Welcome to MakeMyTrip Fiscal 2013 Second Quarter Earnings Call. The company wishes to remind you that certain statements made on this call are considered forward-looking statements within the meaning of the Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance and by their nature, are subject to inherent uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of this date, and the company undertakes no obligation to update this information to reflect changed circumstances. Additional information considering these statements is contained in the Risk Factors and Forward-looking Statements section of the company's annual report on Form 20-F filed with the SEC on June 25, 2012. Copies of these filings are available from the SEC or from the company's Investor Relations department. The company will be recording today's conference, which will be made available for a 2-week replay. Later, we will be conducting a question-and-answer session, and instructions will be given at that time. I would now like to turn the conference over to our host, Jonathan Huang. Please go ahead.

Thank you and hello, everyone, and welcome to our Fiscal 2013 Q2 Earnings Call. We will be using certain non-IFRS metrics, which are reconciled with IFRS metrics in our press release tables. We believe that our profitability and performance will be better demonstrated using these metrics. Joining us today is Deep Kalra, Founder and CEO of MakeMyTrip, who will summarize our achievements in the past quarter. We also have Rajesh Magow, our Co-Founder, Chief Financial and Operating officer, who will elaborate on our quarterly financial results. Also on the call with us is Keyur Joshi, our Co-Founder and Chief Commercial Officer, who will be on hand to answer any questions that listeners may have today. Now let me hand the call over to Deep.

Hi, everyone, and thanks for joining us today. In fiscal Q2, the Indian domestic airline industry faced a difficult operating environment as air capacity remained constrained, which led to the continuation of the significantly higher airfares seen in Q1. During the quarter, average airfares remained higher by more than 30% year-over-year, which adversely impacted the demand for air travel. As a result, the industry witnessed a decline of over 10% year-over-year in total domestic passenger traffic per the DGCA's report. This recent industry trend also impacted MakeMyTrip, as we experienced a decline in air transactions for the first time since we began our Indian operations. However, despite the tough domestic air environment, we were able to sustain our market share of 10.8% as per DGCA data. On a more positive note, let me now provide an update for our Hotels and Packages business in the fiscal second quarter. We achieved transactions growth of nearly 47% year-on-year despite the general slower growth environment in India, largely owing to the strong growth in stand-alone hotel bookings. Our comprehensive strategy is to penetrate the predominantly offline hotel market in India for the last few quarters, including our new 3.0 Hotel site, expansion of hotel inventory and smart brand positioning has yielded encouraging results. As a result, we recorded 60-plus-percent growth year-over-year in standalone hotel transactions. Furthermore, we also experienced sequential growth in the number of hotel transactions from the seasonally strong fiscal first quarter into Q2, validating the momentum we've achieved in changing Indian travelers' habit to book hotels online. To ensure our dominance over the long-term in Hotels and Packages, we continue to make aggressive investments in growing that business. The most recent evidence of that was when earlier today we announced our biggest acquisition to date of hoteltravel.com, a significant OTA…

Thanks, Deep, and hello, everyone. As highlighted by Deep in his speech, our results for this quarter were clearly impacted by the overall weak domestic air industry environment. For the quarter, our air transactions were down 9.8% year-on-year as demand for domestic air travel weakened on the back of much higher year-on-year average airfares. However, these high sales resulted in higher gross bookings, growth of 25% in constant currency. This high growth of gross bookings was offset by the decline in our net revenue margin to 6.5%, down from 7.8% a year ago and resulting net revenue growth was about 5% in constant currency year-over-year. As mentioned earlier, our margins were lower during the quarter as we strategically utilized part of the net revenue margin to sustain our domestic air market share of roughly 11%. As you may have also noticed in our release, our Hotels and Packages business continued to perform well, with transition growth nearly 47%, led by the robust strength in our stand-alone Hotel business and resulted in net revenue growth of 51% year-on-year on a constant-currency basis. We were also able to maintain healthy net revenue margins of 12.5%, which was an improvement from the same period last year as we continue to expand our business and relationships with our suppliers. Lastly, our Other revenues segment saw a decline in the sale of rail tickets due to the introduction of onetime password imposed by the supplier's site, IRCTC, where the success rate was low. From a profitability standpoint, we were able to manage our expenses well enough through the quarter, better than breakeven in adjusted operating profit despite a lower-than-expected Internet revenue. During the lean travel quarter, we reduced our personnel expenses, excluding share-based compensation, by nearly 5% and marketing spend by over 20%, sequentially from fiscal Q1. We'll continue to explore and invest in automation to optimize our operating costs, and at the same time continue to make the appropriate long-term investments to change the way our customers book hotel and holiday packages. Now before I hand the call over to Deep, I would like to share with you our updated guidance. While we are encouraged by the government's recent positive announcements to boost growth and support the aviation sector, we believe it will take some time before the capacity in passenger traffic growth comes back to the earlier levels. Therefore, we are revising our constant-currency net revenue growth guidance to 13% to 16% or $89 million to $91 million at an exchange rate of INR 54 per $1. Now let me turn the call back to Deep for his closing remarks.

Thanks, Rajesh. We remain confident that the long-term outlook for aviation in India remains bright as the demand for air travel at the right price point certainly outpaces the capacity available today. At the same time, our vision of MakeMyTrip remains on track as we strive to earn cash on the huge opportunity in the domestic and regional hotel and holidays market that still primarily books offline. We believe that unwavering focus and our ability to make strategic investments that our competitors cannot match will further widen our lead in the marketplace, provide us with sustainable success and create long-term value for our stakeholders. Thank you for listening in today, and we'd now like to begin the Q&A session. Operator?

[Operator Instructions] And your first question will come from the line of Lloyd Walmsley with Deutsche Bank.

I was wondering if you guys can talk a little bit about where you sacrificed margin for market share. Was that passing along lower fees to consumers or taking lower fees from airlines? And then how should we be thinking about Internet margins in the second half of the fiscal year? And then as you look out longer term, what gives you comfort that capacity is going to be coming back? Are the airlines going to continue to be comfortable operating at losses? Or do you think there's a structural shift whereby they're going to generally be more profit-focused going forward?

Yes, I'll take that, Lloyd. So Lloyd, I think -- so we didn't take any cuts in what we got from the airlines, we took what we could get and negotiated hard, being the market leader with almost 11% market share and with some of these airlines even higher. We did however pass on some part of that tactically and otherwise to the consumers when we did notice that there were competitors who were heavily discounting. We've still managed to command a small premium on price and managed to -- like, what I mentioned in my speech that we did manage to maintain and slightly improve our market share at 10.8%. So that's effectively how we did pass on some part of the total take rate, the gross take rate, to our customers. In terms of the operating environment and capacity, there have been distinct signs that the government has opened up the aviation sector for foreign direct investment. They actually declared that open, so we do expect to see some of the healthier airlines actually get much wanted capital. Domestic capital was obviously not able to come into some of these airlines, and in some cases this would be [ph] strategic capital from other airlines. That's a very typical model that the airlines follow around the world, and we understand that talks are underway at -- with multiple airlines. So we expect to see some that come in and help -- that will help more capacity come in. At the same point, a couple of airlines have been expanding, albeit slowly. The market leaders, Indigo has been adding planes about one a month. Some of the other airlines also did add a couple of planes in the last few quarters and continue to do so, but I -- we suspect that given the mismatch between demand and supply, we will see more planes come in. We will also see a rationalization of pricing when that happens. Sometimes the data are already apparent with advanced purchase fares becoming pretty common in the industry. And we think that's a good sign because leisure travelers typically plan their travel well in advance, and they'll be able to take advantage of these lower airfares. So we think that's going to be a positive sign. And I think looking forward it's hard to say when this will start but if we were to an outlook of the next 3 to 4 quarters, we'll definitely are going to see the air industry get back to much healthier rates, not only for the suppliers but for all players in the ecosystem.

[Operator Instructions] And your next question will come from the line of Manish Hemrajani with Oppenheimer.

Given that you've cut your outlook to about $89 million to $91 million, what's the confidence level you now have to make that lower end of your guidance?

Manish, this is Deep. Manish, obviously, revising the guidance downward was not something that we were very happy to do, but it's really a reflection of what's happening in the marketplace. I think some of the industry headwinds, particularly on the air side, have hit us hard. And air still being 70% of our product mix, of our revenue mix, that's had an overall adverse effect on overall growth. That being said, and just for a minute, the overall growth is a reflection that the rest of the segment, which is really the key Hotel and Packages segment, is actually growing and growing very well. So we're happy with that. And keeping that growth momentum in mind and factoring in fairly tepid growth on the air side, I'm confident on the guidance that we've given and we should be able to meet that, and that's how that's been baked in actually.

Okay. And then can you talk about the acquisition. First off, can you explain the rationale behind this purchase? And how much of an overlap is there between your web properties and hotel travel?

So Manish, overlap -- or rather the rationale is the following: we see very strong growth as you're aware [ph] of Indians traveling overseas and within the overseas market in Southeast Asia, which is extremely attractive because of proximity, because of low airfares. A lot of low cost carriers now flying between city fares between India and various parts of Southeast Asia, whether it's Bangkok or Singapore or Kuala Lumpur. And also because there's a lot more hotel capacity in these parts of the world, particularly Thailand and Malaysia with the fantastic hotel deals also being made available. So this is really taking a lot of the Indian customers to Southeast Asia. Hotel travel's got a fantastic footprint in terms of Southeast Asian properties. The bulk of their [ph] properties of the 80,000 properties where they have inventory are in Southeast Asia and in fact, they have content on 150,000 properties. So we think that's going to be a perfect fit a lot of our customers. We also think that our Indian properties, 10,000 plus, will be a good fit for some of their customers. Also in addition to that, I think it's important to bear in mind that the APAC -- within the APAC region, which is the fastest-growing region for hotel growth, it's actually Southeast Asia which is outstripping the rest of APAC and is now a sector emerged as the third largest hotel market -- online hotel market in APAC after Japan and China. So, and [ph] going ahead of Australia and New Zealand. So that's one of the reasons why we are very excited about this market. Not as -- not only it's inherent growth of that market, but the fact that a lot of Indians are choosing to go there for their holiday as well as for business needs and we think we can leverage that. In terms of overlap, frankly, it's only for a small section of the Indian hotels, they have Indian content but it's only for the -- perhaps, maybe, a couple of thousand hotels to 3,000 hotels. The rest of it all are unique properties, so really 95%, 97% of the combined properties are entirely unique. So we see this as very complementary to our strategy to grow the hotel market in the region.

Got it. And I apologize if this has already been asked or you already explained this. What's that current net revenue run rate? And what kind of revenue contribution one would expect from them for '13 and '14?

We're not actually disclosing that at this stage, Manish. [indiscernible] being a prior [ph] company, we're not disclosing that right now.

Can you throw some color around the metrics in terms of RevPAR and margins?

So, Manish, if I can take that. Like Deep mentioned at this stage we are not -- in this quarter, we are not, it's that -- it's actually not very material when it comes to the revenue contribution to the overall number, hence, we are not going to be disclosing some revenue. All other metrics at this point in time, as we go along when it becomes material, we would be coming out and disclosing that.

Got it. And then one technical question, using cash plus shares, is that based on yesterday's closing price?

No, it's not. So the -- it's not yesterday's closing price it is actually 30 days average. Okay last 30 days average, it would [ph] be the last 30 days average.

So as of yesterday, the last 30 days average.

Your next question comes from the line of Chad Bartley with Pacific Crest.

I wanted to ask about the financials of hoteltravel.com, but I understand you won't -- don't want to disclose that now. So maybe can you talk about just hotels in general and the competitive landscape, and if there's been any change in kind of the players you're seeing out there, your market share within the hotel segment or how you guys feel about that going forward?

Okay. Sure, Chad. So, Chad, you know very broad understanding, it's very hard to get specific data on the hotel market out here, but we have triangulated where there is data points [ph], spoke to the hotels, there were some third party reports, which have covered very good sized sample of the hotel booking. We believe there are about 5% of all of hotel bookings in India moved online now, including OTAs and Supply Direct. And we think Supply Direct is probably about less than a couple of percent, the rest being OTA. And within the OTA market, we believe that we've got about a 2/3 share so we think we broadly have about 2 percentage points, another percentage point would be other OTAs in the market and then a couple of percent is Supply Direct. So really the key point here is just the kind [ph] headroom which exists in this market and the fact that it is now beginning to move online pretty well. We're seeing traction both in terms of transactions as well as [indiscernible] rates [ph] and a lot of small hotels now actually, the push factor has changed to a pull factor. So we feel a very healthy, kind of, response to our market making efforts with the hotel suppliers.

And a quick follow-up, as far as multinational OTAs, companies like Expedia, for example, coming into India, are they focused more on air or hotel or both? And are they part of the competitive landscape that you're thinking about?

Yes. There are a couple of the multinational companies like Expedia here that focus has been more on the hotel side of the market, although they do have an air offering. But it's also most of their customers, and the transactions that they're doing are still for the international customers coming into India, so the inbound market. The domestic market for them we understand is still smaller, and this is based on what we hear back from the hotels. Both Booking.com and Agoda also have hotels in India contracted, and again, it's largely serving their markets, so European and Southeast Asian respectively. Travelocity does have a small presence in the market, and they're the only ones who've been looking at the air market as well but we see less and less of them and more of Expedia and the others in the market.

And at this time, we have no further questions. I would like to turn the call back to Mr. Jonathan Huang for closing remarks.

Thank you, everybody, for joining our call today. We look forward to speaking with you next quarter on our fiscal Q3 earnings call. Thank you.

Thank you.

Thanks.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a wonderful day.