team to maintain and enhance our existing relationships, and develop new relationships, with travel suppliers. Our supplier relationship teams negotiate agreements or arrangements with suppliers for access to

 

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travel inventory for our services and products, and also monitor supplier-sponsored promotions. They also focus on relationship management with our suppliers. One of the key services we provide to our suppliers is the provision of customer feedback and preferences which we obtain primarily through our CRM system, user-generated content on our websites as well as through our call centers.

Our top five (in alphabetical order) airline suppliers for travel in India and overseas (based on revenue less service cost earned by us) and our top five (in alphabetical order) hotel suppliers (based on gross bookings) for fiscal year 2017 (including the contribution from ibibo Group) were:

 

Airlines

(Travel within India)

 

Airlines

(International Travel)

 

Hotels

(within India)

Air India

  Air India   Carlson Group of Hotels

Go Air

  Emirates   Ginger Hotels

IndiGo

  Etihad Airways   Lemon Tree Hotels

Jet Airways

  Jet Airways   Sarovar Hotels And Resorts Pvt Ltd

SpiceJet

  Malaysia Airlines   Taj Hotels, Resorts & Palaces

Airlines

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

Most of these airlines offer us fares that match those offered by the airlines on their own websites as well as on other online travel websites. The fares paid by our customers include our service fee in addition to the fares charged by the airlines. We currently have commission arrangements with all India-based airlines, as well as major international airlines that service India, where part of our commission is linked to the number of sales facilitated by us or the revenue realized by these airlines on sales completed through us. Similarly, we earn fees from our GDS service providers on a per-segment basis for sales completed by us through the GDS that are linked to the volumes of sales completed by us.

Hotels

As of March 31, 2017, we provided our customers with access to over 40,000 hotels, 13,500 alternative accommodations in India and more than 240,000 hotels and properties outside India. Our hotel supply team is responsible for negotiating agreements or arrangements with independent hotels, hotel chains and hotel management companies and securing competitive rates, promotions and access to inventory for listing on our websites as well as packaging of holidays. We select our hotel partners by their reputation and quality and monitor customer feedback on our websites as well as other channels in order to ensure that hotels listed on our websites maintain acceptable standards.

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

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

 

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hotels in India are connected through direct connects. “Direct connect” is the method by which our booking systems are integrated with the central reservations systems of the hotels and reservations made are confirmed on a real-time basis, although this applies to a small proportion of our total hotels. Through our ongoing efforts to increase the automation of and otherwise improve our extranet, our hotel suppliers are now able to perform more of the necessary functions for executing transactions through our system without our direct involvement. We obtain inventory for most hotels outside India through contracts with other online travel agents and aggregators outside India. In some instances, in order to enjoy special negotiated rates for these hotels, we pre-purchase hotel room nights and assume inventory risk on them.

Buses

As of March 31, 2017, we provided our customers with access to over 11,000 privately owned buses, approximately 25,000 government owned Road Transport Corporation buses in India, 1,850 buses across Peru and Columbia and 6,000 buses across Singapore, Malaysia and Indonesia. We aim to provide a wide range of bus ticket inventory on our platform and enable bus operators to list their inventory online through our inventory hosting software called redBus Plus or to integrate their existing inventory software to our platform. redBus Plus allows bus operators to update service information, creating campaigns, responding to customer feedback and analyze customer demand. redBus also provides bus ticketing API to multiple e-commerce websites across the spectrum and thus enables a widest possible distribution reach for bus operators.

Competition

The market for travel services and products is highly competitive. We currently compete with both established and emerging providers of travel services and products, including other online travel agencies, such as cleartrip.com, expedia.com, travelocity.co.in, yatra.com, booking.com and agoda.com, as well as traditional travel agencies, tour operators, travel suppliers and operators of travel industry reservation databases. Large, established Internet search engines have also launched applications offering travel itineraries in destinations around the world, and meta-search companies who can aggregate travel search results also compete with us for customers. In our domestic hotels and packages business, we compete primarily with established Indian travel market players, such as Cox & Kings and Thomas Cook and new entrants such as oyorooms.com. Such competitors may have greater financial resources than us, may seek to increase market share by offering heavy discounting and promotional schemes and may be able to negotiate better rates with suppliers.

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

Intellectual Property

Our intellectual property rights include trademarks and domain names associated with the names “MakeMyTrip,” “goibibo” and “redBus,” and other rights arising from confidentiality agreements relating to our website content and technology. We regard our intellectual property as a factor contributing to our success. We rely on trademark law, trade secret protection, non-competition and confidentiality agreements with our employees and some of our partners and vendors, to protect our intellectual property rights. We require our employees to enter into agreements to keep confidential all information relating to our customers, methods, business and trade secrets during and after their employment with us. Our employees are required to acknowledge and recognize that all inventions, trade secrets, works of authorship, developments and other processes made by them during their employment are our property.

 

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We have registered the domain names www.makemytrip.com (which includes the sub-domain “us.makemytrip.com” for our US website), www.makemytrip.ae, www.makemytrip.com.sg, www.goibibo.com, www.redbus.in, www.luxury.com.sg and www.indiaahoy.com and have full legal rights over these domain names for the period for which such domain names are registered. We primarily conduct our business under the “MakeMyTrip,” “goibibo” and “redBus” brand names and logos. We have registered the trademark “MakeMyTrip” in India, Mauritius, Bhutan, Nepal, Singapore, Taiwan, Indonesia, European Union, Canada, Australia, Malaysia, Saudi Arabia, Qatar, United Arab Emirates and Bahrain, and we have applied for registration in Sri Lanka, Kuwait, Oman and Japan. We have also registered the following logos and word marks in India: “IBIBO,” “GOIBIBO,” “redBus.in,” “Ryde,” “Ryde by Ibibo,” “Ibibo Ryde” and “goCash.” The word mark “MakeMyTrip” and trademark “MakeMyTrip.com-India in every trip” are registered in the United States. We have applied for registration of our new “MY” MakeMyTrip logo and our MakeMyTrip mark with our new logo in India. We have registered copyrights of our logos and brand names “MakeMyTrip,” “goibibo” and “redBus” in India and copyright registration of certain specific representations of the logo “my.”

The logos “India Ahoy” and the word mark “Travel Talkies,” logo and word mark “tripalong,” “MakeMyTrip — Memories Unlimited,” “MakeMyTrip-Dil Toh Roaming Hai,” “Dil Toh Roaming Hai” are also registered trademarks in India. We have applied for trademark registration of the logos and word marks “MakeMyTrip — Hotels Unlimited,” “routeplanner” and “Uncancel,” the logo “my” and the word mark “MMT,” in India and such applications are currently pending. We have filed responses to objections raised by the Trademark Registry to certain of these applications. Our word mark “Dil Toh Roaming Hai” and word mark and logo “MakeMyTrip.com-India in every trip” are registered as trademarks in the United States. We have registered the service mark for “ITC” in Thailand and have applied for registration of the trademark “ITC” in Thailand. We have also obtained an assignment over the trademark “Luxury Tours & Travel.” We have also applied for patents in India for certain aspects of our technological systems.

Employees

As of March 31, 2017, we had 3,426 employees. The following tables show a breakdown of our employees as of the end of our past three fiscal years by category of activity and geographic location.

 

     Number of Employees as of
March 31,
 

Division/Function

   2015      2016      2017  

Management

     12        13        19  

Product development

     44        55        180  

Sales and marketing

     676        708        712  

Technology development and technology support

     336        416        980  

Others (including operations, business development, administration, finance and accounting, legal and human resources)

     706        748        1,535  
  

 

 

    

 

 

    

 

 

 

Total

     1,774        1,940        3,426  
  

 

 

    

 

 

    

 

 

 

 

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     Number of Employees as of
March 31,
 

Location

   2015      2016      2017  

India

     1,400        1,621        3,164  

United States

     4        3        3  

Singapore

     63        62        48  

Malaysia

     19        17        24  

Thailand

     223        228        122  

United Arab Emirates

     5        8        8  

China

     1        1        1  

The Netherlands

     43        —        —  

Israel

     16        —        —  

Colombia

     —        —        6  

Peru

     —        —        50  
  

 

 

    

 

 

    

 

 

 

Total

     1,774        1,940        3,426  
  

 

 

    

 

 

    

 

 

 

None of our employees are represented by a labor union. We believe that our relations with our employees are good. We contract with third parties for the provision of temporary employees from time to time based on the needs of our businesses for various functions, including administration, technology-related projects and staffing at our travel stores and airport counters. As of March 31, 2017, we employed 574 temporary and contract employees.

Insurance

We maintain and annually renew insurance for losses (but not business interruption) arising from fire, burglary as well as terrorist activities for our corporate office at Gurgaon, India, as well as for our various company-owned travel stores in 15 cities in India and for our airport counters in Mumbai, Delhi, Chennai and Hyderabad. In connection with our initial public offering in August 2010, we purchased a liability policy that also covers our directors and officers with a policy limit of $50 million. We extended this policy in connection with our follow-on public offerings in June 2011 and March 2014. In addition, we have a liability policy of $30 million to insure our directors and officers from various liabilities arising out of the general performance of their duties. We have purchased public liability insurance, fidelity insurance and work injury compensation insurance for our group entities. With effect from January 31, 2017, the coverage under such policies was expanded to include all the ibibo Group entities.

Regulations

We are subject to various laws and regulations in India arising from our operations in India, including travel agent requirements and the operation of our MakeMyTrip and goibibo call centers, airport counters and company-owned travel stores.

MMT India requires licenses from state tourism departments to act as a travel agent/tour operator in certain states in India. MMT India has received such licenses in the National Capital Territory of Delhi. In addition, Luxury Tours holds a travel agent’s license from the Singapore Tourism Board, Luxury Tours (Malaysia) holds an Inbound license from the Ministry of Tourism, Malaysia and ITC Bangkok Co. Ltd. holds an inbound license from the Tourism Authority of Thailand.

MMT India has obtained a license from the Reserve Bank of India to act as a Full Fledged Money Changer (single branch), which requires that MMT India maintain minimum net owned funds of Rs. 2.5 million (approximately $0.04 million).

 

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Under the Indian Information Technology Act, 2000, as amended, we are subject to civil liability to compensate for wrongful loss or gain to any person arising from negligence in implementing and maintaining reasonable security practices and procedures with respect to sensitive personal data or information that we possess, deal with or handle in our computer systems, networks, databases and software. India has also implemented privacy laws, including the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, which impose limitations and restrictions on the collection, use and disclosure of personal information.

We obtained approvals to operate our domestic and international call centers in Bangalore and Pune as “Other Service Providers” from the Department of Telecommunications, Ministry of Communications and Information Technology, Government of India, which are valid for 20 years from September 27, 2005 and June 6, 2001, respectively in MMT India and domestic call center as “Other Service Providers” for redbus business which is valid for 20 years from March 19, 2013. Also, we have applied for similar licenses in Pune and Gurgaon offices in redbus and ibibo india businesses which are under process. We have also obtained telemarketing centre approvals for Delhi and Gurgaon, which are valid until 2018. We obtain and maintain registrations for our shops and establishments in each state where our company-owned travel stores are located.

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

The consolidated foreign direct investment policy, or the FDI Policy, issued by the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Government of India and the Foreign Exchange Management Act, 1999, as amended, and the regulations framed thereunder, or the FEMA have certain requirements with respect to downstream investments by Indian companies that are owned or controlled by foreign entities and with respect to 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 currently include restrictions on pricing, valuation of shares and sources of funding for such investments, and may, in certain cases, require prior notice to or approval of the Government of India. India’s Foreign Exchange Management Act, 1999, as amended, and the rules and regulations promulgated thereunder, restrict us from lending to or borrowing from our Indian subsidiaries. Further the Government of India has recently made and may continue to make revisions to the FDI policy on e-commerce in India (including in relation to business model and permitted services). Such changes may require us to make changes to our business in order to comply with Indian law.

The Companies Act contains significant changes to Indian company law, including in relation to the issue of capital by companies, related party transactions, corporate governance, audit matters, shareholder class actions and restrictions on the number of layers of subsidiaries and corporate social responsibility spending. While most of the provisions of the Companies Act are currently effective, certain provisions of the Companies Act, 1956 remain in effect. See “Item 3. Key Information — D. Risk Factors — Risks Related to Us and Our Industry — Changing Laws, Rules and Regulations and Legal Uncertainties in India, Including Adverse Application of Corporate and Tax Laws, May Adversely Affect Our Business and Financial Performance.”

C. Organizational Structure

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

 

LOGO

 

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Notes:

(1) The operating subsidiaries of Ibibo Group Holdings (Singapore) Pte. Ltd. include ibibo India, Ibibo Group Pte. Limited, Singapore and other insignificant subsidiaries. ibibo India is the ibibo Group’s key Indian operating subsidiary.
(2) The ITC Group consists of ITC Bangkok Co., Ltd. (Thailand) and other insignificant subsidiaries.

D. Property, Plant and Equipment

Our primary facility is our principal executive office located in Gurgaon, India, which serves as the principal place of business for our MMT India and ibibo Group operations. Our principal executive offices cover approximately 170,707 square feet and is under lease from fiscal year 2017 to fiscal year 2029. Further, we have leased two facilities covering approximately 69,754 square feet and 16,758 square feet facilities in Bangalore and Mumbai, respectively. We have also leased various facilities across other major cities in India.

As of March 31, 2017, we had 16 company-owned travel stores in 15 cities, including one in our office in Gurgaon, 35 franchisee-owned travel stores which primarily sell packages in 32 cities and counters in four major airports in India under our MakeMyTrip brand. Outside of India, we lease offices in New York, Singapore, Kuala Lumpur, Phuket, Bangkok, and Dubai, and we own two offices in Phuket.

 

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

 

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our business, financial condition and results of operations should be read in conjunction with “Item 3. Key Information — A. Selected Consolidated Financial Data” and our consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in “Item 3. Key Information — D. Risk Factors” and elsewhere in this Annual Report. Actual results could differ materially from those contained in any forward-looking statements. Our financial and operating results for fiscal year 2017 include the financial and operating results of the ibibo Group for the two months ended March 31, 2017 following the completion of our acquisition of the ibibo Group on January 31, 2017.

Overview

We are a leading online travel company in India. Through our primary websites, www.makemytrip.com, www.goibibo.com and www.redbus.in, and mobile platforms, travelers can research, plan and book a wide range of travel services and products in India as well as overseas. Our services and products include air ticketing, hotels and packages, rail tickets, bus tickets, car hire and ancillary travel requirements such as facilitating access to third-party travel insurance and visa processing. In order to meet the requirements of the 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. Our customers are able to make bookings on our MakeMyTrip, goibibo and redBus mobile sites and on major mobile platforms through our mobile applications, including Indian domestic and international flights, hotels and holiday packages and Indian bus offerings through our iOS and Android applications, Indian domestic flights through our BlackBerry application, and Indian domestic flights and hotels through our Windows Mobile application. We believe that smartphones and mobile devices will become a more integral part of how our customers shop for and purchase our products in the coming years.

We generate revenue through two main lines of business, air ticketing and hotels and packages. Our sales of air tickets and hotel rooms are primarily made through our websites and our mobile applications. Our customers

 

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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, 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 providers. Revenue from our air ticketing business generally represents the commissions, incentive payments and fees we earn as an agent on a “net” basis.

In our hotels and packages business, revenue (including revenue on air tickets sold as part of packages) is generally accounted for on a “gross” basis, representing the total amount paid by our customers for these travel services and products. The cost of procuring the relevant services and products for sale to our customers in this business is classified as service cost. Our hotels and packages revenue also 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 most hotels outside India, which are accounted for on a “net” basis. We earn commissions in a similar manner for certain non-hotel products related to our packages. Our hotels and packages business tends to yield higher margins than our air ticketing business, which we believe reflects the greater value that our travel services add and the more complex nature of our hotels and packages services as compared to our air ticketing business. We are focused on expanding our hotels and packages business and shifting our revenue mix accordingly.

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 relevant information about 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,
 
    2015     2016     2017     2015     2016     2017     2015     2016     2017     2015     2016     2017  
    (in thousands except percentages)  

Revenue

  $ 74,325     $ 78,172     $ 118,514     $ 220,512     $ 251,713     $ 314,254     $ 4,825     $ 6,169     $ 14,848     $ 299,662     $ 336,054     $ 447,616  

Less:

                       

Service Cost

    2,816       1,770       —         157,897       165,264       173,919       —       —       —       160,713       167,034       173,919  

Revenue less service cost

  $ 71,509     $ 76,402     $ 118,514     $ 62,615     $ 86,449     $ 140,335     $ 4,825     $ 6,169     $ 14,848     $ 138,949     $ 169,020     $ 273,697  

% of total revenue less service cost

    51.5     45.2     43.3     45.1     51.1     51.3     3.4     3.7     5.4     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 do not assume any

 

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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 is classified as service cost.

Revenue from our hotels and packages business (including air tickets sold as part of packages) is generally accounted for on a “gross” basis, representing the total amount paid by our customers for these travel services and products, as we 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 is 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 most hotels outside India, which are accounted for on a “net” basis. We earn commissions in a similar manner for certain non-hotel products related to our packages. Our hotels and packages revenue is recognized on the check-in date for hotel reservations and the date of departure for packages.

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 relevant information about 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, discounts 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.

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 during last three fiscal years.

 

     Fiscal Year Ended March 31,  
     2015     2016     2017  
     (in thousands, except percentages)  

Number of transactions:

      

Air ticketing

     5,432.8       6,960.5       9,379.7  

Hotels and packages

     1,385.5       3,137.3       6,874.1  

Gross bookings:

      

Air ticketing

   $ 1,175,379.2     $ 1,275,747.8     $ 1,545,151.9  

Hotels and packages

     472,997.6       565,764.7       745,135.6  
  

 

 

   

 

 

   

 

 

 
   $ 1,648,376.8     $ 1,841,512.5     $ 2,290,287.5  
  

 

 

   

 

 

   

 

 

 

Net revenue margins:

      

Air ticketing

     6.1     6.0     7.7

Hotels and packages

     13.2     15.3     18.8

Combined net revenue margin for air ticketing and hotels and packages

     8.1     8.8     11.3

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, as well as increased

 

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liquidity constraints, have caused our airline partners to pursue cost reductions in their operations, including reducing distribution costs. Measures taken by airlines to reduce such costs have included reductions in travel agent commissions. Many international airlines which fly to India have also either significantly reduced or eliminated commissions to travel agents. Unlike full-service airlines, low-cost airlines do not generally utilize GDSs for their ticket inventory. As a result, travel agents selling air tickets for low-cost airlines generally do not earn fees from GDSs.

Adverse changes to the overall business and financial climate for the airline industry in India due to various factors including, but not limited to, rising fuel costs, high taxes, significant depreciation of the Indian Rupee as compared to the US dollar making travel for Indian consumers outside India more expensive, and increased liquidity constraints, resulted in airlines in India reducing the base commissions paid to travel agencies. These factors were primarily responsible for causing us to record a net loss of $20.9 million in fiscal year 2014. During fiscal year 2015, the domestic airlines in India continued to reduce the base commissions paid to travel agencies and we spent significantly on marketing and sales promotion expenses to promote transactions on our mobile platforms in India and to promote our international hotels. These factors were mainly responsible for our net loss of $18.4 million in fiscal year 2015. Any consolidation in the airline industry involving our suppliers may also adversely affect our existing relationships and arrangements with such suppliers. During fiscal years 2016 and 2017, we made significant investments in our ongoing customer acquisition programs, such as cash incentives and select loyalty program incentive promotions, to accelerate growth in our standalone hotel booking business in response to increased competition in the domestic travel market in India. This was the primary factor that resulted in our net loss of $88.5 million and $110.3 million, in fiscal year 2016 and 2017, respectively.

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

In fiscal year 2017, our air ticketing net revenue margins (excluding one-time incremental revenue of $9.2 million recognized in the fiscal year 2017 based on quarterly evaluation of trends of refund rights exercised by our customers along with a change in the estimate for provisions for cancelled tickets pursuant to confirmation from vendor) increased to 7.1%. The improvement in net revenue margin in fiscal year 2017 was primarily the result of better negotiated rates with and incentive deals we received from our air ticketing suppliers. Air ticketing transactions and gross bookings growth in fiscal year 2017 was largely driven by the expansion of the travel market in India due to increased domestic travel, new entrants in the air travel market and the expansion of the Indian economy. In fiscal year 2016, our air ticketing net revenue margin decreased marginally to 6.0% from 6.1% in fiscal year 2015.

In fiscal year 2017, our net revenue margins in the hotels and packages business increased to 18.8% from 15.3% in fiscal year 2016. The increase in net revenue margin in fiscal year 2017 was mainly driven by an increase in standalone hotels bookings as a percentage of overall transactions in our hotels and packages business in fiscal year 2017. In fiscal year 2016, our net revenue margins in the hotels and packages business increased to 15.3% from 13.2% in fiscal year 2015. The increase in net revenue margin in fiscal year 2016 was achieved due to better negotiated rates and higher performance linked and other incentives from our suppliers.

Our hotels and packages transactions have increased over the last three fiscal years, increasing from 1.4 million transactions in fiscal year 2015 to 6.9 million transactions in fiscal year 2017, including transactions of the ibibo Group acquired in January 2017. Gross bookings for hotels and packages increased from $473.0 million in fiscal year 2015 to $745.1 million in fiscal year 2017. Revenue less service cost from our hotels and packages business accounted for 45.1%, 51.1% and 51.3% of our total revenue less service cost in fiscal years 2015, 2016 and 2017, respectively. The increase of revenue less service cost in fiscal year 2017 as compared to fiscal year 2016 was due to an increase in gross bookings by 31.7%, a 119.1% increase in the number of transactions and an expansion of net revenue margins from 15.3% in fiscal year 2016 to 18.8% in fiscal year 2017.

 

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Acquisition of the ibibo Group. In January 2017, we undertook a strategic combination with the ibibo Group by way of an acquisition of 100% equity interest in the ibibo Group, which provides online travel services in India. The ibibo Group was founded in 2007 and provides online travel services in India through its consumer travel brands. Our financial and operating results for fiscal year 2017 include the financial and operating results of the ibibo Group for the two months ended March 31, 2017 following the completion of our acquisition of the ibibo Group on January 31, 2017.

Seasonality in the Travel Industry. We experience seasonal fluctuations in the demand for travel services and products offered by us. We tend to experience higher revenues from our hotels and packages business in the second and fourth calendar quarters of each year, which coincide with the summer holiday travel season and the year-end holiday travel season for our customers in India and other markets.

Marketing and Sales Promotion Expenses. Competition in the Indian online travel industry has intensified and the industry is expected to remain highly competitive for the foreseeable future. Increased competition may cause us to increase our marketing and sales promotion expenses in the future in order to compete effectively with new entrants and existing players in the market. We also incur marketing and sales promotion expenses associated with customer inducement and acquisition programs, including cash incentives and select loyalty program incentive promotions, which we offer from time to time on various booking platforms. We may also increase our marketing and sales promotion expenses as a result of our expansion into new markets and such expenses may not be offset by increased revenue particularly at the initial commencement of business in these new markets.

Trends and Changes in the Indian Economy and Travel Industry. Our financial results have been, and are expected to continue to be, affected by trends and changes in the Indian economy and travel industry, particularly the Indian online travel industry. 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;

 

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

 

    capacity and liquidity constraints in the airline industry in India; and

 

    increased use of smartphones and mobile devices in India.

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

The financial statements of all our subsidiaries are translated to our 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. Foreign exchange gains and losses resulting from the settlement of transactions and from the re-measurement of monetary items at year-end exchange rates are recognized in the profit or loss of the period in which they arise. For the purposes of consolidation, all income and expenses are translated at the average rate of exchange during the period covered by the applicable statement of income and assets and liabilities are translated at the exchange rate prevailing on the balance sheet date. When the US dollar strengthens against the Indian Rupee, our revenue and costs in Indian Rupees converted to US dollars decrease. When the US dollar weakens, our revenue and costs in Indian Rupees converted to US dollars increase.

 

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In the past few years, there have been periods of high volatility in the Indian Rupee and US dollar exchange rate. In fiscal year 2017, the average value of the Indian Rupee depreciated 2.5% against the US dollar as compared to the average value of the Indian Rupee in fiscal year 2016. This volatility is illustrated in the table set forth in the section titled “Exchange Rates.” As a result of the depreciation of the Indian Rupee against the US dollar during fiscal year 2017, our loss on account of foreign exchange fluctuations during fiscal year 2017 was $(1.7) million as compared to $(4.5) million for fiscal year 2016.

Our Revenue, Service Cost and Other Revenue and Expenses

Revenue

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

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

Hotels and Packages. Revenue from our hotels and packages business generally represents the total amount paid by our customers for these services and products as well as revenue from air tickets sold as part of packages. Our hotels and packages revenue also 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 most hotels outside India, which are accounted for on a “net” basis. We earn commissions in a similar manner for certain non-hotel products related to our packages. As revenue in our hotels and packages business is accounted for on a “gross” basis, revenue from air tickets sold as part of packages is grossed up to include the fare paid by customers as well as all commissions and fees charged by us, and added to our hotels and packages revenue.

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 from Apollo Munich Health Insurance Company Limited and other insurance agents 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.

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

 

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

 

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

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

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

The incentives offered on transactions where we are the primary obligor are netted off from revenue as the risks and responsibilities of the products and services sold on transactions where we are the primary obligor lies with us. Accordingly, on such transactions the incentives are deducted from revenue since revenue and associated cost are offered to the same 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 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 is classified as service cost.

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

 

    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,
 
    2015     2016     2017     2015     2016     2017     2015     2016     2017     2015     2016     2017  
    (in thousands)  

Revenue on gross basis

  $ 3,556     $ 2,180     $ —       $ 183,255     $ 190,546     $ 189,079     $ —     $ —     $ —     $ 186,811     $ 192,726     $ 189,079  

Revenue on net basis

    70,769       75,992       118,514       37,257       61,167       125,175       4,825       6,169       14,848       112,851       143,328       258,537  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue

  $ 74,325     $ 78,172     $ 118,514     $ 220,512     $ 251,713     $ 314,254     $ 4,825     $ 6,169     $ 14,848     $ 299,662     $ 336,054     $ 447,616  

Less:

                 

Service cost

    2,816       1,770       —         157,897       165,264       173,919       —       —       —       160,713       167,034       173,919  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue less service cost

  $ 71,509     $ 76,402     $ 118,514     $ 62,615     $ 86,449     $ 140,335     $ 4,825     $ 6,169     $ 14,848     $ 138,949     $ 169,020     $ 273,697  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Personnel Expenses

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

Marketing and Sales Promotion Expenses

Marketing and sales promotion costs consist of internet, television, radio and print media advertisement costs as well as event-driven promotion costs for our products and services. These costs include advertising on websites, television and in print, search engine marketing and other media costs. We also incur marketing and sales promotion expenses associated with customer inducements and acquisitions programs, including cash incentives and select loyalty program incentive promotions, which we offer from time to time on various booking platforms. Marketing and sales promotion costs are recognized when incurred.

We earn a majority of our revenue on transactions where we act as an agent and do not assume any performance obligation on the products booked. Accordingly, to effectively represent the underlying business model, revenue and associated costs are presented separately, and the cash incentives and loyalty reward expenses offered on such bookings as mentioned above are accounted for and reported as marketing and sales promotion expenses. The rationale for the significant increase in such expenses is detailed below.

In fiscal 2016, the Indian travel industry saw a significant shift to online transactions driven by significant growth in the smartphones user base. In the past, most of our customers booked travel services using our websites through their desktop or laptop. In view of the significant increase in smartphone penetration, in fiscal 2016 the percentage of our standalone hotel bookings made over mobile almost doubled in a year to over 60% of total online bookings. Keeping in view the changing trend of the platform being used by customers for online search and bookings (i.e. increasingly moving towards mobile site or mobile applications), we had to create direct engagement programs to attract and retain customers. Accordingly, in fiscal 2016 we introduced various marketing and promotional schemes such as cash incentives and loyalty programs to acquire and retain online customers in India.

In fiscal 2017, the shift to online transactions in the Indian travel industry continued with increased Internet penetration in India driven by further growth in the smartphones user base. The percentage of our standalone hotel bookings made over mobile increased to over 74% of total online bookings. In addition, the ibibo Group, which we acquired in January 2017, also had a variety of similar marketing and promotional schemes such as cash incentives and loyalty programs offered under the “goibibo” and “redbus” brands.

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

 

    Cash back incentives: Under this scheme, the end-customers are offered certain predefined cash back based on the terms offered at the time of sale. We enter into specific agreements with various banks for joint promotional offers pursuant to which the cost of cash back promotional incentive is shared between us and the bank and is agreed before rolling out such schemes to the end-customers. On eligible transactions, the cash back is credited in the end-customer’s credit card or bank account by the participating bank within a certain period as per the terms communicated at the time of the transaction.

We share details of eligible bookings made under the promotional offer with the respective banks with whom such promotional offers were run. The bank reconciles the details shared with transactions recorded on their platform and credits the amounts in the end-customers’ account. It is the bank’s obligation to pay the end-customer on the basis of the promotional offer made at the time of sale. After the completion of the offer period, bank sends an invoice to us to recover the portion of the cost which

 

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has to be borne by us. We verify the invoice with its bookings under the respective promotional offers based on the agreement entered with bank and pays the eligible cash back amount to the bank.

 

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

 

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

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

Other Operating Expenses

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

Depreciation, Amortization and Impairment

Depreciation consists primarily of depreciation expense recorded on property and equipment, such as computers and office furniture, fixtures and equipment, buildings, 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 technology-related development expenses, software and intangible assets acquired in business combinations. Impairment expenses consist of losses on account of certain intangibles assets no longer being used in business.

Finance Income

Finance income primarily comprises interest income on funds invested, change in financial liability and net gain on change in fair value of derivatives. Interest income is recognized as it accrues in profit or loss, using the effective interest method.

Finance Costs

Finance costs primarily comprises interest expense on borrowings, change in financial liability, net loss on change in fair value of derivatives, impairment losses recognized on financial assets, including trade and other receivables, costs related to public offerings and costs related to convertible notes. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized in profit or loss using the effective interest method.

Foreign currency gains and losses are reported on a net basis as a component of finance income and costs.

 

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Foreign Currency Translation

We report our consolidated financial statements in US dollars, which is the functional currency of our holding company and certain of our subsidiaries. The functional currency of each of our subsidiaries is the currency in which each subsidiary primarily generates and expends cash. The financial statements of all our subsidiaries with functional currencies other than US dollars are translated to our holding company’s reporting currency using relevant exchange rates in accordance with IFRS. In particular, the assets and liabilities of our foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to US dollars at exchange rates as of the relevant reporting date, and the income and expenses of our foreign operations are translated to US dollars at the average of the exchange rates applicable during the relevant reporting period. Adjustments resulting from the translations of financial statements of our subsidiaries, except for subsidiaries whose functional currency is US dollars, from their functional currency to our 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 included in this Annual Report.

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 and mobile applications whereas revenue from our hotels and packages business is generated through our websites and mobile applications along with 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 providers. Income from the sale of airline tickets is recognized as an agent on a net commission earned basis, as the Group does not assume any performance obligation post the confirmation of the issuance of an airline ticket to the customer. Where the Group has procured advance coupons of airline tickets for an anticipated future demand from customers and assumes the risk of not utilizing the coupons at its disposal, income from the sale of such airline tickets is accounted on gross basis. The costs of such air tickets are classified as service cost. Incentives from airlines are recognized when the performance obligations under the incentive schemes are achieved.

Hotels and Packages. Income from hotel reservations including commission earned is recognized on a net basis as an agent on the date of check-in as the Group does not assume any performance obligation post the

 

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issuance of hotel confirmation voucher to the customer. Where the Group has pre-booked the hotel room nights for an anticipated future demand from the customers and assumes the risk of not utilizing the available hotel room nights at its disposal, income from the sale of such hotel room nights is accounted on gross basis. Performance linked incentives from hotels are recognized as income on achievement of performance obligations. Income from tours and packages, including income on airline tickets sold to customers as a part of tours and packages is accounted on gross basis as the Group is determined to be the primary obligor in the arrangement i.e., the risks and responsibilities are taken by the Group including the responsibility for delivery of services. Income from tours and packages also includes amounts received from hotel vendors against online promotions of hotels brands on our websites.

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.

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

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 collectability 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 services have been provided in accordance with the agreement, i.e. upon booking of the air ticket in the case of airline ticketing revenue, upon date of departure in the case of packages and upon check-in in the case of hotels. As the customer is primarily required to pay the amount at the time of transaction, collectability is reasonably assured.

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 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 use of services by the customer.

Our revenues are recognized on a “net” basis when we are acting as an agent, and on a “gross” basis when we are the “primary obligor.” See “— Our Revenue, Service Cost and Other Revenue and Expenses — Revenue.”

Service Cost

Service cost primarily consists of costs paid to hotel and package suppliers for the acquisition of relevant services and products for sale to customers, and includes the procurement cost of hotel rooms and other services. Service costs also include costs of pre-purchased air tickets coupons in respect of sale of airline tickets for an anticipated future demand from customers and assumes the risk of not utilizing the coupons at its disposal, and cost of pre-booked hotel room nights for an anticipated future demand from the customers and assumes the risk of not utilizing the available hotel room nights at its disposal.

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.

 

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Marketing and Sales Promotion Costs

Marketing and sales promotion costs consist primarily of internet, television, radio and print media advertisement costs, as well as event-driven promotion costs for our products and services. These costs include advertising on websites, television, print formats, search engine marketing and any other media costs. We also incur marketing and sales promotion expenses associated with customer inducements and acquisitions programs, including cash incentives and select loyalty program incentive promotions, which we offer from time to time on various booking platforms. Marketing and sales promotion costs are recognized when incurred.

Other Operating Costs

Other operating costs include costs such as payment gateway charges, web hosting charges and outsourcing fees, which are recognized on an accrual basis.

Depreciation, Amortization and Impairment

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

Accounting Estimates

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

Business Combinations, Goodwill and Intangible Assets

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to us. Control exists when the parent has power over the entity, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, including those which significantly affect the entity’s returns.

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

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

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

 

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

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

 

•    Customer — related intangible assets

     7-10 years  

•    Contract — related intangible assets

     5-6 years  

•    Marketing — related intangible assets

     7-10 years  

•    Software

     3-5 years  

•    Technology-related development costs

     2-5 years  

•    Favorable lease contract term — related intangible assets

     7 years  

Convertible Notes

Our 4.25% convertible notes due 2021 were convertible into ordinary shares at an initial conversion price of $21.45 per share, representing an initial conversion rate of 46.62 ordinary shares per $1,000 principal amount of the convertible notes. The liability component of the convertible notes was initially recognized at fair value less any directly attributable transaction costs. Directly attributable transaction costs were allocated to the liability component and the conversion option in proportion to their initial carrying amounts. A conversion option which is not settled by delivering a fixed number of equity instruments for a fixed amount of cash is accounted for separately from the liability component as a derivative and initially accounted for at fair value. Subsequent to initial recognition, the liability component of the convertible notes was measured at amortized cost using the effective interest method. The conversion option was subsequently measured at fair value at each reporting date with changes in fair value recognized as profit or loss. The conversion option was presented together with the related liability. On October 28, 2016, we issued an aggregate of 9,857,028 ordinary shares (comprising 659,939 ordinary shares issued from treasury shares held by us and 9,197,089 new ordinary shares) to Ctrip upon conversion of all its convertible notes.

Available-for-sale Financial Assets

Available-for-sale financial assets are non-derivative financial assets that are either designated as available-for-sale or are not classified in any of the other categories. Available-for-sale financial assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and any changes, other than impairment losses, are recognized in other comprehensive income (loss) and presented within equity in the fair value reserve. When such assets are derecognized, the cumulative gain or loss in other comprehensive income (loss) is transferred to profit or loss. Available-for-sale financial assets comprise of equity securities and right acquired under business combination.

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.

 

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Impairment of Non-Financial Assets

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

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

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

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

Share-based Payment Transactions

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

The equity instruments generally vest in tranches over the vesting period. The fair value determined at the grant date is expensed over the vesting period of the respective tranches. We recognize share-based compensation net of an estimated forfeiture rate and 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 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

 

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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 Technology-related Development Cost

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

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

Other Intangible Assets

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

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

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

Income Tax

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

Current Income Tax. As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. We are subject to tax

 

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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 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.

 

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Results of Operations

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

 

     Fiscal Year Ended March 31,  
     2015     2016     2017  
     Amount     %     Amount     %     Amount     %  
     (in thousands, except percentages)  

Revenue

   $ 299,662       100.0     $ 336,054       100.0     $ 447,616       100.0  

Other Income

     853       0.3       1,014       0.3       363       0.1  

Service cost

     (160,713     (53.6     (167,034     (49.7     (173,919     (38.9

Personnel expenses

     (44,318     (14.8     (49,018     (14.6     (73,736     (16.5

Marketing and sales promotion expenses

     (42,724     (14.3     (108,966     (32.4     (224,424     (50.1

Other operating expenses

     (59,345     (19.8     (67,954     (20.2     (81,585     (18.2

Depreciation, amortization and impairment

     (7,955     (2.7     (10,923     (3.3     (29,702     (6.6

Results from operating activities

     (14,540     (4.9     (66,827     (19.9     (135,387     (30.2

Finance income

     3,168       1.1       1,586       0.5       45,268       10.1  

Finance costs

     (6,712     (2.2     (20,327     (6.0     (18,289     (4.1

Impairment in respect of an equity-accounted investee

     —       —       (959     (0.3     —         —    

Share of loss of equity-accounted investees

     (139     (0.0     (1,860     (0.6     (1,702     (0.4

Profit (Loss) before tax

     (18,223     (6.1     (88,387     (26.3     (110,110     (24.6

Income tax benefit (expense)

     (135     (0.0     (155     (0.0     (193     (0.0

Profit (Loss) for the year

     (18,358     (6.1     (88,542     (26.3     (110,303     (24.6

Fiscal Year 2017 Compared to Fiscal Year 2016

Revenue. We generated revenue of $447.6 million in fiscal year 2017, an increase of 33.2% over revenue of $336.1 million in fiscal year 2016.

Air Ticketing. Revenue from our air ticketing business increased by 51.6% to $118.5 million in fiscal year 2017 from $78.2 million in fiscal year 2016. In fiscal year 2017, we recognized incremental revenue of $9.2 million based on quarterly evaluation of trends of refund rights exercised by our customers along with a change in the estimate for provisions for cancelled tickets pursuant to confirmation from vendor. Our revenue less service costs increased by 55.1% to $118.5 million in fiscal year 2017 (43.0% excluding incremental revenue of $9.2 million in fiscal year 2017) from $76.4 million in fiscal year 2016.

This growth was driven by a year-on-year increase of 34.8% in air ticketing transactions in fiscal year 2017 and an increase in gross bookings of 21.1% to $1.5 billion in fiscal year 2017 from $1.3 billion in fiscal year 2016, along with the contribution of air ticketing revenue from the ibibo Group. Air ticketing transactions and gross bookings growth in 2017 was largely driven by the expansion of the travel market in India due to increased domestic travel, new entrants in the air travel market and the expansion of the Indian economy. Our net revenue margin improved from 6.0% in fiscal year 2016 to 7.7% in fiscal year 2017 ( 7.1% excluding incremental revenue of $9.2 million in fiscal year 2017).

Hotels and Packages. Revenue from our hotels and packages business increased by 24.8% to $314.3 million in fiscal year 2017 from $251.7 million in fiscal year 2016. Our revenue less service costs increased by 62.3% to $140.3 million in fiscal year 2017 from $86.5 million in fiscal year 2016. This growth was due to an increase in gross bookings by 31.7% and a 119.1% increase in the number of transactions along with the contribution of hotels and packages revenue from the ibibo Group. Our net revenue margins improved from 15.3% in fiscal year 2016 to 18.8% in fiscal year 2017, which was mainly driven by an increase in standalone hotels bookings as a percentage of overall hotels and packages bookings. Standalone hotel bookings increased in fiscal year 2017 as

 

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we maintained our market share while the total number of transactions booked online increased, primarily due to greater internet penetration in India.

Other Revenue. Our other revenue increased to $14.8 million in fiscal year 2017 from $6.2 million in fiscal year 2016, primarily due to the contribution of bus ticketing revenue from the ibibo Group consolidation and an increase in facilitation fees on travel insurance.

Other Income. Our other income was $0.4 million in fiscal year 2017, primarily due to the write-back of amounts that we had previously provided for but that are no longer required. Our other income accounted for $1.0 million in fiscal year 2016, primarily due to the acquisition of a technology platform license.

Service Cost. Service cost increased to $173.9 million in fiscal year 2017 from $167.0 million in fiscal year 2016, mainly as a result of an increase in the transaction volume in our hotels and packages business in fiscal year 2017.

Total Revenue less Service Costs. Our total revenue less service costs increased by 61.9% to $273.7 million in fiscal year 2017 from $169.0 million in fiscal year 2016. This growth resulted from a 62.3% increase in our hotels and packages revenue less service costs, an increase of 55.1% in our air ticketing revenue less service costs and an increase of 140.7% in other revenue. For further information and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure (revenue), see “— Certain Non-IFRS Measures” elsewhere in this Annual Report.

Personnel Expenses. Personnel expenses increased by 50.4% to $73.7 million in fiscal year 2017 from $49.0 million in fiscal year 2016. This increase was primarily due to higher employee share-based compensation costs mainly relating to the ibibo Group acquisition, an annual increase in wages in fiscal year 2017 and an increase in employee headcount mainly in our hotels and packages business. The employee share-based compensation costs also include a one-time charge of $9.0 million as part of the ibibo Group acquisition. Excluding employee share-based compensation costs, personnel expenses as a percentage of net revenue decreased by 3.8% from fiscal year 2016 to fiscal year 2017.

Marketing and sales promotion expenses. Marketing and sales promotion expenses increased by 106.0% to $224.4 million in fiscal year 2017 from $109.0 million in fiscal year 2016, primarily as a result of significant investments in our ongoing customer acquisition and inducement programs incurred to accelerate growth in our standalone hotel booking business, along and higher marketing expenses related to mobile application downloads and referral costs by $8.1 million and brand advertisement expenses by $8.9 million in fiscal year 2017, along with the contribution of marketing and sales promotion expenses of the ibibo Group. For more information on our customer acquisition and inducement programs, see “— Our Revenue, Service Cost and Other Revenue and Expenses — Marketing and Sales Promotion Expenses.”

Other Operating Expenses. Other operating expenses increased by 20.1% to $81.6 million in fiscal year 2017 from $68.0 million in fiscal year 2016, primarily as a result of an increase in legal and professional expenses of $7.7 million and payment gateway charges of $2.2 million, in line with the growth in our business and the contribution of other operating expenses of the ibibo Group. Other operating expenses for fiscal year 2017 also include merger and acquisition related expenses of $6.0 million in fiscal year 2017 compared to $0.2 million in fiscal year 2016, comprising legal and professional expenses, other expenses associated with our acquisition of the ibibo Group and certain non-routine transactions, whether or not consummated.

Depreciation, Amortization and Impairment. Our depreciation, amortization and impairment expenses increased by 171.9% to $29.7 million in fiscal year 2017 from $10.9 million in fiscal year 2016, primarily as a result of impairment of goodwill and brands related to the Hotel Travel Group of $14.6 million as we decided to significantly reduce our Hotel Travel Group operations during the fourth quarter of fiscal year 2017 and an increase in amortization costs on acquisition-related intangibles following the ibibo Group acquisition.

 

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Results from Operating Activities. As a result of the foregoing factors, our results from operating activities was a loss of $135.4 million in fiscal year 2017 compared to a loss of $66.8 million in fiscal year 2016. We had an adjusted operating loss of $83.7 million in fiscal year 2017 compared with an adjusted operating loss of $50.1 million in fiscal year 2016. For a description of the components and calculation of “adjusted operating profit (loss)” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure (results from operating activities), see “— Certain Non-IFRS Measures” elsewhere in this Annual Report.

Finance Income. Our finance income increased to $45.3 million in fiscal year 2017 from $1.6 million in fiscal year 2016, primarily as a result of the net gain from change in fair value of derivative financial instrument related to convertible notes of $42.4 million in fiscal year 2017.

Finance Costs. Our finance costs decreased to $18.3 million in fiscal year 2017 as compared to $20.3 million in fiscal year 2016, primarily due to interest expense on financial liabilities measured at amortized cost of $8.6 million and amortization of deferred difference of $5.9 million in fiscal year 2017 which was offset by interest expense on financial liabilities measured at amortized cost of $3.8 million and net loss from change in fair value of derivative financial instrument of $9.0 million in fiscal year 2016 relating to convertible notes outstanding.

Loss for the year. As a result of the foregoing factors, our loss in fiscal year 2017 was $110.3 million as compared to a loss of $88.5 million in fiscal year 2016. We had an adjusted net loss of $99.2 million in fiscal year 2017 compared to an adjusted net loss of $58.3 million in fiscal year 2016. For a description of the components and calculation of “adjusted net profit (loss)” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure (profit (loss)), see “— Certain Non-IFRS Measures” elsewhere in this Annual Report.

Diluted loss per share. Diluted loss per share was $2.09 in fiscal year 2017 as compared to diluted loss per share of $2.12 in fiscal year 2016. We had an adjusted diluted loss per share of $1.88 in fiscal year 2017 as compared to an adjusted diluted loss per share of $1.40 in fiscal year 2016. For a description of the components and calculation of a “adjusted diluted earnings (loss) per share” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure (diluted earnings (loss) per share), see “— Certain Non-IFRS Measures” elsewhere in this Annual Report.

Fiscal Year 2016 Compared to Fiscal Year 2015

Revenue. We generated revenue of $336.1 million in fiscal year 2016, an increase of 12.1% over revenue of $299.7 million in fiscal year 2015.

Air Ticketing. Revenue from our air ticketing business increased by 5.2% to $78.2 million in fiscal year 2016 from $74.3 million in fiscal year 2015. Our revenue less service costs increased by 6.8% to $76.4 million in fiscal year 2016 from $71.5 million in fiscal year 2015. This growth was driven by a year-on-year increase of 28.1% in air ticketing transactions for fiscal year 2016 and an increase in gross bookings of 8.5% to $1.3 billion in fiscal year 2016 from $1.2 billion in fiscal year 2015 partially offset by a decrease in net revenue margin from 6.1% in fiscal year 2015 to 6.0% in fiscal year 2016. Air ticketing transactions and gross bookings growth in 2016 was largely driven by the expansion of the travel market in India due to increased domestic travel, new entrants in the air travel market and the expansion of the Indian economy.

Hotels and Packages. Revenue from our hotels and packages business increased by 14.1% to $251.7 million in fiscal year 2016 from $220.5 million in fiscal year 2015. Our revenue less service costs increased by 38.1% to $86.5 million in fiscal year 2016 from $62.6 million in fiscal year 2015. This growth was due to an increase in gross bookings by 19.6%, a 126.4% increase in the number of transactions and an expansion of net revenue margins from 13.2% in fiscal year 2015 to 15.3% in fiscal year 2016. The increase in net revenue margin in fiscal year 2016 was due to better negotiated rates and higher performance linked and other incentives from our

 

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suppliers. The year-on-year transaction growth in this segment was driven by strong growth in our standalone hotel booking business.

Other Revenue. Our other revenue increased to $6.2 million in fiscal year 2016 from $4.8 million in fiscal year 2015, primarily due to an increase in facilitation fees from travel insurance sales.

Other Income. Our other income was $1.0 million in fiscal year 2016, primarily due the acquisition of a technology platform license. Our other income accounted for $0.9 million in fiscal year 2015, primarily due to write-back of amounts that we had previously provided for but that were no longer required to be provided for.

Service Cost. Service cost increased to $167.0 million in fiscal year 2016 from $160.7 million in fiscal year 2015, mainly as a result of an increase in the transaction volume in our hotels and packages business in fiscal year 2016.

Total Revenue less Service Costs. Our total revenue less service costs increased by 21.6% to $169.0 million in fiscal year 2016 from $138.9 million in fiscal year 2015. This growth resulted from a 38.1% increase in our hotels and packages revenue less service costs and an increase of 6.8% in our air ticketing revenue less service costs. For further information and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure (revenue), see “— Certain Non-IFRS Measures” elsewhere in this Annual Report.

Personnel Expenses. Personnel expenses increased by 10.6% to $49.0 million in fiscal year 2016 from $44.3 million in fiscal year 2015. This increase was on account of higher employee share-based compensation costs of $13.7 million in fiscal year 2016 as against $12.3 million in fiscal year 2015 and an annual increase in wages in fiscal year 2016. Excluding employee share-based compensation costs, personnel expenses as a percentage of net revenue decreased by 2.1% from fiscal year 2015 to fiscal year 2016.

Marketing and sales promotion expenses. Marketing and sales promotion expenses increased by 155.0% to $109.0 million in fiscal year 2016 from $42.7 million in fiscal year 2015 mainly as a result of cash incentives and loyalty reward expenses incurred as part of our customer acquisition and inducement programs to accelerate growth in our standalone hotel booking business in response to increased competition in the domestic travel market in India, and higher marketing expenses related to mobile application download and referral cost by $8.7 million and brand advertisement expenses by $5.0 million in fiscal year 2016 which was partially offset by higher online marketing expenses in ETB Group of $5.4 million in fiscal year 2015. For more information on our customer acquisition and inducement programs, see “— Our Revenue, Service Cost and Other Revenue and Expenses — Marketing and Sales Promotion Expenses.”

Other Operating Expenses. Other operating expenses increased by 14.5% to $68.0 million in fiscal year 2016 from $59.3 million in fiscal year 2015, primarily as a result of an increase in outsourcing expenses of $2.2 million and payment gateway charges of $1.7 million, in line with the growth in our business.

Depreciation, Amortization and Impairment. Our depreciation, amortization and impairment expenses increased by 37.3% to $10.9 million in fiscal year 2016 from $8.0 million in fiscal year 2015, primarily as a result of impairment of certain technology-related intangibles assets no longer used in business and due to an increase in amortization costs on acquisition-related intangibles and technology-related developments and software.

Results from Operating Activities. As a result of the foregoing factors, our results from operating activities was a loss of $66.8 million in fiscal year 2016 compared to a loss of $14.5 million in fiscal year 2015. We had an adjusted operating loss of $50.1 million in fiscal year 2016 compared to an adjusted operating profit of $0.5 million in fiscal year 2015. For a description of the components and calculation of “adjusted operating profit (loss)” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure (results from operating activities), see “— Certain Non-IFRS Measures” elsewhere in this Annual Report.

 

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Finance Income. Our finance income decreased to $1.6 million in fiscal year 2016 from $3.2 million in fiscal year 2015, primarily as a result of an increase in interest income on term deposits with banks in fiscal year 2015.

Finance Costs. Our finance costs increased to $20.3 million in fiscal year 2016 as compared to $6.7 million in fiscal year 2015, primarily due to the net change in fair value of derivative financial instrument of $9.0 million and interest expense of $3.4 million on convertible notes.

Loss for the year. As a result of the foregoing factors, our loss in fiscal year 2016 was $88.5 million as compared to a loss of $18.4 million in fiscal year 2015. We had an adjusted net loss of $58.3 million in fiscal year 2016 compared to an adjusted net loss of $2.6 million in fiscal year 2015. For a description of the components and calculation of “adjusted net profit (loss)” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure (profit (loss)), see “— Certain Non-IFRS Measures” elsewhere in this Annual Report.

Diluted loss per share. Diluted loss per share was $2.12 in fiscal year 2016 as compared to diluted loss per share of $0.44 in fiscal year 2015. We had an adjusted diluted loss per share of $1.40 in fiscal year 2016 as compared to an adjusted diluted loss per share of $0.06 in fiscal year 2015. For a description of the components and calculation of “adjusted diluted earnings (loss) per share” and a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure (diluted earnings (loss) per share), see “— Certain Non-IFRS Measures” elsewhere in this Annual Report.

Liquidity and Capital Resources

Historically, our sources of liquidity have principally been proceeds from the sale of our convertible preferred shares, convertible notes and ordinary shares, bank overdrafts and working capital facilities and cash flows from operations. In fiscal year 2016, we issued $180.0 million of 4.25% convertible notes due 2021 to Ctrip, which were converted into ordinary shares in October 2016. Our cash requirements have mainly been for working capital as well as capital expenditures and acquisitions.

As of March 31, 2017, our primary sources of liquidity were $101.7 million of cash and cash equivalents and $95.7million in term deposits with various banks, which are available on demand. A portion of such term deposits are used to secure bank overdraft facilities, including facilities with American Express, which support our MMT India business.

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 $29.2 million as of March 31, 2016 to $37.3 million as of March 31, 2017, primarily as a result of an increase in receivables in our hotels and packages business during fiscal year 2017 in line with growth in our business. Our other current assets primarily consist of deposits and advances to our suppliers to secure better prices and availability of bookings in future periods. Our other current assets decreased from $51.2 million as of March 31, 2016 to $50.2 million as of March 31, 2017, primarily due to decreases in advances to airlines and increases in other receivables.

As of March 31, 2017, MMT India had the following facilities available in India from IndusInd Bank: (i) an unsecured overdraft facility for up to Rs. 150 million (approximately $2.3 million) with primary security as exclusive charge over the entire assets of MMT India and (ii) an overdraft facility against credit card receivables of Rs. 200 million (approximately $3.1 million) along with charge on entire assets of the Company and direct payment routing confirmation of entire receivables from American Express Credit Card with IndusInd Bank. As of March 31, 2017, no amount was outstanding under these facilities. As of March 31, 2017, the ibibo Group did not have any facilities outstanding.

 

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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/letters of credit to secure our obligations to them. As of March 31, 2017, MMT India had sanctioned bank guarantee limits of (i) Rs. 1,400 million (approximately $21.7 million) from IndusInd Bank against exclusive charge on the assets along with corporate guarantee from MakeMyTrip Limited, and (ii) Rs. 50 million (approximately $0.8 million) from HDFC Bank against fixed deposit. As of March 31, 2017, an aggregate of Rs. 1,240.0 million (approximately $19.2 million) of such bank guarantees were utilized, including (i) Rs. 1,227.9 million (approximately $19.0 million) from IndusInd Bank and (ii) Rs. 12.28 million (approximately $0.2 million) from HDFC Bank, respectively, but no demand had been made against any of these guarantees. As of March 31, 2017, ibibo India had sanctioned bank guarantee limits of Rs. 550 million (approximately $8.5 million) from Citi Bank against a letter of support issued by Naspers, of which Rs. 405.5 million (approximately $6.3 million) of such bank guarantees were utilized. In addition to these bank guarantees, an aggregate of Rs 0.90 million (approximately $0.01 million) were issued from Yes Bank against 100% cash margin.

In addition, MMT USA has obtained certificates of deposit totaling $0.1 million to provide guarantees to various international airlines; Luxury Tours has obtained certificates of deposit totaling $0.4 million to provide guarantees to various international hotels and packages suppliers; and the ITC Group has obtained certificates of deposit totaling $0.8 million to provide 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 and cash flow from operations 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,  
     2015     2016     2017  
     (in millions)  

Net cash generated from/(used in) operating activities

   $ 10.8     $ (66.0   $ (108.5

Net cash generated from/(used in) investing activities

     5.4       (103.6     163.0  

Net cash generated from/(used in) financing activities

     (2.7     164.6       2.2  

Net increase/(decrease) in cash and cash equivalents

     13.5       (5.0     56.7  

Cash and cash equivalents at beginning of year

     38.0       49.9       46.3  

Effect of exchange rate fluctuations on cash held

     (1.7     1.4       (1.3

Cash and cash equivalents at end of year

     49.9 (1)      46.3 (2)      101.7 (3) 

 

Notes:

(1) Excludes $93.5 million of term deposits not classified as “cash and cash equivalents.” As of March 31, 2015, we did not have any amounts outstanding under our overdraft facilities.
(2) Excludes $169.3 million of term deposits not classified as “cash and cash equivalents.” As of March 31, 2016, we had $7.2 million outstanding under our overdraft facilities.
(3) Excludes $95.7 million of term deposits not classified as “cash and cash equivalents.” As of March 31, 2017, we did not have any amounts outstanding under our overdraft facilities.

Net Cash Generated From/(Used In) Operating Activities

Our net cash used in operating activities was $108.5 million in fiscal year 2017, as compared to net cash used in operating activities of $66.0 million in fiscal year 2016, an increase of $42.5 million in fiscal year 2017.

 

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Our net loss adjusted for amortization and depreciation, impairment and other non-cash items was $78.8 million in fiscal year 2017 as compared to $42.7 million in fiscal year 2016. Further, in fiscal year 2017, there was an increase in our working capital of $29.6 million as compared to an increase in working capital of $23.3 million in fiscal year 2016. The working capital increase in fiscal year 2017 was primarily due to a decrease of $33.9 million in trade and other payables and other customer advances in the Hotel Travel Group partially offset by a decrease of $4.9 million in advances to vendors in our hotel segment.

Our net cash used in operating activities was $66.0 million in fiscal year 2016, as compared to net cash generated from operating activities of $10.8 million in fiscal year 2015, a decrease of $76.8 million in fiscal year 2016. Our net loss adjusted for amortization and depreciation and other non-cash items was $42.7 million in fiscal year 2016. Further, in fiscal year 2016, there was an increase in our working capital of $23.3 million as compared to a decrease in working capital of $5.0 million in fiscal year 2015. The working capital increase in fiscal year 2016 was primarily due to a $10.5 million increase in non-current assets related to payment of indirect tax demand on our Indian subsidiary under protest and an increase of $6.7 million in advances to vendors particularly in our hotels segment, including advances to airlines for fiscal year 2017, as well as a $6.6 million decrease in trade and other payables and other customer advances due to a decrease in business volume in the ETB Group.

Our net cash generated from operating activities was $10.8 million in fiscal year 2015 as compared to net cash used in operating activities of $4.0 million in fiscal year 2014, an increase of $14.8 million in fiscal year 2015. Our net income adjusted for amortization and depreciation and other non-cash items increased by $5.6 million in fiscal year 2015. Further, in fiscal year 2015, there was decrease in our working capital by $5.0 million as compared to an increase in working capital of $4.2 million in fiscal year 2014. The working capital decrease in fiscal year 2015 was primarily due to an increase in trade and other payables by $17.4 million due to increase in advances from customers for future bookings, particularly in our hotels segment, including advances to airlines for fiscal year 2016, partially offset by increase in withholding taxes deducted on incentives offered by our suppliers.

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

In fiscal year 2017, cash generated from investing activities was $163.0 million. We received cash of $82.8 million in connection with a working capital adjustment as part of our acquisition of the ibibo Group and $20.0 million in working capital of the ibibo Group. We redeemed term deposits with banks amounting to $83.6 million (computed using average exchange rates for the period) for investment and working capital purposes and received interest on our term deposits of $2.5 million. We also invested $10.0 million (computed using average exchange rates for the period) in term deposits with banks, $8.8 million in property plant and equipment, $6.2 million in software and technology-related development projects and $1.1 million in equity-accounted investees.

In fiscal year 2016, cash used in investing activities was $103.6 million. We redeemed term deposits with banks amounting to $63.4 million (computed using average exchange rates for the period) for investment and working capital purposes and received interest on our term deposits of $2.9 million. We also invested $140.0 million (computed using average exchange rates for the period) in term deposits with banks, $5.7 million in property plant and equipment, $5.4 million in software and technology-related development projects and $17.8 million in equity-accounted investees.

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

In fiscal year 2017, cash generated from financing activities was $2.2 million, primarily as a result of cash proceeds of $8.6 million from the issuance of additional ordinary shares as part of the consideration we paid for our acquisition of the ibibo Group. Further, we made payments of $4.5 million as interest on convertible notes and our other finance charges and repurchased 144,131 of our own ordinary shares for $2.1 million.

 

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In fiscal year 2016, cash generated from financing activities was $164.6 million, primarily as a result of proceeds from the issuance of convertible notes of $180.0 million. Further, we made payments of $0.9 million as interest on bank overdrafts and our other finance charges, repurchased 768,357 of our own ordinary shares for $11.1 million, paid $2.7 million for direct costs related to convertible notes and paid $0.9 million for acquisition of non-controlling interests.

In fiscal year 2015, cash used in financing activities was $2.7 million, primarily as a result of payment of deferred consideration related to business combination of $1.4 million. Further, we made payments of $0.8 million as interest on bank overdrafts and other finance charges, repurchased 20,000 of our own ordinary shares for $0.4 million and paid $0.4 million for direct costs related to follow-on public offerings. The cash outflows from these payments was partially offset by collection of $0.2 million as proceeds from the issuance of shares on exercise of share-based awards by certain of our employees.

Capital Expenditures

Historically, our sources of liquidity have principally been proceeds from the sale of our convertible preferred shares, convertible notes and ordinary shares, bank overdrafts and working capital facilities and cash flows from operations. In fiscal year 2016, we issued $180.0 million of 4.25% convertible notes due 2021 to Ctrip, which were converted into ordinary shares in October 2016.

We made capital expenditures of $7.0 million, $11.1 million and $15.0 million in fiscal years 2015, 2016 and 2017, respectively. As of March 31, 2017, we had committed capital expenditures of $1.8 million for fiscal year 2017, substantially all of which we expect to spend in India. In addition, we expect to spend an additional approximately $15.0 million to $17.0 million on capital expenditures during fiscal year 2018. Our capital expenditures have 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 and mobile platforms.

Off-Balance Sheet Arrangements

As of March 31, 2017, MMT India had obtained Rs. 1,247 million (approximately $19.3 million) in bank guarantees, primarily from IndusInd Bank in favor of IATA, against any payment default by us to all airlines participating in IATA’s bill settlement plan, and MMT USA and the ITC Group had obtained certificates of deposit totaling $0.1 million and $0.8 million, respectively, for the purposes of providing guarantees to various international airlines. Additionally, Luxury Tours had obtained certificates of deposit totaling $0.4 million for purposes of providing guarantees to various hotels and packages suppliers. Apart from the foregoing, we do not have any outstanding off-balance sheet derivative financial instruments, guarantees, interest rate swap transactions or foreign currency forward contracts. We do not engage in trading activities involving non-exchange traded contracts.

Contractual Obligations

The following table sets forth our contractual obligations as of March 31, 2017. Other than the obligations specified below, we do not have any long-term commitments:

 

     Payment Due by Period  

Contractual

Obligations

   Total      Less than 1
year
     1-3 years      3-5 years      More than
5 years
 
     (in thousands)  

Secured bank loan(1)

   $ 890      $ 288      $ 445      $ 154      $ 3  

Principal

     749        226        380        140        3  

Interest

     141        62        65        14        —    

Operating lease obligations(2)

     44,842        4,825        8,909        7,857        23,251  

Purchase obligations(3)

     1,848        1,848        —          —          —    

Employee benefits(4)

     2,946        —          —          —          —    

 

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Notes:

(1) Secured bank loans relate to loan for motor vehicles used in our business.
(2) Operating lease obligations relate to our leasing arrangements for our various office premises.
(3) We enter into purchase orders from time to time for various equipment or other requirements for our business.
(4) Employee benefits in the statement of financial position include $2.9 million in respect of employee benefit obligations. For this amount, the extent of the amount and timing of repayment/settlement is not reliably estimable or determinable at present and accordingly has not been disclosed in the table above.

Inflation

The CIA World Factbook estimates that consumer inflation in India was 4.9% in 2015 and 5.6% in 2016. For more information, see “Risk Factors — Risks Related to Operations in India — 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.”

Quantitative and Qualitative Disclosures about Market Risk

Our business activities are exposed to a variety of market risks, including credit risk, foreign exchange 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 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 whom 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 35 to our audited consolidated financial statements included elsewhere in this Annual Report for additional information relating to our exposure to credit risk.

Foreign Exchange Risk. We are exposed to movements in currency exchange rates, primarily those related to the US dollar and the Indian Rupee. As the functional currency of MMT India and ibibo India, our key operating subsidiaries, is the Indian Rupee, our exposure to foreign exchange 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 $7.8 million, $65.4 million and $0.1 million, respectively, as of March 31, 2017. Based on our operations in fiscal year 2017, a 10.0% appreciation of the US dollar against the Indian Rupee as of March 31, 2017, assuming all other variables remained constant, would have increased our loss for fiscal year 2017 by $5.5 million. Similarly, a 10.0% depreciation of the US dollar against the Indian Rupee as of March 31, 2017, assuming all other variables remained constant, would have decreased our loss for fiscal year 2017 by $5.5 million.

We are also exposed to movements between the US dollar and the Indian Rupee in our operations, as 1.8%, 1.1% and 0.2% of our revenue for fiscal years 2015, 2016 and 2017, respectively, was generated by MMT India and, in respect of fiscal year 2017, the ibibo Group from their air ticketing businesses and received in US dollars, although our expenses are generally incurred in Indian Rupees. Additionally, we receive revenue from our hotels and packages business in Indian Rupees, but a portion of our expenses in this segment (those relating

 

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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. Fluctuation in the Indian Rupee-US dollar exchange rate could have a material adverse effect on our business and our financial condition and results of operations as reported in US dollars. For more information, see “Risk Factors — Risks Related to Us and Our Industry — Our Results of Operations are Subject to Fluctuations in Currency Exchange Rates.”

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, 2017, we had fixed rate financial instruments consisting of $115.7 million of term deposits and no amounts outstanding on variable rate financial instruments. As of March 31, 2016, we had fixed rate financial instruments consisting of $169.3 million of term deposits and $7.2 million of variable rate financial instruments, 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. An increase or decrease in interest rates as of March 31, 2017 would not have affected our profit or loss and would not have had any impact on our equity as we had no amounts outstanding on variable rate financial instruments. A sensitivity analysis shows that an increase of 100 basis points in interest rates as of March 31, 2016 would have increased loss by $0.1 million and resulted in a corresponding decrease in our equity. Similarly, a decrease of 100 basis points in interest rates as of March 31, 2016 would have decreased loss by $0.1 million and resulted in a corresponding increase in our equity.

Certain Non-IFRS Measures

In addition to referring to revenue less service cost, we also refer to adjusted operating profit (loss), adjusted net profit (loss) and adjusted diluted earnings (loss) per share which are non-IFRS measures and most directly comparable to results from operating activities, profit (loss) and diluted earnings (loss) per share for the year, respectively, each of which is an IFRS measure.

As certain parts of our revenues 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 costs, which is a non-IFRS measure, as we believe that revenue less service costs reflects more relevant information about the value addition of the travel services that we provide to our customers. Income from packages, including income on airline tickets sold to customers as a part of tours and packages is accounted for on a gross basis since we are the primary obligor in the arrangement and assume the risks and responsibilities, including the responsibility for delivery of services. Revenue from the packages business which is accounted for on a “gross” basis represents the total amount paid by customers for these travel services and products, while our cost of procuring the relevant services and products for sale to our customers in this business is classified as service cost.

We believe that revenue less service costs reflects more accurately the value addition of the travel services that we provide to customers in our packages business where we are the primary obligor and is similar to the revenue on a “net” basis for our air ticketing and hotels business where we act as an agent. Our revenue less service costs may not be comparable to similarly titled measures reported by other companies due to potential differences in the method of calculation. 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.

We use financial measures that exclude share-based compensation expense, all merger and acquisitions related expenses, amortization of acquired intangibles and change in financial liability relating to acquisitions for our internal management reporting, budgeting and decision making purposes, including comparing our operating results to that of our competitors. Because of varying available valuation methodologies and subjective assumptions that companies can use when adopting IFRS 2 “Share based payment,” management believes that

 

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providing non-IFRS financial measures that exclude such expenses allows investors to make additional comparisons between our operating results and those of other companies. We believe that our current calculations of adjusted operating profit (loss), adjusted net profit (loss), revenue less service cost and adjusted diluted earnings (loss) per share represent a balanced approach to adjusting for the impact of certain discrete, unusual or non-cash items which are useful in measuring our results and provide investors and analysts a more relevant representation of our operating results. We believe that investors and analysts in its industry use these non-IFRS measures to compare our company and our performance to that of our global peers. However, the presentation of these non-IFRS measures are 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. These non-IFRS measures may not be comparable to similarly titled measures reported by other companies due to potential differences in the method of calculation. The IFRS measures most directly comparable to adjusted operating profit (loss) and adjusted net profit (loss) are results from operating activities and profit (loss) for the period, respectively.

A limitation of using adjusted operating profit (loss), adjusted net profit (loss) and adjusted diluted earnings (loss) per share instead of operating profit (loss), net profit (loss) and diluted earnings (loss) per share calculated in accordance with IFRS as issued by the IASB is that these non-IFRS financial measures exclude a recurring cost, namely share-based compensation. Management compensates for this limitation by providing specific information on the IFRS amounts excluded from adjusted operating profit (loss), adjusted net profit (loss) and adjusted diluted earnings (loss) per share. The presentation of these non-IFRS measures is not meant to be considered in isolation or as a substitute for our consolidated financial results prepared in accordance with IFRS as issued by the IASB.

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,
 
    2015     2016     2017     2015     2016     2017     2015     2016     2017     2015     2016     2017  
    (in thousands except percentages)  

Revenue

  $ 74,325     $ 78,172     $ 118,514     $ 220,512     $ 251,713     $ 314,254     $ 4,825     $ 6,169     $ 14,848     $ 299,662     $ 336,054     $ 447,616  

Less:

                       

Service Cost

    2,816       1,770       —         157,897       165,264       173,919       —         —         —         160,713       167,034       173,919  

Revenue less service cost

  $ 71,509     $ 76,402     $ 118,514     $ 62,615     $ 86,449     $ 140,335     $ 4,825     $ 6,169     $ 14,848     $ 138,949     $ 169,020     $ 273,697  

% of total revenue less service cost

    51.5     45.2     43.3     45.1     51.1     51.3     3.4     3.7     5.4     100.0     100.0     100.0

The IFRS measures most directly comparable to “adjusted operating profit (loss),” “adjusted net profit (loss)” and “adjusted diluted earnings (loss) per share” are results from operating activities, profit (loss) for the year and diluted earnings (loss) per share, respectively.

 

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The following table reconciles our results from operating activities (an IFRS measure) to adjusted operating profit (loss) (a non-IFRS measure) for the periods indicated:

 

Reconciliation of adjusted operating profit (loss)    Fiscal Year Ended
March 31,
 
     2015     2016     2017  
     (in millions)  

Result from operating activities as per IFRS

   $ (14.5   $ (66.8   $ (135.0

Add: Employee share-based compensation costs

     12.3       13.7       26.8  

Less: Income on license acquired

     —         (0.9     —    

Add: Impairment of intangible assets

     —         2.2       15.2  

Add: Merger and acquisitions related expenses

     0.4       0.2       6.0  

Add: Severance cost related to a prior acquisition

     0.6       —         —    

Add: Acquisition related intangibles amortization

     1.7       1.5       3.7  
  

 

 

   

 

 

   

 

 

 

Adjusted operating profit (loss)

   $ 0.5     $ (50.1   $ (83.7
  

 

 

   

 

 

   

 

 

 

The following table reconciles our profit (loss) for the year (an IFRS measure) to adjusted net profit (loss) (a non-IFRS measure) for the periods indicated:

 

Reconciliation of adjusted net profit (loss)    Fiscal Year Ended
March 31,
 
     2015     2016     2017  
     (in millions)  

Profit (Loss) for the year as per IFRS

   $ (18.4   $ (88.5   $ (110.3

Add: Employee share-based compensation costs

     12.3       13.7       26.8  

Less: Income on license acquired

     —         (0.9     —    

Add: Impairment of intangible assets

     —         2.2       15.2  

Add: Acquisition related intangibles amortization

     1.7       1.5       3.7  

Add: Severance cost related to a prior acquisition

     0.6       —         —    

Add: Share of loss of equity-accounted investees

     0.2       1.9       1.7  

Add/Less: Net change on change in fair value of derivative financial instrument

     —         9.3       (42.4

Add: Merger and acquisitions related expenses

     0.4       0.2       6.0  

Add: Direct cost related to Convertible notes

     —         0.7       —    

Add: Impairment in respect of an equity-accounted investee

     —         0.9       —    

Add: Net change in value of financial liability related to business combination

     0.5       0.5       —    

Add: Income tax expense

     0.1       0.2       0.2  
  

 

 

   

 

 

   

 

 

 

Adjusted net profit (loss)

   $ (2.6   $ (58.3   $ (99.2
  

 

 

   

 

 

   

 

 

 

 

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The following table reconciles our diluted earnings (loss) per share for the year (an IFRS measure) to adjusted diluted earnings (loss) per share (a non-IFRS measure) for the periods indicated:

 

Reconciliation of adjusted diluted earnings (loss) per share    Fiscal Year Ended
March 31,
 
     2015     2016     2017  
     (in US$)  

Diluted Earnings (Loss) per share for the year as per IFRS

   $ (0.44   $ (2.12   $ (2.09

Add: Employee share-based compensation costs

     0.29       0.33       0.51  

Less: Income on license acquired

     —         (0.02     —    

Add: Impairment of intangible assets

     —         0.05       0.29  

Add: Acquisition related intangibles amortization

     0.04       0.04       0.11  

Add: Severance cost related to a prior acquisition

     0.02       —         —    

Add: Share of loss of equity-accounted investees

     —         0.05       0.03  

Add/Less: Net change in fair value of derivative financial instrument

     —         0.22       (0.80

Add: Merger and acquisitions related expenses

     0.01       —         0.11  

Add: Direct cost related to Convertible notes

     —         0.02       —    

Add: Impairment in respect of an equity-accounted investee

     —         0.02       —    

Add: Net change in value of financial liability related to business combination

     0.02       0.01       —    

Add: Income tax expense

     *     *     *
  

 

 

   

 

 

   

 

 

 

Adjusted diluted earnings (loss) per share

   $ (0.06   $ (1.40   $ (1.88
  

 

 

   

 

 

   

 

 

 

 

Note:

* Less than $0.01.

New Accounting Standards and Interpretations Not Yet Adopted

IFRS 9 Financial Instruments: In July 2014, the International Accounting Standards Board issued the final version of IFRS 9, Financial Instruments. The standard aims to reduce the complexity of the current rules on financial instruments as mandated in IAS 39. IFRS 9 has fewer classification and measurement categories as compared to IAS 39 and has eliminated the categories of held to maturity, available for sale and loans and receivables. Further it eliminates the rule-based requirement of segregating embedded derivatives and tainting rules pertaining to held to maturity investments. For an investment in an equity instrument which is not held for trading, IFRS 9 permits an irrevocable election, on initial recognition, on an individual share-by-share basis, to present all fair value changes from the investment in other comprehensive income. No amount recognized in other comprehensive income would ever be reclassified to profit or loss. It requires the entity, which chooses to measure a liability at fair value, to present the portion of the fair value change attributable to the entity’s own credit risk in other comprehensive income.

IFRS 9 replaces the incurred loss model in IAS 39 with an expected credit loss model. The measurement uses a dual measurement approach, under which the loss allowance is measured as either 12 month expected credit losses or lifetime expected credit losses. The standard also introduces new presentation and disclosure requirements.

The effective date for adoption of IFRS 9 is annual periods beginning on or after January 1, 2018, though early adoption is permitted. We are currently evaluating the requirements of IFRS 9 and have not yet determined the impact on the consolidated financial statements.

IFRS 15 Revenue from Contracts with Customers: In May 2014, the International Accounting Standards Board and Financial Accounting Standards Board jointly issued IFRS 15, Revenue from Contracts with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced

 

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disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers.

The standard permits the use of either the retrospective or cumulative effect transition method. The effective date for adoption of IFRS 15 is annual periods beginning on or after January 1, 2017, though early adoption is permitted.

In September 2015, the IASB issued an amendment to IFRS 15, deferring the adoption of the standard to periods beginning on or after January 1, 2018 instead of January 1, 2017.

In April 2016, the IASB amended IFRS 15 to provide clarifications to apply the principles of IFRS 15 as well as additional transitional relief to companies.

We have not yet selected a transition method and are evaluating the impact of IFRS 15 on our consolidated financial statements.

IFRS 16 Leases: On January 13, 2016, the International Accounting Standards Board issued the final version of IFRS 16, Leases. IFRS 16 will replace the existing leases standard, IAS 17, Leases, and related interpretations. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for lessees and lessors. It introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Currently, operating lease expenses are charged to the statement of profit or loss and other comprehensive income (loss). IFRS 16 also contains enhanced disclosure requirements for lessees. The effective date for adoption of IFRS 16 is annual periods beginning on or after January 1, 2019, though early adoption is permitted for companies applying IFRS 15 Revenue from Contracts with Customers. We are yet to evaluate the requirements of IFRS 16 and the impact on our consolidated financial statements.

IAS 7 Statement of Cash Flows: In January 2016, the International Accounting Standards Board issued amendments to IAS 7 requiring entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes and suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities. The effective date for adoption of the amendments to IAS 7 is annual reporting periods beginning on or after January 1, 2017, though early adoption is permitted. We have evaluated the disclosure requirements of the amendment and the effect on the consolidated financial statements are not expected to be material.

IFRIC 23, Uncertainty over Income Tax Treatments: In June 2017, the International Accounting Standards Board issued IFRIC 23, Uncertainty over Income Tax Treatments. IFRIC 23 is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12.

According to IFRIC 23, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.

The standard permits two possible methods of transition:

 

    Full retrospective approach — Under this approach, IFRIC 23 will be applied retrospectively to each prior reporting period presented in accordance with IAS 8 — Accounting Policies, Changes in Accounting Estimates and Errors

 

    Retrospectively with cumulative effect of initially applying IFRIC 23 recognized by adjusting equity on initial application, without adjusting comparatives

 

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The effective date for adoption of IFRC 23 is annual periods beginning on or after January 1, 2019, though early adoption is permitted. The Group is yet to evaluate the effect of IFRIC 23 on the consolidated financial statements.

 

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

Our board of directors consists of 10 directors.

The table below sets forth the name, age and position of each of our directors, executive officers and significant employees as of the date hereof. Unless otherwise indicated, the business address of our directors and executive officers is 19th Floor, Building No. 5, DLF Cyber City, Gurgaon, 122002, India.

 

Name

  

Age

    

Position/Title

Directors:(1)

     

Deep Kalra

     48      Director, Group Chairman and Group Chief Executive Officer

Rajesh Magow

     48      Director and Chief Executive Officer — India

Aditya Tim Guleri

     52      Independent Director

Vivek N. Gour

     54      Independent Director

Gyaneshwarnath Gowrea

     51      Director

James Jianzhang Liang

     47      Director

Oliver Rippel

     41      Director

Pat Kolek

     46      Director

Charles Searle

     53      Director

Yuvraj (Raj) Thacoor

     65      Independent Director

Executive Officers:(2)

     

Ashish Kashyap

     44      Co-Founder and President

Mohit Kabra

     46      Group Chief Financial Officer

 

Notes:

(1) Mohit Kabra, Philip C. Wolf, Frederic Lalonde, Ranodeb Roy and Naushad Ally Sohoboo resigned from our board of directors with effect from January 31, 2017. Oliver Rippel, Pat Kolek, Charles Searle and Yuvraj (Raj) Thacoor were appointed to our board of directors with effect from January 31, 2017, as nominees of MIH Internet. Our board of directors has determined that Mr. Thacoor is an independent director within the meaning of the Nasdaq Stock Market, Marketplace Rules.
(2) Anshuman Bapna, Mohit Gupta, Ranjeet Oak, Sanjay Mohan, Saujanya Shrivastava and Yuvaraj Srivastava ceased to be executive officers with effect from June 1, 2017.

Directors

Deep Kalra is our founder, group chairman and group chief executive officer and was appointed to our board of directors on October 9, 2001. Mr. Kalra’s responsibilities as group chief executive officer include executing our business strategy and managing the overall performance and growth of our company. Mr. Kalra has over 25 years of work experience in e-commerce, sales, marketing, corporate banking, financial analysis and senior management roles. Prior to founding our company in April 2000, Mr. Kalra worked with GE Capital India, a subsidiary of the General Electric Company, where he was vice president, business development. Prior to that, he also worked with AMF Bowling Inc. and ABN AMRO Bank NV. Mr. Kalra serves on the board of a The IndUS Entrepreneurs’ New Delhi – NCR Chapter, a global, not-for-profit organization focused on promoting entrepreneurship, and was their immediate past president. He is a co-founder of Ashoka University, a liberal arts college in Sonepat, near New Delhi and serves on their board and governing council. Mr. Kalra holds a Bachelor’s degree in Economics from St. Stephen’s College, Delhi University, India, and a Master’s degree in Business Administration from the Indian Institute of Management, Ahmedabad, India.

 

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Rajesh Magow is our co-founder and chief executive officer — India and was appointed to our board of directors on November 6, 2012. Mr. Magow has also previously held the positions of chief financial officer and chief operating officer at our company. Mr. Magow has over 24 years of experience in the information technology and Internet industries. After having been a part of our senior management team in 2001 for a few months, Mr. Magow worked as a part of senior management at Tecnovate eSolutions Private Limited, a wholly-owned subsidiary of eBookers.com (a United Kingdom-based online travel company that was listed on NASDAQ until it was acquired by the Cendant group in February 2005) from 2001 to June 2006. Before leaving Tecnovate eSolutions, he was the acting chief executive officer of the company. Mr. Magow was part of the senior management team that set up eBookers’ call center and back office operations in India and was a board member of Tecnovate from January 2001 to June 2006. Prior to Tecnovate, he also worked with Aptech Limited and Voltas Limited. Mr. Magow rejoined our company in 2006. He also served on the board of Flipkart Limited as an independent director from March 2011 to May 2015 and was again appointed as an independent director in June 2017. Mr. Magow is a qualified chartered accountant from the Institute of Chartered Accountants of India, Delhi.

Aditya Tim Guleri was appointed to our board of directors on April 3, 2007 as a nominee of Sierra Ventures VIII-A, L.P., Sierra Ventures VIII-B, L.P. and Sierra Ventures Associates VIII, LLC, or the Sierra Ventures entities. He has remained on our board following the lapse of Sierra Ventures entities’ right of nomination upon the completion of our initial public offering in August 2010. Mr. Guleri is a Managing Director of Sierra Ventures. Mr. Guleri’s investment focus is information technology software companies. Additionally, Mr. Guleri has helped execute Sierra’s India strategy and investments. As a venture capitalist, Mr. Guleri has helped to complete strategic exits from numerous companies including several public companies. Mr. Guleri currently serves on the board of directors of Treasure Data, Alpine Data Labs, Nexenta, Hired, LeadGenius, Phenom People, Shape Security, Townsquared and Zycada. Prior to Sierra, Mr. Guleri founded and served as chief executive officer of Octane Software from 1996 to 2000. He successfully led Octane’s merger with Epiphany (Nasdaq: EPNY) in 2000. Before Octane, Mr. Guleri was vice president of field operations at Scopus Technology. Mr. Guleri holds a Master of Science degree in Engineering and Operating Research from Virginia Polytechnic Institute and State University and a Bachelor of Science degree in Electrical Engineering from Punjab Engineering College, Chandigarh, India. The business address of Mr. Guleri is 2884 Sand Hill Road, Suite 100, Menlo Park, CA 94025, United States.

Vivek N. Gour was appointed to our board of directors on May 1, 2010. He is the managing director of Air Works India Engineering Pvt Ltd.. Prior to joining our board of directors, Mr. Gour was the chief financial officer and principal accounting officer of Genpact Limited from January 2005 to February 2010; Genpact is listed on the New York Stock Exchange. From October 2003 to December 2004, Mr. Gour served as chief financial officer for GE Capital Business Processes. From October 2002 to September 2003, he served as chief financial officer of GE Capital India and GE Capital International Services. Mr. Gour has a Bachelor of Commerce degree from Mumbai University, India, and a Master of Business Administration from Delhi University, India. The business address of Mr. Gour is Kalyani House, Plot # 40, 1st Floor, Sector 18, Gurgaon – 122001, Haryana, India.

Gyaneshwarnath Gowrea was appointed to our board of directors on February 11, 2009 and is one of our resident directors in Mauritius. Mr. Gowrea is the chairman of the taxation sub-committee of Global Finance Mauritius, vice chairman of the International Fiscal Association (Mauritius Branch) and an international tax affiliate of the Chartered Institute of Taxation. He was the managing director of Multiconsult Limited from 2009 to 2011. From 2007 to 2008, he was director of AAA Global Services Ltd. and from 1999 to 2006 he was a manager with Cim Global Business. Mr. Gowrea completed his secondary education at John Kennedy College in Mauritius and holds a Master of Science in Accounting from De Monfort University in Leicester, UK and a Diploma in International Taxation. In addition, he holds various professional qualifications, including being a fellow of the Association of Chartered Certified Accountants, United Kingdom, a fellow member of the Mauritius Institute of Directors and a member of Society of Trust and Estate Practitioners, United Kingdom. The business address of Mr. Gowrea is Les Cascades Building, 33 Edith Cavell Street, Port Louis, Mauritius.

 

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James Jianzhang Liang was appointed to our board of directors on January 27, 2016, as a nominee of Ctrip. He is one of the co-founders of Ctrip and is currently serving as its chief executive officer. Prior to founding Ctrip, Mr. Liang held a number of technical and managerial positions with Oracle Corporation from 1991 to 1999 in the United States and China, including the head of the ERP consulting division of Oracle China from 1997 to 1999. Mr. Liang currently serves on the boards of Home Inns Group (NASDAQ: HMIN), Tuniu (NASDAQ: TOUR), eHi (NASDAQ: EHIC) and Qunar (NASDAQ: QUNR). Mr. Liang received his Ph.D. degree from Stanford University and his Master’s and Bachelor’s degrees from Georgia Institute of Technology. He also attended an undergraduate program at Fudan University. The business address of Mr. Liang is Building 16, SKY SOHO, No. 968 Jinzhong Road, Shanghai, PRC 200335.

Oliver Rippel was appointed to our board of directors on January 31, 2017, as a nominee of MIH Internet. He is chief executive officer of B2C e-commerce for Naspers which includes retail, marketplaces and travel. He joined Naspers in January 2009 as head of business development in Southeast Asia before managing e-commerce in Africa and Middle East shortly thereafter. From 2011 to 2014 he oversaw e-commerce in Southeast Asia, India and Africa. Between 2014 and 2015, he was managing online services segments including e-tail outside of Europe, travel, real estate, and mobile services. Before working for Naspers Limited, Oliver spent nine years at eBay – first in his home country of Germany and then as part of the Asia-Pacific region in China, Korea, and South-East Asia. There, he mostly focused on strategy and business development, as well as category management and marketing operations. Mr. Rippel studied economics in Berlin, Germany. The business address of Mr. Rippel is Unit 13-10, Parkview Square, 600 North Bridge Road, Singapore.

Pat Kolek was appointed to our board of directors on January 31, 2017, as a nominee of MIH Internet. He joined Naspers in 2014 as chief financial officer of e-commerce and was appointed chief operating officer of Naspers in July 2016. As group chief operating officer, Mr. Kolek is focused on aligning group strategy with company objectives, leading core business activities and strategic initiatives such as large acquisitions and divestitures. Mr. Kolek has more than 20 years’ experience in executing business growth and development strategies for hyper growth organizations. Prior to joining Naspers, Mr. Kolek spent 10 years at eBay, most recently as vice president and chief financial officer of eBay International and previously as the chief operating officer of eBay Classifieds. Mr. Kolek holds a bachelor’s degree in commerce from Santa Clara University and is a certified public accountant. The business address of Mr. Kolek is Taurusavenue 105, 2132 LS, Hoofddorp, The Netherlands.

Charles St Leger Searle was appointed to our board of directors on January 31, 2017, as a nominee of MIH Internet. He is chief executive officer of Naspers Internet Listed Assets. Mr. Searle serves on the board of several companies associated with the Naspers Group, including Tencent Holdings Limited, listed on the Stock Exchange of Hong Kong, and Mail.ru Group Limited that is listed on the London Stock Exchange. Prior to joining the Naspers Group in Hong Kong, he held positions at Cable & Wireless plc and at Deloitte & Touche in London and Sydney. Mr. Searle is a graduate of the University of Cape Town and a member of the Institute of Chartered Accountants in Australia and New Zealand. Mr. Searle has more than 22 years of international experience in the telecommunications and internet industries. The business address of Mr. Searle is Room 2908, 29/F, Three Pacific Place, 1 Queen’s Road East, Hong Kong

Yuvraj (Raj) Thacoor was appointed to our board of directors on January 31, 2017, as a nominee of MIH Internet. He is a chartered accountant, Fellow of The Institute of Chartered Accountants in England and Wales, Associate Member of the Chartered Institute of Arbitrators (UK), Member of The British Institute of Management, Member of The Mauritius Institute of Public Accountants and The Financial Reporting Council (FRC) as well as a Licensed Insolvency Practitioner. Mr. Thacoor was an audit partner of Deloitte, Coopers and Lybrand and PricewaterhouseCoopers from 1988 until 2000 when he set up Grant Thornton in Mauritius and served as Managing Partner until he retired in July 2016. Mr. Thacoor is currently the Regional Head of Grant Thornton International for the development of Africa. Mr. Thacoor served as Chairman of the first offshore fund set up in Mauritius and has since served on several boards of funds dealing mainly in real estate in India. Mr. Thacoor has contributed to promoting the accountancy profession in Mauritius. He served as Chairman of The Financial Reporting and Monitoring Panel of the regulatory body FRC, Mauritius. The business address of Mr. Thacoor is Villa Ulys, 3 The Palms, Au Bout Du Monde, Ebene, Mauritius.

 

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Executive Officers

Ashish Kashyap is our co-founder and president. Prior to joining us in January 2017, Mr. Kashyap served as the founder and chief executive officer of the ibibo Group, one of India’s leading online travel groups. Mr. Kashyap founded the ibibo Group in 2007 and launched the online travel business in late 2009, with a vision to organize the transportation and accommodation industry. In 2011, Mr. Kashyap also co-founded PayU India, a leading payments platform. Prior to founding the ibibo Group, Mr. Kashyap was the country head of Google India. Before joining Google India, Mr. Kashyap founded eCommerce and online travel businesses at Indiatimes.com. Mr. Kashyap holds a Masters of Management-IMPM from McGill University, Desautels Faculty Of Management, Diploma: IMPM (Insead) and Economics (Hons) from Kirorimal College, Delhi University India.

Mohit Kabra is our group chief financial officer. Prior to joining us in July 2011, Mr. Kabra served as a Director, Finance at Kohler India where he worked from 2006 to June 2011. He has approximately 23 years of work experience and has held various positions in the India businesses of, among others, PepsiCo, Colgate and Seagram. Mr. Kabra has a Bachelor of Commerce degree from St. Joseph’s Junior College. He is a qualified Chartered Accountant from the Institute of Chartered Accountants of India and a qualified Cost Accountant from the Institute of Cost Accountants of India.

B. Compensation

For fiscal year 2017, the aggregate compensation (including directors’ fees, but excluding grants of stock options and RSUs that are described below) to our directors and executive officers included in the list under the heading “— Directors and Executive Officers of our Group” (including the executive officers who were designated executive officers on January 31, 2017) was $3.1 million, which included $0.9 million in base salary, $0.4 million in housing and rent allowance, $0.6 million in special allowances and $1.2 million in other payments. The foregoing compensation figures include $0.1 million which may be awarded in the form of RSUs at the option of the relevant director. Our employment agreements (as amended from time to time) with each of our group chairman and group chief executive officer, chief executive officer – India, and group chief financial officer provide for bonus entitlements calculated as a percentage of gross annual salary and linked to gross sales targets of our company. Our employment agreements with our other executive officers provide for a variable performance component which is payable upon each of the individual officer and our company attaining certain performance targets. Except as otherwise disclosed, these aggregate cash compensation amounts for fiscal year 2017 do not include stock compensation and employee benefits to our directors and executive officers. Stock compensation to our directors and executive officers are disclosed separately in the tables under “— Outstanding Options” and “Outstanding RSUs,” and employee benefits to our directors and executive officers are disclosed separately under “— Employee Benefit Plans.”

Share Incentive Plans

Equity Option Plan

Our board of directors adopted the MakeMyTrip.com 2001 Equity Option Plan, or our Equity Option Plan, on January 12, 2001, retrospectively effective from June 1, 2000, pursuant to the enabling authority granted under a shareholders’ resolution dated January 12, 2001, in order to attract and retain appropriate talent in the employment of our company, to motivate our employees with incentives, to create shareholder value by aligning the interests of employees with the long term interests of our company and to create a sense of ownership and provide wealth creation opportunities for our employees. MMT India had also adopted an equity option plan in 2006. Employees who were previously granted options under the MMT India Equity Option Plan have instead been granted options under our Equity Option Plan. The MMT India Equity Option Plan and all options granted to employees under such plan were terminated with effect from July 14, 2010.

Although we do not intend to make additional grants under our Equity Option Plan, the options already granted under Equity Option Plan continue to remain valid and exercisable. The following paragraphs describe the principal terms of our Equity Option Plan.

 

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Administration

Our Equity Option Plan is administered by the compensation committee of our board of directors. Among other things, our compensation committee determines the terms and conditions of each option grant, including, but not limited to, the number of options, exercise price, vesting period, exercise period and any lock-in period, forfeiture provisions, adjustments to be made to the number of options and exercise price in the event of a change in capital structure or other corporate action, and satisfaction of any performance conditions.

Vesting Schedule

Unless otherwise specified in the grant, all initial grants made to any individual vest in the following manner:

 

    10% on the expiry of 12 months from the date of grant.

 

    20% on the expiry of 24 months from the date of grant.

 

    30% on the expiry of 36 months from the date of grant.

 

    40% on the expiry of 48 months from the date of grant.

Unless otherwise specified in the grant, all subsequent grants made on the basis of the performance of the individual vest in four equal installments at the anniversary of the respective grant date. Our compensation committee has absolute discretion to vary such vesting dates as it deems fit. Other than as set forth under “— Outstanding Options,” all options we have granted to date have vested in full on their respective grant dates.

Option Exercise and Expiration

Unless otherwise specified in the grant, vested options must be exercised prior to the earliest of the following dates:

 

    48 months from the vesting date.

 

    72 months from the date of grant.

 

    six months following the recipient’s date of voluntary resignation or termination of employment, other than due to death, disablement or retirement.

 

    one year following the death of a recipient or termination due to disablement or retirement.

Cashless Exercise of Options

Our Equity Option Plan permits holders of options to exercise their options using a cashless exercise method. In a cashless exercise, the holder of options exercises the options by simultaneously selling the shares underlying the options upon exercise. Our board or compensation committee may also require the holder of options (especially in the case where such method of cashless exercise may contravene certain regulatory requirements) to surrender the options to our company at the selling price of the shares underlying the options in lieu of such exercise and simultaneous sale of shares. In each of the foregoing, the holder of options is only entitled to receive the difference between the selling price and the exercise price for the options, after deductions for all applicable taxes and expenses.

Pursuant to the terms of our Equity Option Plan, any holder of options who may be restricted or prevented by applicable laws and regulations from paying in full or in part the exercise price of his or her options or from exercising such restricted options and acquiring our ordinary shares, will be required to exercise such restricted options using the cashless exercise method, as described above.

 

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Effect of Change of Control or Restructuring of Capital

Upon any restructuring of capital or the occurrence of a change of control of our company, the recipient of any option that is outstanding at the time of such restructuring or change of control will be entitled to such number and type of securities that is being offered in lieu of the shares underlying such option by virtue of such restructuring of capital or change of control, if any.

Amendment or Termination

Our board of directors may at any time amend, alter or terminate our Equity Option Plan or any grant under our Equity Option Plan. However, amendments to any grant under our Equity Option Plan are subject to consent from the recipient of such grant, if such amendment would impair or prejudice the rights of such recipient. Additionally, the approval of shareholders holding not less than 75% of our issued share capital will be required to increase the number of shares available for issuance under options granted pursuant to our Equity Option Plan, change the exercise price of any option or to extend the maximum period during which grants under our Equity Option Plan may be made. The term of our Equity Option Plan was for an initial seven years but was extended to June 1, 2012 pursuant to a board resolution passed on June 12, 2009 which had retrospective effect from June 1, 2007. Our Equity Option Plan was subsequently amended and restated, and extended to June 1, 2014, pursuant to board and shareholder resolutions passed on May 25, 2010. We have not extended the validity of this plan, but the existing grants under this plan remain valid as per the terms of the original grant.

Number of Shares granted under 2001 Equity Option Plan

As of March 31, 2017, pursuant to our Equity Option Plan, we had outstanding options exercisable into a total of 333,121 ordinary shares with exercise price ranging from $0.4875 to $1.9765.

Share Incentive Plan

We adopted the MakeMyTrip 2010 Share Incentive Plan on May 25, 2010, or our Share Incentive Plan, upon which our Share Incentive Plan became immediately effective. On October 18, 2016, our board of directors approved two amendments to our Share Incentive Plan in order to give effect to an earlier recommendation of our compensation committee to increase the shares available under our Share Incentive Plan to fund employee grants for the four fiscal years starting April 2014 and to provide for a sufficient number of RSUs to be granted in connection with the conversion of Indigo SARs and Naspers Rollover RSUs and the other awards contemplated under the Transaction Agreement. On May 18, 2017, our board of directors approved an amendment to our Share Incentive Plan to increase the shares available under the Plan to fund employee grants until March 2022 and to extend the expiration date of our Share Incentive Plan from May 2020 to 31 March 2022.

Although our Equity Option Plan will continue to be valid under its terms and will govern the terms of all options granted thereunder, we intend to grant all new equity share awards under our Share Incentive Plan.

The purpose of our Share Incentive Plan is to promote the success and enhance the value of our company by linking the personal interests of the members of our board, employees and consultants of our company, subject to restrictions under applicable law, to those of our shareholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to our shareholders. Our Share Incentive Plan is further intended to provide us with flexibility in our ability to motivate, attract and retain the services of such individuals upon whose judgment, interest and special effort the successful conduct of our operations are largely dependent.

The following paragraphs describe the principal terms of our Share Incentive Plan.

Administration

Our Share Incentive Plan is administered by our board of directors which, to the extent permitted by applicable laws, may delegate its authority to one or more members of our board or one or more of our officers, subject to certain restrictions set forth in our Share Incentive Plan.

 

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Shares Available for Awards

Subject to certain adjustments set forth in our Share Incentive Plan, the aggregate number of shares that may be issued or awarded under our Share Incentive Plan is equal to the sum of (x) 9,357,842 Shares, plus (y) in the event that any Indigo SARs or Naspers Rollover RSUs (each, as defined in the Transaction Agreement) are forfeited between October 18, 2016 and January 31, 2017 as a result of an Indigo Business Employee’s (as defined in the Transaction Agreement) termination of employment during such period, a number of Shares in respect of restricted share units into which such forfeited Indigo SARs and Naspers Rollover RSUs would have converted pursuant to Sections 7.07(a)(i) and 7.07(a)(ii) of the Transaction Agreement (each such defined term having the meaning ascribed to such term in the Transaction Agreement). To the extent that an award terminates, expires or lapses for any reason, or is settled in cash and not shares, then any shares subject to the award will again be available for the grant. Any shares delivered by the holder or withheld by our company upon the exercise of any award, in payment of the exercise price or tax withholding, may again be optioned, granted or awarded, subject to certain limitations set forth in our Share Incentive Plan.

Eligibility

Our employees, consultants and non-employee directors are eligible to be granted awards, except that awards will not be granted to consultants or non-employee directors who are residents of any country in the European Union and any other country, which, pursuant to applicable laws, does not allow grants to any non-employees or consultants.

Options

Our board of directors is authorized to grant options on shares. The per share option exercise price of all options granted pursuant to our Share Incentive Plan will be determined by our board of directors, which may be a fixed or variable price related to the fair market value of the shares; provided that no option may be granted to an individual subject to taxation in the United States at less than the fair market value on the date of the grant, without compliance with Section 409A of the United States Internal Revenue Code of 1986, as amended (or the Code), or the holder’s consent. Our board of directors will determine the methods of payment of the exercise price of an option, which may include without limitation cash or check, shares, proceeds or other forms of legal consideration acceptable to our board of directors. The term of options granted under our Share Incentive Plan may not exceed 10 years from the date of grant. Except as limited by the requirements of Section 409A of the Code, our board of directors may extend the term of any outstanding option and may extend the time period during which vested options may be exercised, or may amend any other term or condition of such option, in connection with any termination of service of the holder.

Restricted Shares

Our board of directors is authorized to grant shares subject to various restrictions, including without limitation restrictions on transferability.

Share Appreciation Rights

Our board of directors is authorized to grant share appreciation rights to eligible individuals, entitling the holder to receive an amount determined by multiplying the difference obtained by subtracting the exercise price per share of the share appreciation right from the share value on the date of exercise of the share appreciation right by the number of ordinary shares with respect to which the share appreciation right is exercised, subject to any limitations our board of directors may impose. The term of share appreciation rights will be set by our board of directors. Amounts payable upon exercise of a share appreciation right will be in cash, shares or a combination of both, as determined by our board of directors.

 

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Dividend Equivalents

Our board of directors may grant dividend equivalents based on dividends declared on the ordinary shares of our company. Such dividend equivalents will be converted to cash by such formula and at such time and subject to such limitations as may be determined by our board of directors.

Share Payments

Our board of directors is authorized to make share payments, which may, but are not required to be made, in lieu of base salary, bonus, fees or other cash compensation. The number or value of shares of any share payment will be determined by our board of directors and may be based upon any criteria, including service to our company, as determined by our board of directors.

Deferred Shares

Our board of directors is authorized to grant deferred shares based on any specific criteria, including service to our company, as our board of directors determines. Shares underlying a deferred share award will not be issued until the deferred share award has vested, pursuant to a vesting schedule or other conditions or criteria set by our board of directors. Unless otherwise provided by our board of directors, a holder of deferred shares will have no rights as a shareholder with respect to such deferred shares until the deferred share awards have vested and the shares underlying the deferred share awards have been issued.

Restricted Share Units

Our board of directors is authorized to grant, in its sole discretion, restricted share units, or RSUs, to our directors, executive officers and employees. The RSUs have been awarded so far in lieu of cash compensation, as an incentive for future performance and as a reward for past performance. Each grant of RSUs is subject to various vesting conditions as determined by our board of directors. Such vesting conditions may include, for example, the vesting schedule, expiration dates and employment restrictions.

Upon exercise of a holder’s RSUs, subject to applicable laws, our company will issue to the holder one unrestricted, fully transferable share (or the fair market value of one such share in cash) for each vested and non-forfeited RSU. RSUs may be paid in cash, shares or both, as determined by our board of directors.

The RSUs may be exercised using a cashless exercise method. In a cashless exercise, the holder of the RSUs exercises the RSUs by simultaneously selling the shares underlying the RSUs upon exercise. Our board or compensation committee may also require the holder of the RSUs (especially in the case where such method of cashless exercise may contravene certain regulatory requirements) to surrender the RSUs to our company at the selling price of the shares underlying the RSUs in lieu of such exercise and simultaneous sale of shares. In each of the foregoing, the holder of the RSUs is only entitled to receive the difference between the selling price and the exercise price for the RSUs, after deduction of all applicable taxes and expenses.

The term of a dividend equivalent award, share payment award, deferred share award and/or RSU award will be determined by our board of directors in its sole discretion.

During fiscal year 2017, we granted 4,481,294 RSUs, of which 1,129,905 RSUs were granted in connection with our acquisition of the ibibo Group in exchange for share-based payment awards held by certain employees of the ibibo Group. These RSUs can be exercised at any time during the 10-year period from the grant date (i.e., January 31, 2017). 2,654,479 RSUs were granted to our directors and executive officers. See “— Outstanding RSUs” for more information.

Adjustments

In the event of certain changes in our capitalization, our board of directors, in its sole discretion, will make such proportionate and equitable adjustments to reflect such changes with respect to (i) the aggregate number and

 

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type of shares that may be issued under our Share Incentive Plan, (ii) the terms and conditions of any outstanding awards and (iii) the grant or exercise price per share for any outstanding award under our Share Incentive Plan.

Corporate Transactions

If a corporate transaction occurs and outstanding awards under our Share Incentive Plan are not converted, assumed or replaced by the successor, such awards will generally become fully exercisable and all forfeiture restrictions on such awards will lapse. Upon, or in anticipation of, a corporate transaction, our board of directors may, in its sole discretion, (i) cause any awards outstanding to terminate at a specific time in the future and give each holder the right to exercise such awards during such period of time as our board of directors will determine, (ii) either purchase any award for an amount of cash equal to the amount that could have been attained upon the exercise of such award or realization of the holder’s rights had such award been currently exercisable or payable or fully vested or (iii) replace such award with other rights or property selected by our board of directors in its sole discretion.

Non-transferability

Awards granted under our Share Incentive Plan are generally not transferable during the lifetime of the award holder.

Amendment, Suspension or Termination

Unless terminated earlier, our Share Incentive Plan will expire on, and no award may be granted pursuant to it after, the tenth anniversary of its effective date. Any awards that are outstanding on the tenth anniversary of the effective date of our Share Incentive Plan will remain in force according to the terms of our Share Incentive Plan and the applicable award agreement. Except as otherwise provided in our Share Incentive Plan, our board of directors may terminate, amend or modify our Share Incentive Plan at any time and from time to time. However, shareholder approval will be required for any amendment (i) to the extent necessary and desirable to comply with applicable laws and (ii) that results in an increase in benefits that would not apply equally to all shareholders of shares or a change in eligible individuals. Except as provided in our Share Incentive Plan or any award agreement, any amendment, suspension or termination may not impair any rights or obligations under any award without the award holder’s consent.

Outstanding Options

During fiscal years 2015, 2016 and 2017 no options were granted to any of our directors and executive officers under our Equity Option Plan. As of March 31, 2017, 329,121 outstanding options were held by our directors and executive officers as set forth in the following table. As of June 30, 2017, 329,121 outstanding options were held by our directors and executive officers.

 

Name

   Shares Underlying
Outstanding Options
     Exercise Price
($ per Share)
     Date of Grant      Date of Expiration(1)  

Rajesh Magow

     182,140        0.74        June 25, 2009        June 30, 2021  
     114,000        1.98        June 25, 2009        June 30, 2021  
     32,981        0.53        June 25, 2009        June 30, 2021  

 

Note:

(1) All these options vested upon the date of grant and were required to be exercised prior to 48 months from their vesting date (i.e., the date of grant), subject to the terms of our Equity Option Plan. In May 2013, our compensation committee extended the date of expiration of these options from June 25, 2013 to June 25, 2017. In April 2017, the date of expiration of these grants were extended to June 30, 2021.

 

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Outstanding RSUs

During fiscal year 2017, 2,654,479 RSUs were issued under our Share Incentive Plan to our directors and executive officers, of which 3,000 fully vested RSUs were granted to our directors in lieu of cash compensation owed to them.

On January 31, 2017, in connection with our acquisition of the ibibo Group and in accordance with the Transaction Agreement, certain equity awards (comprising Indigo SARs and Naspers Rollover RSUs) that were previously granted by the ibibo Group to ibibo Group employees were converted to RSUs. We also issued RSUs to certain ibibo Group employees. In aggregate, we issued 1,836,798 RSUs to ibibo Group employees in connection with our acquisition of the ibibo Group.

As set forth in the following table, outstanding RSUs as of March 31, 2017 were:

 

Name

   Shares Underlying
Outstanding RSUs
     Total RSUs
Granted in
Fiscal Year
2017
     Exercise
Price
 
                   ($ per Share)  

Deep Kalra

     2,045,428        1,273,447        0.0005  

Rajesh Magow

     1,098,581        615,211        0.0005  

Other directors

     7,229        3,000        0.0005  

Executive officers(1)

     756,370        762,821        0.0005  

 

Note:

(1) Total outstanding RSUs held as of March 31, 2017 by Ashish Kashyap and Mohit Kabra, who are our executive officers as of the date of this Annual Report. As of January 31, 2017, certain Indigo SARs that were previously granted by the ibibo Group to Ashish Kashyap were converted to RSUs in accordance with the Transaction Agreement.

Employee Benefit Plans

We maintain employee benefit plans in the form of certain statutory and incentive plans covering substantially all of our employees. For fiscal year 2017, the aggregate amount set aside or accrued by us to provide for pension or retirement benefits for all our employees (including our directors and executive officers) was approximately $2.6 million.

Provident Fund

In accordance with Indian law, all of our employees in India are entitled to receive benefits under the Employees’ Provident Fund Scheme, 1952, as amended, a retirement benefit scheme under which an equal amount of 12% of basic salary of an employee is contributed both by employer and employee in a fund with government/trust with company. Also, in accordance with applicable laws, all of our employees at our non-Indian subsidiaries are entitled to receive benefits under the relevant laws and regulations applicable in such jurisdictions. Our subsidiaries make a monthly deposit to these funds and we have contributed an aggregate of approximately $0.4 million in fiscal year 2017.

Gratuity

In accordance with Indian law, we pay gratuity up to our eligible employees in India. Under our gratuity plan, a defined benefit plan, an employee is entitled to receive a gratuity payment on the termination of his or her employment if the employee has rendered continuous service to our company for not less than five years, or if the termination of employment is due to death or disability. The amount of gratuity payable to an eligible employee is equal to 15 days’ salary for every year of employment (or any portion of a year exceeding six

 

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months), and currently the aggregate amount of gratuity shall not exceed Rs. 1.0 million (approximately $0.02 million). We have provided for aggregate of approximately $0.2 million in fiscal year 2015, an aggregate of approximately $0.3 million in fiscal year 2016 and an aggregate of approximately $0.4 million in fiscal year 2017 for our gratuity payments.

Employment Agreements with Executive Officers

Each of our executive officers has entered into an employment agreement with MMT India or ibibo India. These agreements do not have fixed terms of employment. We may terminate the employment of our officers for cause, at any time, without notice or remuneration, for certain acts of the executive officer, including but not limited to any criminal offense theft, fraud, embezzlement, intoxication, violence, sexual harassment or damage to our reputation. Generally, either party may terminate employment at any time by giving the other party a written notice of three months or by paying an amount equal to three months’ salary in lieu of such notice. These termination provisions apply to executive officers apart from Messrs. Deep Kalra, Rajesh Magow and Ashish Kashyap, whose termination provisions are set forth in their respective employment and change in control severance agreements.

Each executive officer has agreed to respect and not claim any right over any intellectual property owned by our company. Additionally, each executive officer has assigned all his or her right, title and interest to, and in, any property relating to our business (whether tangible or intangible) which is created during the term of its employment. In addition, each executive officer has agreed to be bound by the non-competition restrictions set forth in his or her employment agreement. Specifically, each executive officer has agreed, while employed by us and for a period of six months after termination of his or her employment, not to:

 

    solicit or induce any person to terminate his or her employment or consulting relationship with our company; or

 

    canvass, solicit or endeavor to entice away from our company any client or customer of our company, or any person who regularly dealt with our company.

The employment agreements of Messrs. Deep Kalra and Rajesh Magow (each, an “Executive”) were amended, effective April 1, 2010, to change the notice period for termination from three months to six months. In addition, each Executive has entered into a change in control severance agreement with MMT India, effective October 18, 2016, which provides that, in the event such Executive’s employment is terminated by MMT India, other than for cause, death or disability, or by the Executive for good reason (pursuant to which the Executive is required to give three months’ notice of intended termination after the occurrence of the event constituting good reason), such Executive will be entitled (i) if such termination occurs before January 31, 2019, to receive certain severance payments calculated with reference to the Executive’s annual salary and target bonus and (ii) if such termination occurs prior to the end of the relevant vesting period, to have all of his equity grants under our Company’s incentive plans to fully vest and be immediately exercisable. The terms of each Executive’s change in control severance agreements replaced the corresponding “change in control” provisions in each Executive’s employment agreement. Furthermore, each Executive has agreed to additional non-solicitation and non- competition restrictions in his change in control severance agreement, which shall continue for a period of two years following the termination of his employment with MMT India. In addition, Mr. Kalra’s employment agreement specifies that he will not engage or have a substantial financial interest in any travel intermediary business that competes directly with our company for a period of 12 months following the termination of his employment with MMT India.

The material terms of Mr. Ashish Kashyap’s change in control severance agreement with MMT India, effective January 31, 2017, are substantially similar to the material provisions of the Executives’ change in control severance agreements, except with respect to the treatment of equity awards.

Save as disclosed in this section, our company’s executive employment agreements do not provide for any special termination benefits, nor do we have any other arrangements with our executive officers for special termination benefits.

 

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C. Board Practices

Board of Directors

Our holding company is managed and controlled by our board of directors from Mauritius. Our board of directors currently has ten directors. There are no family relationships between any of our directors and executive officers. A director is not required to hold any shares in our company by way of qualification. There are no severance benefits payable to our directors upon termination of their directorships, other than to Mr. Deep Kalra and Mr. Rajesh Magow, who are our directors and also our executive officers and are entitled to severance benefits in such capacity pursuant to the terms of their employment and their respective change in control severance agreements.

We entered into an investor rights agreement with Ctrip dated January 7, 2016, or Ctrip Investor Rights Agreement, pursuant to which Ctrip is entitled to designate one director to our board of directors, which director is also entitled to be nominated or appointed to the compensation committee of our board of directors, subject to the approval of our board of directors (which approval shall not to be unreasonably withheld) so long as it beneficially owns a minimum number of ordinary shares in our company (subject to adjustment for any share split, share dividend, recapitalization, reclassification or similar transaction in respect of any such ordinary shares). On January 27, 2016, James Jianzhang Liang was appointed as a director of our Company as a nominee of Ctrip. On October 18, 2016, we entered into an amendment to the Ctrip Investor Rights Agreement pursuant to which the number of ordinary shares to be beneficially owned by Ctrip in order for it to exercise such board-nomination rights was increased to 9,857,028 ordinary shares (subject to any adjustments described in this paragraph). See “Item 10. Additional Information — B. Memorandum and Articles of Association — Ctrip Investor Rights Agreement.”

In connection with our acquisition of the ibibo Group, we issued Class B Shares to MIH Internet. The rights and preferences of our Class B Shares are set forth in the Terms of Issue. A summary of the material Terms of Issue are set forth in “Item 10. Additional Information — B. Memorandum and Articles of Association — Class B Shares.” Pursuant to the Terms of Issue, so long as the Permitted Holders (as defined in the Terms of Issue) beneficially own 10% or more of our issued and outstanding voting securities, the holders of Class B Shares, or the Class B Members, will be entitled to (i) nominate from time to time a number of directors to our board of directors in proportion to their percentage beneficial ownership of our issued and outstanding voting securities (including if over 40%), rounded to the nearest whole number; provided that, for so long as the Class B Members, either alone or together with certain permitted transferees, are entitled to nominate at least four directors to our board of directors, at least one of the nominees shall be a Mauritius resident and (ii) request the removal of any Class B director at any time. In the event of any vacancy of a Class B director, the Class B Members shall have the exclusive right to designate a replacement to fill such vacancy, and except as required by law or our Constitution, neither our company nor its board of directors may remove any Class B director unless such removal is at the written direction of the Class B Members or for cause.

In the event the number of Class B directors at any given time is greater than the number of directors the holders of Class B Shares are entitled to nominate (in proportion to their percentage beneficial ownership as described above), the Class B Members shall cause the applicable number of Class B directors to tender their resignations from the board of directors promptly, including causing all Class B directors to tender resignations in the event the Permitted Holders no longer beneficially own at least 10% of our issued and outstanding voting securities. See “Item 10. Additional Information — B. Memorandum and Articles of Association — Class B Shares — Board-Related Rights.”

Terms of Directors and Executive Officers

In accordance with our Constitution, one-third of our directors (or, if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation at each annual meeting of our company, provided that neither the chairman of our board nor a director holding office as managing director shall be subject to retirement by rotation or be taken into account in determining the number of directors to retire. A retiring

 

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director shall be eligible for re-election. The directors to retire in each year shall be those who have been longest in office since their last re-election or appointment and as between persons who became or were last re-elected directors on the same day, those to retire shall (unless they otherwise agree among themselves) be determined by lot. The office of a director shall be vacated if the director resigns, dies, becomes mentally unsound or bankrupt, becomes disqualified from being a director or ceases to hold office under Mauritius law, or is removed by our shareholders. A director may be removed by an ordinary resolution of our shareholders.

Under Mauritius law, the office of a director of our company is required to become vacant at the conclusion of the annual meeting of our company commencing next after the director attains the age of 70 years. However, a person of or over the age of 70 years may, by ordinary resolution of which no shorter notice is given than that required to be given for the holding of a meeting of shareholders, be appointed or re-appointed or authorized to continue to hold office as a director until the next annual meeting of our company.

Executive officers are selected by and serve at the discretion of the board of directors.

Duties of Directors

Under Mauritius law, our directors have a duty to our company to exercise their powers honestly in good faith in the best interests of our company. Our directors also have a duty to our company to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Where a director of a public company also holds office as an executive, the director is required under Mauritius law to exercise that degree of care, diligence and skill which a reasonably prudent and competent executive in that position would exercise. In fulfilling their duty of care to our company, our directors must ensure compliance with the Mauritius Companies Act and our Constitution, as amended from time to time. A shareholder has the right to seek damages against our directors if a duty owed by our directors to him as a shareholder is breached.

The functions and powers of our board of directors include, among others:

 

    convening shareholders’ annual meetings and reporting its work to shareholders at such meetings;

 

    authorizing dividends and distributions;

 

    appointing officers and determining the term of office of officers;

 

    exercising the borrowing powers of our company and mortgaging the property of our company, provided that shareholders’ approval shall be required if any transaction is a major transaction for our company under section 130 of the Mauritius Companies Act; and

 

    approving the issuance and transfer of shares of our company, including the recording of such shares in our share register.

Committees of the Board of Directors

We have established two committees under our board of directors: an audit committee and a compensation committee. Each committee’s members and functions are described below.

Under the Terms of Issue, at any time the Permitted Holders (as defined in the Terms of Issue) beneficially own 10% or more of our issued and outstanding voting securities, one Class B director shall serve on each committee of our board.

Audit Committee

Our audit committee consists of Messrs. Vivek N. Gour and Aditya Tim Guleri and is chaired by Mr. Gour. Each member of the audit committee satisfies the independence requirements of Rule 5605 of the Nasdaq Stock

 

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Market, Marketplace Rules and the independence requirements of Rule 10A-3 under the Exchange Act. Our board of directors also has determined that Mr. Gour qualifies as an audit committee financial expert within the meaning of the SEC rules. Our audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. Our audit committee is responsible for, among other things:

 

    selecting our independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors;

 

    regularly reviewing the independence of our independent auditors;

 

    reviewing all related party transactions on an ongoing basis;

 

    discussing the annual audited financial statements with management and our independent auditors;

 

    annually reviewing and reassessing the adequacy of our audit committee charter;

 

    such other matters that are specifically delegated to our audit committee by our board of directors from time to time;

 

    meeting separately and periodically with management and our internal and independent auditors; and

 

    reporting regularly to our full board of directors.

Under the Terms of Issue, at any time the Permitted Holders (as defined in the Terms of Issue) beneficially own 10% or more of our issued and outstanding voting securities and no Class B director serves on the audit committee, the Class B Members shall have the right to appoint a representative to attend audit committee meetings as an observer. On January 31, 2017, our board of directors approved the appointment of Mr. Pat Kolek as a non-voting observer to the Audit Committee.

Compensation Committee

Our compensation committee consists of Messrs. Vivek N. Gour, Aditya Tim Guleri, James Jianzhang Liang and Oliver Rippel and is chaired by Mr. Gour. On January 31, 2017, our board of directors approved the appointment of Mr. Oliver Rippel as a member of the compensation committee. Messrs. Gour, Guleri, Liang and Rippel satisfy the independence requirements of Rule 5605 of the Nasdaq Stock Market, Marketplace Rules. Our compensation committee assists our board of directors in reviewing and approving the compensation structure of our directors and executive officers, including all forms of compensation to be provided to our directors and executive officers. Members of the compensation committee are not prohibited from direct involvement in determining their own compensation. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:

 

    reviewing the compensation plans, policies and programs adopted by the management;

 

    reviewing and approving the compensation package for our executive officers;

 

    reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating the performance of our chief executive officer in light of those goals and objectives, and setting the compensation level of our chief executive officer based on this evaluation; and

 

    reviewing periodically and making recommendations to the board regarding any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.

We currently do not have in place a nominations committee, and the actions ordinarily taken by such committee are resolved by a majority of the independent directors on our board. As a foreign private issuer, we are permitted to follow home country corporate governance practices under Rule 5615(a)(3) of the Nasdaq Stock

 

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Market, Marketplace Rules. Our home country practice differs from Rule 5605(e) of the Nasdaq Stock Market, Marketplace Rules regarding implementation of a nominations committee charter or board resolution, because our company, as a holder of a GBC1 issued by the Financial Services Commission of Mauritius, is not required under Mauritius law to establish a nominations committee.

Code of Business Conduct and Ethics

Our code of business conduct and ethics provides that our directors and officers are expected to avoid any action, position or interest that conflicts with the interests of our company or gives the appearance of a conflict. Directors and officers have an obligation under our code of business conduct and ethics to advance our company’s interests when the opportunity to do so arises. The full text of our code of business conduct and ethics is available on our website, at http://investors.makemytrip.com/.

Indemnification Agreements

We have entered into indemnification agreements with each of our directors to indemnify them against certain liabilities and expenses arising from their being a director.

D. Employees

See “Item 4. Information on the Company — B. Business Overview — Employees.”

E. Share Ownership

The following table sets forth information with respect to the beneficial ownership of our equity shares as of March 31, 2017 by each of our directors and all our directors and executive officers as a group. As used in this table, beneficial ownership means the sole or shared power to vote or direct the voting or to dispose of or direct the sale of any security. A person is deemed to be the beneficial owner of securities that can be acquired within 60 days upon the exercise of any option, warrant or right. Ordinary shares subject to options, warrants or rights that are currently exercisable or exercisable within 60 days are deemed outstanding for computing the ownership percentage of the person holding the options, warrants or rights, but are not deemed outstanding for computing the ownership percentage of any other person.

 

               
     Equity shares beneficially owned
as of March 31, 2017
        
     Ordinary Shares      Class B Shares      Percent of Total
Voting Power(1)
 

Name of Beneficial Owner

   Number     Percent(1)      Number      Percent(1)     

Directors:

             

Deep Kalra(2)

     4,124,993       7.74        —          —          4.49  

Rajesh Magow

     665,256       1.25        —          —          0.72  

Aditya Tim Guleri

     —         —          —          —          —    

Vivek N. Gour

     6,138        —          —          *  

Gyaneshwarnath Gowrea

     —         —          —          —          —    

James Jianzhang Liang(3)

     —         —          —          —          —    

Oliver Rippel(4)

     —         —          —          —          —    

Pat Kolek(4)

     —         —          —          —          —    

Charles Searle(4)

     —         —          —          —          —    

Yuvraj (Raj) Thacoor(4)

     —         —          —          —          —    

Executive Officers:

             

Ashish Kashyap

     121,272       *        —          —          *  

Mohit Kabra

     11,012       *        —          —          *  

All our directors and executive officers as a group

     4,928,671       9.25        —          —          5.36  

 

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* Represents beneficial ownership of less than 1.0% of our issued share capital.

Notes:

(1) Based on 52,706,194 ordinary shares outstanding and 38,971,539 Class B Shares outstanding as of March 31, 2017. Except as otherwise required by law, the Terms of Issue or our Constitution, our ordinary shares and Class B Shares vote together as a single class on all matters on which our shareholders are entitled to vote. See also “Item 10. Additional Information — B. Memorandum and Articles of Association — Class B Shares — Reserved Matters.”
(2) Travogue Electronic Travel LLP (formerly a company known as Travogue Electronic Travel Private Limited), or Travogue, is a limited liability partnership controlled by Mr. Deep Kalra. Mr. Deep Kalra holds 78.4% of the partnership interests in Travogue. Accordingly, as of March 31, 2017, Mr. Kalra’s beneficial ownership of our ordinary shares includes 1,220,961 ordinary shares held by him (or his immediate family members) directly and 3,000,000 ordinary shares held indirectly through Travogue. As of June 30, 2017, Travogue owned 2,925,000, or 5.02%, of all of our outstanding ordinary shares, based on information provided by Travogue.
(3) James Jianzhang Liang is a nominee director and the co-founder and chief executive officer of Ctrip. As at March 31, 2017, Ctrip beneficially owns 9,857,028 ordinary shares.
(4) Oliver Rippel, Pat Kolek, Charles Searle and Yuvraj (Raj) Thacoor are nominee directors of MIH Internet. As of March 31, 2017, MIH Internet beneficially owned 413,035 ordinary shares and 38,971,539 Class B Shares. Following the closing of a placement of Class B Shares to Naspers on May 5, 2017, Naspers beneficially owned 0.45% of our ordinary shares, 100% of our Class B Shares, together representing 42.96% of all of our outstanding shares.

 

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

The following table sets forth information regarding beneficial ownership of our ordinary shares and Class B shares as of March 31, 2017 held by each person who is known to us to control 5.0% or more of the total voting power of our outstanding ordinary shares as of March 31, 2017.

Beneficial ownership is determined in accordance with the SEC rules and includes shares over which the indicated beneficial owner exercises voting and/or investment power or receives the economic benefit of ownership of such securities. Equity shares subject to options currently exercisable or exercisable within 60 days are deemed outstanding for the purposes of computing the percentage ownership of the person holding the options but are not deemed outstanding for the purposes of computing the percentage ownership of any other person.

 

Name of Beneficial Owner

  Equity shares beneficially owned
as of March 31, 2017
       
  Ordinary Shares     Class B Shares     Percent of Total
Voting Power(1)
 
  Number     Percent(1)     Number     Percent(1)    

Naspers(2)

    413,035       0.78       38,971,539       100.0       42.96  

Ctrip(3)

    9,857,028       18.70       —         —         10.75  

Wasatch Advisors, Inc.(4)

    5,229,322       9.92       —         —         5.70  

Capital World Investors(5)

    4,713,758       8.94       —         —         5.14  

T. Rowe Price(6)

    3,692,344       7.01       —         —         4.03  

Travogue(7)

    3,000,000       5.69       —         —         3.27  

 

Notes:

(1) Based on 52,706,194 ordinary shares outstanding and 38,971,539 Class B Shares outstanding as of March 31, 2017. Except as otherwise required by law, the Terms of Issue or our Constitution, our ordinary shares and Class B Shares vote together as a single class on all matters on which our shareholders are entitled to vote. See also “Item 10. Additional Information — B. Memorandum and Articles of Association — Class B Shares — Reserved Matters.”

 

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(2) Information based on a report on Schedule 13D filed with the SEC by Naspers on February 7, 2017. MIH Internet is a 91.29% subsidiary of MIH B2C Holdings B.V., a private limited liability company organized under the laws of The Netherlands (“MIH B2C”). MIH B2C is a wholly-owned subsidiary of Myriad International Holdings B.V. (“Myriad”), a private limited liability company organized under the laws of The Netherlands, which is a wholly-owned subsidiary of MIH Ming He Holdings Limited (“MIH Ming He”), a limited liability company organized under the laws of Hong Kong, which is a wholly-owned subsidiary of MIH Holdings (Pty) Limited (“MIH South Africa”), a limited liability company organized under the laws of the Republic of South Africa, which is a wholly-owned subsidiary of Naspers. Naspers is a widely held company listed on the Johannesburg Stock Exchange. Following the closing of a placement of Class B Shares to Naspers on May 5, 2017, Naspers beneficially owned 0.71% of our ordinary shares, 100.0% of our Class B Shares and 42.69% of all of our outstanding shares.
(3) Information based on Amendment No. 1 to a report on Schedule 13D filed with the SEC by Ctrip on October 26, 2016. As of May 5, 2017, Ctrip beneficially owned 10,773,694, or 10.68%, of all of our outstanding shares, based on Amendment No. 2 to a report on Schedule 13D filed with the SEC by Ctrip on May 10, 2017.
(4) Information based on Amendment No. 5 to a report on Schedule 13G filed with the SEC by Wasatch Advisors, Inc. on February 14, 2017.
(5) Information based on Amendment No. 1 to a report on Schedule 13G filed with the SEC by Capital World Investors on February 13, 2017.
(6) Information based on Amendment No. 8 to a report on Schedule 13G filed with the SEC on February 7, 2017. The shareholders are T. Rowe Price New Horizons Fund, Inc. and T. Rowe Price Associates, Inc.
(7) Information based on a report on Schedule 13G jointly filed with the SEC on January 14, 2011 by Travogue and Mr. Deep Kalra. Travogue is a limited liability partnership controlled by Mr. Deep Kalra. Mr. Deep Kalra holds 78.4% of the partnership interests in Travogue. Accordingly, Mr. Kalra’s beneficial ownership of our ordinary shares includes 1,220,961 ordinary shares held by him (or his immediate family members) directly and 3,000,000 ordinary shares held indirectly through Travogue. Mr. Keyur Joshi, our strategic advisor, holds 12.8% of the partnership interests in Travogue. As of June 30, 2017, Travogue owned 2,925,000, or 5.02%, of all of our outstanding ordinary shares, based on information provided by Travogue.

 

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Significant Changes in Percentage of Ownership

The following table sets forth the significant changes in the shareholding interests of our company by our principal shareholders in our ordinary shares and Class B shares in the last three fiscal years. Except as disclosed below, there were no significant changes in the percentage of ownership in our company in the last three fiscal years.

 

     2015      2016     2017  

Name and Type of Shares

   Number      Percent(1)      Number      Percent(1)     Number      Percent(1)  

SAIF:(2)

                

Ordinary shares

     6,705,553        15.97        6,085,897        14.41       —          —    

Tiger Global:(3)

                

Ordinary shares

     2,633,000        6.27        —          —         —          —    

Travogue:

                

Ordinary shares

     3,000,000        7.15        3,000,000        7.11       3,000,000        5.69  

Massachusetts Financial Company:(4)

                

Ordinary shares

     779,267        1.86        —          —         —          —    

T. Rowe Price:(5)

                

Ordinary shares

     4,642,398        11.06        4,077.294        9.66       3,692,344        7.04  

Wasatch Advisors Inc.:(6)

                

Ordinary shares

     4,254,518        10.13        4,557,200        10.79       5,229,322        9.92  

Novel Century Ventures Limited:(7)

                

Ordinary shares

     2,943,693        7.01        —          —         —          —    

Wells Fargo & Company:(8)

                

Ordinary shares

     2,302,383        5.48        —          —         —          —    

Ruane, Cunniff & Goldfarb Inc:(9)

                

Ordinary shares

     —          —          2,813,802        6.66       2,410,750        4.57  

Janus Capital Management LLC:(10)

                

Ordinary shares

     —          —          2,812,362        6.66     2,164,259        4.11  

Capital World Investors:(11)

                

Ordinary shares

     —          —          —          —         4,713,758        8.94  

Ctrip(12)

                

Ordinary shares

     —          —          8,391,608        16.58       9,857,028        18.70  

Naspers(13)

                

Ordinary shares

     —          —          —          —         413,035        0.78  

Class B Shares

     —          —          —          —         38,971,539        100.0  

 

Notes:

(1) Based on 52,706,194 ordinary shares outstanding and 38,971,539 Class B Shares outstanding as of March 31, 2017. Except as otherwise required by law, the Terms of Issue or our Constitution, our ordinary shares and Class B Shares vote together as a single class on all matters on which our shareholders are entitled to vote. See also “Item 10. Additional Information — B. Memorandum and Articles of Association — Class B Shares — Reserved Matters.”
(2) Andrew Y. Yan is the sole shareholder of SAIF II GP Capital Ltd. the sole general partner of SAIF Partners II L.P. which is the sole general partner of SAIF II GP L.P., which is in turn the sole general partner of SB Asia Investment Fund II L.P., or SAIF, our shareholder. Information based on Amendment No. 2 to a report on Schedule 13G filed with the SEC on February 10, 2017.
(3) The shareholders are Tiger Global Investments L.P., Tiger Global Performance, LLC, Tiger Global Management, LLC, Charles P. Coleman III, Lee Fixel and Scott Shleifer. The Tiger Global entities are controlled by Charles Coleman, Lee Fixel and Scott Shleifer. Information based on Amendment No. 7 to a report on Schedule 13G filed with the SEC on February 16, 2016.
(4) Information based on Amendment No. 1 to a report on Schedule 13G filed with the SEC on February 12, 2015.

 

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(5) The shareholders are T. Rowe Price New Horizons Fund, Inc. and T. Rowe Price Associates, Inc. Information based on Amendment No. 8 to a report on Schedule 13G filed with the SEC on February 7, 2017.
(6) Information based on Amendment No. 5 to a report on Schedule 13G filed with the SEC by Wasatch Advisors, Inc. on February 14, 2017.
(7) Information based on a report obtained by the Company from third party sources.
(8) Information based on a report on Schedule 13G filed with the SEC by Wells Fargo & Company on January 26, 2015.
(9) Information based on Amendment No. 1 to a report on Schedule 13G filed with the SEC by Ruane, Cunniff & Goldfarb Inc. on February 14, 2017.
(10) Information based on Amendment No. 1 to a report on Schedule 13G filed with the SEC by Janus Capital Management LLC on February 13, 2017.
(11) Information based on Amendment No. 1 to a report on Schedule 13G filed with the SEC by Capital World Investors on February 13, 2017.
(12) Information based on Amendment No. 1 to a report on Schedule 13D filed with the SEC by Ctrip on October 26, 2016. As of May 5, 2017, Ctrip beneficially owned 10,773,694, or 10.68%, of all of our outstanding shares, based on Amendment No. 2 to a report on Schedule 13D filed with the SEC by Ctrip on May 10, 2017.
(13) Information based on a report on Schedule 13D filed with the SEC by Naspers on February 7, 2017. MIH Internet is a 91.29% subsidiary of MIH B2C. MIH B2C is a wholly-owned subsidiary of Myriad, which is a wholly-owned subsidiary of MIH Ming He, which is a wholly-owned subsidiary of MIH South Africa, which is a wholly-owned subsidiary of Naspers. Naspers is a widely held company listed on the Johannesburg Stock Exchange. Following the closing of a placement of Class B Shares to Naspers on May 5, 2017, Naspers beneficially owned 0.71% of our ordinary shares, 100.0% of our Class B Shares and 42.69% of all of our outstanding shares.

On August 17, 2010, we completed our initial public offering on the Nasdaq Global Market. We sold an aggregate of 5,750,000 ordinary shares (including 4,153,846 ordinary shares sold by us and 1,596,154 ordinary shares sold by the selling shareholders). The price per ordinary share was $14.00.

On June 2, 2011, we completed a follow-on public offering on the Nasdaq Global Market. An aggregate of 5,244,000 ordinary shares were sold (including 1,450,000 ordinary shares sold by us and 3,794,000 ordinary shares sold by the selling shareholders). On June 29, 2011, in connection with a follow-on public offering, we completed an additional over-allotment offering of 350,000 of our ordinary shares (including 96,777 ordinary shares sold by us and 253,223 ordinary shares sold by the selling shareholders). The price per ordinary share was $24.00.

On March 19, 2014, we completed a follow-on public offering on the Nasdaq Global Market. An aggregate of 6,325,000 ordinary shares were sold (including 3,325,000 ordinary shares sold by us and 3,000,000 ordinary shares sold by the selling shareholders). The price per ordinary share was $23.00.

As of March 31, 2017, there were approximately 11 holders of our ordinary shares, including us, of which one has a registered address in the United States. Since certain of these ordinary shares were held by brokers or other nominees, the number of record holders in the US may not be representative of the number of beneficial holders or where the beneficial holders are resident.

Each of our equity shares is entitled to one vote on all matters that require a vote of shareholders. Except as otherwise required by law, the Terms of Issue or our Constitution, our ordinary shares and Class B Shares vote together as a single class on all matters on which our shareholders are entitled to vote. None of our shareholders has any contractual or other special voting rights.

 

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On May 5, 2017, we completed a private placement on the Nasdaq Global Market. We sold a total of 9,166,667 shares (comprising 5,500,000 ordinary shares and 3,666,667 Class B Shares). The price per ordinary share and per Class B share was $36.00.

B. Related Party Transactions

Our audit committee charter requires our audit committee to review all related party transactions on an ongoing basis and for all such transactions to be approved by our audit committee. Pursuant to the Terms of Issue, which became effective upon the completion of our acquisition of the ibibo Group, we cannot directly or indirectly, enter into, modify, amend or conduct, or agree to enter into, modify, amend or conduct, any Related Party Transaction (as defined in the Terms of Issue) involving an aggregate value or consideration exceeding $120,000, other than in the ordinary course of business consistent with past practice, unless such transaction or series of related transactions has been approved by, or is consistent with or pursuant to the terms of a policy, transaction or agreement (or form of agreement) approved by, the affirmative vote or written consent of a majority of the independent directors, in addition to any other approvals that may be required pursuant to applicable law, the NASDAQ Stock Market Rules (or the rules of any other applicable securities exchange or stock exchange) or the Constitution.

The following is a summary of our related party transactions since April 1, 2014.

Shareholders Agreements

See “Item 10. Additional Information — B. Memorandum and Articles of Association — Ctrip Investor Rights Agreement” and “— Registration Rights”.

Transactions with Chandra Capital

In fiscal year 2015, we earned revenue of $14,141 from Chandra Capital, an investment company owned by Mr. Ravi Adusumalli, primarily from the sales of air tickets to it. We did not earn any revenue from Chandra Capital in fiscal years 2016 and 2017. Mr. Adusumalli was appointed as a director to our board of directors on July 20, 2005 as a nominee of SAIF, one of our principal shareholders that owned 24.80% of our shares as of March 31, 2014, and he resigned from our board of directors with effect from May 20, 2014. These transactions were carried out in the ordinary course of our business and on an arm’s length basis.

Trade and Other Receivables Outstanding

As of March 31, 2015, 2016 and 2017, we had trade and other receivables outstanding of $122,236, nil and nil, respectively, from related parties.

Transactions with equity-accounted investees

My Guest House Accommodations Private Limited, or MGH

MGH has granted us perpetual, transferable and irrevocable access to its technology platform license. We have classified this license of $0.9 million as capital work in progress under intangible assets with corresponding income in the statement of profit or loss and comprehensive income (loss) under “Other Income.” The license is valued using the replacement cost method.

Simplotel

In December 2016, we made an additional investment of $0.6 million in Simplotel.

Saaranya Hospitality Technologies Private Limited, or Saaranya

In March 2017, we subscribed for $0.5 million of new shares issued by Saaranya, which increased our equity interest in Saaranya to 38.6%.

 

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Transactions with entity having significant influence over our company

In connection with our acquisition of the ibibo Group, we received an entitlement to future proceeds from the sale of stake in TEK Travels Private Limited, an Indian entity engaged in the B2B online travel industry, from MIH Internet. As of March 31, 2017, other non-current assets were $15.1 million, which represents the fair value of such entitlement.

In connection with our acquisition of the ibibo Group, MIH Internet contributed $82.8 million in cash to our holding company upon closing of the acquisition (representing 40% of our estimated consolidated net working capital upon the completion of the acquisition after giving effect to the cash contribution from MIH Internet). During May 2017, such amount was subsequently finalized and adjusted to $83.3 million. Following the finalization of such amount, MIH Internet paid the additional $0.4 million to our holding company in May 2017. As of March 31, 2017, we accounted for the difference of $0.4 million as a receivable and was included under our other assets.

Service agreement between ibibo India and PayU

Pursuant to a service agreement between ibibo India and PayU Payments Private Limited (“PayU”), an affiliate of MIH Internet, ibibo India paid $1.4 million to PayU for the two month period ended March 31, 2017 for the provision of online payment processing and other payment services which enables customers to make online payments for the purchase of air tickets, accommodation and other products from the ibibo Group’s websites and mobile platforms.

Letters of Support from Naspers

Certain banks have issued guarantees (the “ibibo Bank Guarantees”) in favor of certain counterparties of ibibo India (for example, IATA and hotel suppliers) in respect of amounts due and payable by ibibo India. As at March 31, 2017, an aggregate of $6.3 million was outstanding under the ibibo Bank Guarantees. Naspers issued letters of support to these banks to guarantee the obligations of ibibo India under the ibibo Bank Guarantees prior to our acquisition of the ibibo Group. These letters of support remained in effect following the completion of our acquisition of the ibibo Group on January 31, 2017. Our holding company intends to replace the ibibo Bank Guarantees or provide letters of support for the ibibo Bank Guarantees on terms substantially similar those of the existing letters of support in accordance with the terms of the Transaction Agreement, as amended. We have agreed to indemnify Naspers and its affiliates from and against all liabilities, claims, losses, damages, costs or expenses arising out of or in connection with the existing letters of support.

Placement of Class B Shares to MIH Internet

On May 5, 2017, MIH Internet purchased 3,666,667 Class B Shares from us at a price of $36.00 per Class B share, for an aggregate consideration of $132.0 million.

Placement of ordinary shares to Ctrip

On May 5, 2017, Ctrip purchased 916,666 ordinary shares from us at a price of $36.00 per ordinary share, for an aggregate consideration of $33.0 million.

Employment Agreements

See “Item 6. Directors, Senior Management and Employees — B. Compensation — Employment Agreements with Executive Officers.”

Transactions with Officers

In January 2015, we granted a short-term loan of $0.4 million to one of our executive officers. The principal amount of the loan and accrued interest was repaid in full in May 2015.

 

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Equity Option and Share Incentive Plans

See “Item 6. Directors, Senior Management and Employees — B. Compensation — Share Incentive Plans.”

C. Interest of Experts and Counsel

Not applicable.

 

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

See “Item 18. Financial Statements” for a list of the financial statements filed as part of this Annual Report.

Legal Proceedings

Except as described below, there are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened, of which we are aware) which we believe could reasonably be expected to have a material adverse effect on our results of operations or financial position.

Tax Proceedings

Certain tax matters involving our key subsidiaries, MMT India and ibibo India, are disclosed below.

Income Tax

Assessment Year 2005-06

In November 2008, MMT India received a show cause notice from the Indian income tax authorities for the assessment year 2005-2006 and a demand for an additional payment of approximately Rs.8.1 million (approximately $0.1 million) (exclusive of any applicable penalties), advising us of an upward revision of our declared income in India for that assessment year as a result of (i) an increase proposed by the transfer pricing officer to adjust our intra-group international transaction prices upwards to an arm’s length price, and (ii) the disallowance of technology-related development depreciation expenses incurred during the year. In January 2009, we filed our objections to both the show cause notice and the demand for the additional payment with the Commissioner of Income Tax (Appeals). In February 2009, the demand for the additional payment was dismissed by the Indian income tax authorities after adjustment against our carried forward losses. Our appeal against the show cause notice in connection with the intra-group international transactions transfer pricing matter was decided in our favor in February 2011. We also received partial relief from the disallowance of technology-related development depreciation expenses. In May 2011, we filed our objection to the partial disallowance of technology-related development depreciation expenses with the Income Tax Appellate Tribunal authorities. In April 2017, the Income Tax Appellate Tribunal passed a favorable order to allow depreciation on technology-related development expenses.

Assessment Year 2006-07

In December 2009, MMT India received a draft assessment order from the Indian income tax authorities for the assessment year 2006-2007, alleging certain irregularities in the method of computation of income and, advising us of an upward revision of our declared income in India for that assessment year as a result of (i) an increase proposed by the transfer pricing officer to adjust our intra-group international transaction prices upwards to an arm’s length price, and (ii) an increase on account of the proposed disallowance of technology-related development depreciation expenses incurred during the year. In January 2010, we filed our objections with the Dispute Resolution Panel. In September 2010, the increases in our declared income assessed by the Indian

 

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income tax authorities were upheld by the Dispute Resolution Panel. In October 2010, we received a final assessment order from the Indian income tax authorities confirming the additions made and initiating penalty proceedings against us under the Income Tax Act, 1961. However, we did not receive a demand for any additional tax payments because our carried forward losses exceeded our assessed income. In December 2010, we filed our objections to the assessment order with the Income Tax Appellate Tribunal authorities. A hearing has been scheduled for September 14, 2017. We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Assessment Year 2007-08

In January 2011, MMT India received an assessment order from the Indian income tax authorities for the assessment year 2007-2008, alleging certain irregularities in the method of computation of income and, advising us of an upward revision of our declared income in India for that assessment year as a result of (i) an increase proposed by the transfer pricing officer to adjust our intra-group international transaction prices upwards to an arm’s length price, and (ii) an increase on account of the disallowance of technology-related development depreciation expenses incurred during the year. However, we did not receive a demand for any additional tax payments because our carried forward losses exceeded our declared taxable income. In March 2011, we filed an appeal with the Commissioner of Income Tax (Appeals). Our appeal against the assessment order in connection with the intra-group international transactions transfer pricing matter was decided in our favor in February 2013. We also received partial relief from the Commissioner of Income Tax (Appeals) on the disallowance of technology-related development depreciation expenses. While we believe that the Income Tax Department has appealed the order of the Commissioner of Income Tax (Appeals) to the Income Tax Appellate Tribunal and we understand that a hearing is currently scheduled for September 14, 2017, we have not yet received any official notice of appeal. We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Assessment Year 2008-09

In February 2012, MMT India received an assessment order from the Indian income tax authorities for the assessment year 2008-2009, and a demand for additional tax payments of approximately Rs.43 million (approximately $0.7 million), advising us of an upward revision of our declared income in India for that assessment year as a result of (i) an increase proposed by the transfer pricing officer to adjust our intra-group international transaction prices upwards to an arm’s length price, (ii) an increase on account of the proposed disallowance of technology-related development depreciation expenses incurred during the year, and (iii) an increase due to the nonpayment of sufficient withholding tax in connection with our use of banking payment gateway facilities. The demand for additional tax payments of approximately Rs.43 million (approximately $0.7 million), was dismissed by the Indian income tax authorities in March 2012 following the adjustment of carried forward losses. In March 2012, we filed our objections with the Commissioner of Income Tax (Appeals). Our appeal against the assessment order in connection with the intra-group international transactions transfer pricing matter was decided in our favor in June 2013. We also received partial relief from the disallowance of technology-related development depreciation expenses and no-payment of sufficient withholding tax in connection with payment gateway charges. Against this partial relief, we and the Income Tax Department each filed appeals in August 2013 with the Income Appellate Tax Tribunal and a hearing is currently scheduled for September 14, 2017. We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Assessment Year 2009-10

In May 2013, MMT India received an assessment order from the Indian income tax authorities for the assessment year 2009-2010, and a demand for additional tax payments of approximately Rs.276 million (approximately $4.3 million), advising us of an upward revision of our declared income in India for that assessment year as a result of (i) an increase proposed by the transfer pricing offer to adjust our intra-group

 

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international transaction prices upwards to an arm’s length price, (ii) increases due to the nonpayment of sufficient withholding tax in connection with our use of banking payment gateway facilities and the cost of air tickets incurred to MMT USA, and (iii) increases for disallowance of excess depreciation expense on computer peripherals and software licenses, and for the disallowance of technology-related development depreciation expenses incurred during the year, and on account of amounts received from business associates, which were treated as deferred revenue. On May 30, 2013, we filed our objections with the Commissioner of Income Tax (Appeals). In November 2013, we also received an order imposing an additional penalty for allegedly attempting to conceal the above matters and a notice of demand amounting to approximately Rs.330 million (approximately $5.1 million), but this demand was temporarily set aside by the Indian tax authorities in January 2014 after adjustment of refunds for the assessment year 2012-2013. In December 2013, we filed our objections to the penalty with the Commissioner of Income Tax (Appeals). Our appeal against the assessment order in connection with the intra-group international transactions transfer pricing matter, nonpayment of sufficient withholding tax on cost of air tickets incurred to MMT USA, disallowance of technology-related development depreciation expenses and on amounts received from business associates which were treated as deferred revenue, was decided in our favor in June 2014. We also received partial relief from the increases for disallowance of excess depreciation expense on computer peripherals and software licenses and nonpayment of sufficient withholding tax in connection with payment gateway charges. We filed appeal in August 2014 with the Income Appellate Tax Tribunal and a hearing is yet to be scheduled. In September 2014, our appeal against the order imposing additional penalty was partially decided in our favor. We filed appeal in December 2014 with the Income Appellate Tax Tribunal and a hearing is yet to be scheduled. We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Assessment Year 2010-11

In March 2014, MMT India received an assessment order from the Indian income tax authorities for the assessment year 2010-11, and a demand for additional tax payments of approximately Rs.736 million (approximately $11.4 million), advising us of an upward revision of our declared income in India for that assessment year as a result of (i) an increase on account of the disallowance of technology-related development depreciation expenses incurred during the year (ii) an increase due to the nonpayment of sufficient withholding tax in connection with our use of banking payment gateway facilities (iii) an increase for disallowance of excess depreciation expense on computer peripherals and software licenses (iv) an increase due to the nonpayment of sufficient withholding tax on reimbursement of expenses to MMT USA (v) an increase for advertising and publicity expenses being capital in nature, and (vi) an increase due to change in the method of accounting for recognizing loyalty cum signing bonus. In April 2014, we filed our objections with the Commissioner of Income Tax (Appeals) along with stay of demand. The matter has been heard in part and the final hearing is pending. We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

In March 2013, ibibo India received an assessment order from the Indian Income tax authorities for the assessment year 2010-2011 advising upward revision as a result of an increase proposed by the transfer pricing officer to adjust our intra-group international transaction prices upwards to an arm’s length price. However, ibibo India did not receive a demand for any additional tax payments because its carry forward losses exceeded its assessed income. On May 13, 2013, ibibo India filed its objections to the assessment order with the Commissioner of Income Tax (Appeals). The appeal against the assessment order in connection with these disallowances was decided in favor of ibibo India on February 10, 2016. While we believe that the Income Tax Department has appealed the order of the Commissioner of Income Tax (Appeals) to the Income Tax Appellate Tribunal, we have not yet received any official notice of appeal. We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

 

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Assessment Year 2011-12

In March 2015, MMT India received an assessment order from the Indian income tax authorities for the assessment year 2011-12, and a demand for additional tax payments of approximately Rs.953 million (approximately $14.7 million), advising us of an upward revision of our declared income in India for that assessment year as a result of (i) an increase for disallowance of excess depreciation expense on computer peripherals and software licenses (ii) an increase due to the nonpayment of sufficient withholding tax on reimbursement of expenses to MMT USA, and (iii) an increase for advertising and publicity expenses being capital in nature. In April 2015, we filed our objections with the Commissioner of Income Tax (Appeals) along with stay of demand. In June 2015, we obtained an interim stay until December 31, 2015. We obtained a final order in March 2016 and demand was temporarily set aside after adjustment of refunds for assessment years 2009-10 and 2010-11. Our appeal against the assessment order in connection with nonpayment of sufficient withholding tax on cost of air tickets incurred to MMT USA and disallowance of technology-related development depreciation expenses has been decided in our favor. We have also received partial relief from addition of advertisement and publicity expenses. In February 2017, we filed an appeal with the Income Appellate Tax Tribunal. However, the next hearing has not yet been scheduled. We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Assessment Year 2012-13

In March 2016, MMT India received an assessment order from Indian tax authorities for assessment year 2012-13, and a demand for additional tax payments of approximately Rs. 905 million (approximately $14.0 million), advising us of an upward revision of our declared income in India for that assessment year as a result of (i) an increase due to insufficient payments on withholding taxes on reimbursement of expenses to MMT USA, (ii) an increase for advertising and publicity expenses being capital in nature and (iii) an increase for expenses on account of ESOPs exercised during the year being capital in nature. In April 2016, we filed our objections with the Commissioner of Income Tax (Appeals) and requested for a stay of demand. While a stay of demand has been granted to MMT India, the next hearing has not been scheduled. We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

In March 2015, ibibo India received an assessment order from the Indian income tax authorities for the assessment year 2012-2013 advising upward revision as a result of an increase on account of the proposed disallowance of expenses relating to software/license fees during the year. However, ibibo India did not receive a demand for any additional tax payments because its carry forward losses exceeded its assessed income. On April 27, 2015, ibibo India filed its objections to the assessment order with the Commissioner of Income Tax (Appeals). ibibo India’s appeal against the assessment order in connection with these disallowances was decided in its favor on October 3, 2016.

Assessment Year 2013-14

In December 2016, MMT India received an assessment order from the Indian tax authorities for assessment year 2013-14, and a demand for additional tax payments of approximately Rs. 912 million (approximately $14.1 million), advising MMT India of an upward revision of its declared income in India for that assessment year as a result of (i) an increase due to insufficient payments on withholding taxes on reimbursement of expenses to MMT USA, (ii) an increase for advertising and publicity expenses being capital in nature and (iii) an increase for expenses on account of employee share options exercised during the year being capital in nature. In January 2017, MMT India filed its objections with the Commissioner of Income Tax (Appeals) and request for a stay of demand. While a stay of demand has been granted to MMT India, the next hearing has not been scheduled. We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

 

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In December 2016, ibibo India received an assessment order from the Indian income tax authorities for the assessment year 2013-2014 advising upward revision as a result of an increase on account of the proposed disallowance of expenses relating to software/license fees during the year. However, ibibo India did not receive a demand for any additional tax payments because its carry forward losses exceeded its assessed income. On January 18, 2017, ibibo India filed its objections to the assessment order with the Commissioner of Income Tax (Appeals). We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Assessment Year 2014-15

In December 2016, ibibo India received an assessment order from the Indian income tax authorities for the assessment year 2014-2015 advising upward revision as a result of an increase on account of the proposed disallowance of expenses relating to employee share options during the year. However, ibibo India did not receive a demand for any additional tax payments because carry forward losses exceeded its assessed income. On February 7, 2017, ibibo India filed its objections to the assessment order with the Commissioner of Income Tax (Appeals). We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Service Tax

Show Cause and Demand Notice — Fiscal Years 2006 to 2012

In the year ended March 31, 2009, the Mumbai Zonal Unit of Directorate General of Excise Intelligence & Customs, an excise and customs tax regulatory authority in India, initiated a general industry wide inquiry on compliance with service tax rules and regulations by various travel agencies in India. In October 2011, pursuant to an audit conducted by the service tax authorities, MMT India received a notice from the tax authorities for fiscal years 2006 to 2010, demanding payment of service tax in respect of certain matters, some of which relate to the travel industry in India and involve a complex interpretation of Indian law. We have received similar notices for fiscal years 2011 and 2012, in October 2011 and October 2012, respectively. In March 2011, we filed replies with the Commissioner of Service Tax for fiscal years 2006 to 2010, and, similarly, filed objections in January 2012 for fiscal year 2011, and in February 2013, for fiscal year 2012, respectively. In August 2013, the Commissioner of Service Tax rejected our objections and confirmed the demand on all the above matters with negligible relief. In November 2013, we filed an appeal with the Customs, Excise and Service Tax Appellate Tribunal. The aggregate value of the claims is approximately Rs. 1,700 million (approximately $26.3 million) and additional interest and penalties if finally determined to be payable. We have deposited approximately Rs. 22 million (approximately $0.3 million) toward service tax with the relevant authorities. We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote. The matter is currently pending.

Show Cause and Demand Notice — Fiscal Years 2008 to 2011

In September 2012, MMT India received a notice from the service tax authorities for fiscal years 2008 to 2011, demanding payment of service tax in respect of certain matters, some of which relate to the travel industry in India and involve a complex interpretation of Indian law. In February 2013, we filed a reply with the Commissioner of Service Tax. In March 2014 we received an order wherein the demand raised by the service tax authorities was confirmed by the Commissioner of Central Excise. The aggregate value of these claims is approximately Rs.15.3 million (approximately $0.2 million). We filed an appeal against the same with the Customs, Excise and Service Tax Appellate Tribunal in June 2014. We are not required to deposit any service tax with the relevant authorities in response to this demand. We do not recognize this claim as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote. The matter is currently pending.

 

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Show Cause and Demand Notice — Fiscal Year 2012

In November 2012, MMT India received a notice from the service tax authorities for fiscal year 2012, demanding payment of service tax in respect of certain matters, which relate to the travel industry in India but are not covered in the show cause notices mentioned in the above paragraphs relating to service tax, and involve a complex interpretation of Indian law. In February 2013, we filed a reply with the Commissioner of Service Tax. In March 2014 we received an order wherein the demand raised by the service tax authorities was confirmed by the Commissioner of Central Excise. The aggregate value of the claims is approximately Rs.16.1 million (approximately $0.2 million). We filed an appeal against the same with the Customs, Excise and Service Tax Appellate Tribunal in June 2014. We are not required to deposit any service tax with the relevant authorities in response to this demand. We do not recognize this claim as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote. The matter is currently pending.

Show Cause and Demand Notice — Fiscal Year 2013

In May 2014, MMT India received two notices from the service tax authorities for fiscal year 2013, demanding payment of service tax in respect of certain matters, which relates to the travel industry in India and involves a complex interpretation of Indian law. In July 2014 and January 2015, we filed replies with Commissioner of Service Tax. The aggregate value of the claims is approximately Rs. 1,075 million (approximately $16.6 million). In July 2014 and January 2015, we filed replies with the Commissioner of Service Tax. In June 2015, we received orders wherein the demand of approximately Rs. 135 million (approximately $2.1 million) was confirmed by the Commissioner of Central Excise. We filed an appeal against the same with the Customs, Excise and Service Tax Appellate Tribunal in September 2015 after making pre-deposit of approximately Rs. 10 million (approximately $0.2 million) with the relevant authorities. We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Show Cause and Demand Notice — Fiscal Year 2014

In September 2015, MMT India received notices from the service tax authorities for fiscal year 2014 demanding payment of service tax in respect of certain matters, some of which relate to the travel industry in India and involve a complex interpretation of Indian law. In December 2015, we filed replies with the Commissioner of Service Tax. The aggregate value of the claims is approximately Rs. 1,136 million (approximately $17.6 million). We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Show Cause and Demand Notice — Fiscal Year 2015

In April 2016, MMT India received a notice from the service tax authorities for fiscal year 2015 demanding payment of service tax in respect of certain matters, which relates to the travel industry in India and involves a complex interpretation of Indian law. The aggregate value of the claims is approximately Rs. 36 million (approximately $0.6 million). We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Show Cause and Demand Notice — Fiscal Year 2014 to September 2015

In September 2016, MMT India received a notice from the service tax authorities for the period from April 2013 to September 2015 demanding payment of service tax in respect of certain matters, which relate to the travel industry in India and involve complex interpretation of Indian law. In November 2016, MMT India filed replies with the Commissioner of Service Tax. The aggregate value of the claims is approximately Rs. 236 million (approximately $3.7 million). We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

 

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Show Cause and Demand Notice — November 2013 to March 2016

In October 2016, ibibo India received a notice from the DGCEI for the period from November 2013 to March 2016 demanding payment of service tax in respect of certain matters, which relate to the travel industry in India and involve complex interpretation of Indian law. In February 2017, ibibo India filed preliminary replies with the DGCEI and expects to file final replies upon completion of cross statements. The aggregate value of the claims is approximately Rs. 2,446 million (approximately $37.9 million). We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Show Cause and Demand Notice — Fiscal Year 2012 to March 2016

In October 2016, MMT India received a notice from the DGCEI for the period from May 2011 to March 2016 demanding payment of service tax in respect of certain matters, which relates to the travel industry in India and involve complex interpretation of Indian law. In February 2017, MMT India filed preliminary replies with the DGCEI and expects to file final replies upon completion of cross statements. The aggregate value of the claims is approximately Rs. 2,286 million (approximately $35.4 million). We do not recognize these claims as a contingent liability as we believe the likelihood of the claims being upheld by the relevant authorities to be remote.

Investigations by Directorate General of Central Excise Intelligence (DGCEI)

DGCEI has initiated an investigation into MMT India for the period from October 2010 to September 2015 in relation to service tax on certain matters. In addition, the DGCEI has initiated an investigation into ibibo India for the period from November 2013 to September 2015 in relation to service tax on certain matters. The matters are industry-wide issues and involve a complex interpretation of Indian law. MMT India and ibibo India have made pre-deposits of Rs. 674 million (approximately $10.4 million) and Rs. 65 million (approximately $ 1.0 million) respectively, under protest. The investigation is ongoing. We believe that we have a strong case in our favor and are taking all possible legal measures to secure appropriate orders of relief from the courts. We sought relief against the actions taken by the DGCEI and received orders in our favor from the Delhi High Court in relation to both the MMT India and ibibo India matters. The DGCEI has appealed the orders of the Delhi High Court to the Supreme Court of India. The Supreme Court issued an interim order on September 27, 2016 staying the order of the High Court. The matter is pending.

Other Proceedings

Dispute with Ezeego1

In August 2010, we were informed that one of our competitors may have filed a criminal complaint in India against us likely alleging the misuse of domain names similar to the name of such competitor’s website. The police authorities are investigating the matters in such complaint, which was filed by our competitor, Ezeego1, and we are cooperating with the authorities and have responded to questions in relation to such investigation.

In December 2014, MMT India and its officers received summons from the Court of Additional Chief Metropolitan Magistrate in Mumbai to answer to the above complaint. We filed a revision petition against the summoning order before the Sessions Court, Mumbai, which allowed the revision petition. The next day of listing of the revision petition November 30, 2017.

Dispute with Hotel Pine Spring

We filed criminal complaints under the provisions of the Negotiable Instruments Act, 1881, as amended, during fiscal year 2013 to recover monies related to the dishonoring of checks in the amount of Rs. 40.0 million (approximately $0.6 million) provided to us by Hotel Pine Spring, one of our hotels and packages vendors in

 

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Srinagar, India. These checks were provided as security for deposits made by us under our agreements signed with the hotel in fiscal years 2011 and 2012 in order to assure available room inventory at pre-agreed rates. We deposited the checks when the agreements were not complied with by the hotel, including by not providing a bank guarantee. We have initiated criminal proceedings against the hotel and its owner for failing to honor the checks and also for breach of the terms of the agreement. Hotel Pine Spring has failed to appear before the Magistrate on various occasions and non-bailable warrants have been issued. The next hearing date in relation to the criminal complaints is on January 23, 2018 and the next hearing date in relation to the recovery of monies arising out of the dishonoring of checks is on February 2, 2018.

Dispute with GoCash

ibibo India received an ex parte injunction order from passed by the Vacation Bench of the District Court at Ernakulum in favour of UAE Exchange Centre LLC & Anr. (hereinafter “Petitioner”) restraining ibibo India from using the term “GoCash” on the basis that the same was infringing and/or passing off the trademark “gocash” of the Petitioner. Subsequently, ibibo India filed its counter affidavit before the District Court at Ernakulum along with an application to vacate such ex-parte injunction. During the hearing on May 24, 2017, the Petitioner gave an undertaking to the court, not to file contempt proceedings for non-compliance of the injunction order till the final determination of the suit by the courts. The next hearing date in this matter is July 22, 2017.

Dispute with Blair James Speers and Graham Paul Johnson

MakeMyTrip is a respondent in a Singapore International Arbitration Centre (SIAC) arbitration proceeding commenced by former shareholders of the Hotel Travel Group, which we acquired in November 2012. The notice of arbitration as filed with SIAC was received by MakeMyTrip on July 12, 2016. The dispute has arisen in connection with certain earn out provisions in a share purchase agreement dated September 26, 2012 between the Hotel Travel Group, its former shareholders and our holding company, under which these former shareholders agreed to sell and transfer to our holding company the share capital of the Hotel Travel Group. The share purchase agreement is governed by Mauritius law. We brought counterclaims in these proceedings against these former shareholders in connection with breaches of the share purchase agreement. The sum in dispute is approximately $35 million. As of the date of this annual report, the arbitration is pending.

B. Significant Changes

There has been no significant subsequent event following the close of the last financial year up to the date of this Annual Report that is known to us and requires disclosure in this Annual Report for which disclosure was not made in this Annual Report.

 

ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

Our outstanding ordinary shares are currently listed and traded on the Nasdaq Global Market under the symbol “MMYT.”

 

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The following table shows the reported high and low trading prices quoted in US dollars for our ordinary shares on the NASDAQ Global Market.

 

     Nasdaq Global Market Price
Per Ordinary Share
 

Period

       High              Low      

Fiscal Year

     

2013

   $ 23.63      $ 10.77  

2014

   $ 29.73      $ 12.50  

2015

   $ 36.12      $ 19.06  

2016

   $ 24.04      $ 11.97  

2017

   $ 37.35      $ 13.69  

Fiscal Quarter

     

2016

     

1st Quarter

   $ 24.04      $ 17.81  

2nd Quarter

   $ 20.81      $ 11.97  

3rd Quarter

   $ 19.05      $ 13.55  

4th Quarter

   $ 22.99      $ 14.88  

2017

     

1st Quarter

   $ 20.20      $ 13.69  

2nd Quarter

   $ 23.80      $ 14.41  

3rd Quarter

   $ 31.90      $ 19.75  

4th Quarter

   $ 37.35      $ 22.40  

Month

     

2016

     

December

   $ 25.40      $ 22.05  

2017

     

January

   $ 34.20      $ 22.40