MakeMyTrip Ltd (MMYT) 2014 Q2 法說會逐字稿

Good day ladies and gentlemen welcome to MakeMyTrip's fiscal 2014 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 US 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 the information to reflect changed circumstances.

Additional information concerning these statements is contained in the risk factors and forward-looking statements section of the Company's Annual Report on Form 20-F filed under the SEC on June 13, 2013.

Copies of this filing are available from the SEC or from the Company's investor relations department.

And now I would like to introduce the speakers for MakeMyTrip -- Deep Kalra, Rajesh Magow and Mohit Kabra.

Please go ahead.

Thank you and welcome everyone to our fiscal 2014 second-quarter earnings call.

Before we discuss results, I'd like to provide a quick update on some positive economic developments in India during the past quarter.

In September, the Reserve Bank of India appointed a new governor, Raghuram Rajan, to head the Central Bank.

The new governor was previously the chief economic advisory to India's Ministry of Finance and also chief economist at the IMF.

Although he has been in the role for very short period, Mr. Rajan has already taken some effective decisions that have helped stabilize the rupee to dollar exchange rate.

We are also encouraged by the constructive progress in our civil aviation industry.

The Foreign Investment Promotion Board has recently approved the application for a joint venture between the Tata Group and Singapore Airlines to set up a full new service carrier in India.

In the meantime, Jet and Etihad areas continue to move towards completing their approved joint venture which had been announced sometime back.

Additionally, AirAsia India recently received there no objection certificate from the Ministry of Civil Aviation and has applied for the air operating permit to begin flight operations early next calendar year.

The civil aviation ministry now estimates that domestic airlines are expected to add around 370 planes to their fleet by 2017, and the commercial fleet size could reach 1000 by 2020, up from 400 currently.

Equally as encouraging, we see continued improvements in the domestic hotels build-out as hotel chains move to alleviate the shortage of quality budget category hotels in the country's top tourist locations.

The Indian Hotels Company, popularly known as the Taj group of hotels, also intends to launch at least 36 new properties over the next four years, which will expand its hotel capacity by 30% and add 5000 more rooms to the market.

Sarovar Hotels also has plans to set up new properties in Tirupati, Rishikesh and [Bhodia], which are among the country's popular pilgrimage destinations.

Moreover the hotel industry has been granted infrastructure status by the government, will would help hotels obtain cheaper loans on easier terms.

Lastly, the tourism industry has announced plans to strengthen infrastructure and create more facilities at various religious and heritage places to accommodate the increasing number of tourists at these locations.

These exciting developments we believe should help enhance the capacity in both the domestic airlines and hotel industry and help grow the overall travel market in India.

Now I'd like to share our business accomplishments from the past quarter.

In the just-concluded low season quarter, we strengthened the MakeMyTrip brand by focusing our energies on increasing customers' delight.

We've rolled out our new and improved MakeMyTrip homepage to 100% set of our visitors, which makes online product discovery easier, the shopping experience better and cross- and up-selling more effective.

In addition we increased our online traffic leadership by reaching 9.3 million monthly unique visitors as mentioned by comScore.

Furthermore we continue to invest in building our domestic and international hotels business and augmenting our mobile offerings, including the launch of our route planner app for Nokia's popular budget smart phone, the Asha.

Coming to the quarter's performance, we're pleased to report that our revenue less service cost grew to $23.3 million, representing a 29.3% year on year growth in constant currency terms.

Given a generally tough macro environment, this performance was slightly ahead of our internal plans.

Lastly, I'd like to share that the team at MakeMyTrip remains very bullish about our long-term prospects.

With a growing middle class that is currently underserved by the existing domestic airline industry, foreign carriers have clearly recognized that large market opportunity and taken the necessary actions to enter the market.

While we are aware that the various airline joint venture announcements may not have immediate financial impact to our business, we are optimistic about their long-term contributions.

We believe, due to increases in seat capacity brought on by these airlines, will help more Indians take flight as prices should moderate to attainable levels for the common man.

Separately, rollout of faster wireless Internet services from telcos that have obtained pan-India 4G licenses will only increase the online population who will adopt e-commerce and m-commerce as a way of life.

I'd now like to turn the call over to Rajesh to elaborate on what further on our quarter's accomplishments.

Thanks Deep, and hello everyone.

As we've been saying all along, developing and growing the hotels and packages business is our top strategic focus, so I would like to begin by sharing the progress based on our H&P segment.

We continued on our robust growth plans in this segment and achieved revenues less service costs growth of 58.2% year on year in constant currency terms during the slow season quarter.

This has been a result of our all-around effort in making improvements in every lever of the business.

From a hotel customer's online experience standpoint we have improved the speed of the shopping experience by reducing data entry wherever possible.

On the mobile front we are enhancing the hotel booking experience by adding (technical difficulty) InstaBook, a fast and painless payment feature that was launched for our flight business several quarters ago.

Additionally, we're also utilizing the GPS coordinates from mobile devices to provide smarter and more targeted hotel deals notifications.

These smart but often unnoticed improvements, along with our ongoing efforts to educate customers about the benefits of mobile booking, should further increase conversion rates on mobile.

Lastly, we are expanding our target hotel audience beyond India with continued investment in HotelTravel.com, while offering our Indian customers the most choice in both domestic and international hotels in our market.

On the holiday packages front, in addition to the good demand for our usual seasonally relevant destinations like [Viandiman], Singapore and Thailand, we are seeing an encouraging growth in destinations like Australia, New Zealand and Africa as air connectivity from India improves to those locations and travelers seek new ideas and locations for travel.

During the quarter based on customer feedback, we launched new luxury selections for many of our popular holiday packages.

We believe offering such an option will address an additional customer segment preferences for travel.

Lastly, as reported earlier, we had launched an online holiday booking engine sometime back for some of our most popular fixed itinerary packages.

Since then we've noted an encouraging change in consumer behavior to book these holidays online.

In fact, our online holidays bookings grew by 150% this quarter, albeit on a small base, which is a clear indication of future online growth for this product.

We will continue to invest in our online booking platforms and make it attractive for users by improving content and booking flow features in order to gain from this changing consumer behavior.

Let me now move on to discuss our air business, where we saw growth returning back this quarter with a year on year increase of 24.7% in transactions.

In Q2, we witnessed great volatility in domestic airfare with air carriers offering very low fares during July and August to stimulate demand in a non-travel quarter, followed by high sales in September, which moderated potential growth toward the end of the quarter.

Despite in unpredictable market environment, our growth still outpaced the market and has allowed us to maintain share of 12% in the total domestic air market.

As for our international flight business, we continue to see the [overall] transactions growth largely driven by low penetration of international flights online.

Moving on to share improvement update on mobile, another one of our top strategic priorities, we have a goal of being the leader in mobile bookings in our market, and as we mentioned on our last call we have created a dedicated mobile development team which is focused on bringing our various products onto a comprehensive mobile platform.

We launched flight and hotel bookings under Windows Phone app, international flight bookings on our mobile website and added InstaBook payment option on the mobile site during the quarter.

And as Deep mentioned, we also introduced our route planner app on the Nokia's very affordable Asha smartphones.

In Q2, we also crossed over the 1.7 million mark in the total downloads since the launch of our first mobile application.

Our iPhone app has been consistently ranked will as one of the top [two] free travel apps in the Indian App Store and our Android app has ranked in the top 10 free travel and local apps in India's Google Marketplace.

When we embarked on our mobile strategy, we brought the same intense focus on user experience from our website into our mobile development.

This successful strategy has resulted in the popularity and the rapid adoption of our mobile platforms.

We are glad to report that more than 13% of domestic hotel transactions were booked via mobile during the reported quarter.

We believe the Indian travel market is just beginning to experience the growth of mobile as a channel for online booking, and we will continue to invest in making the best possible user experience for our growing mobile Internet customer base.

Now let me hand the call over to Mohit to share the quarter results in detail.

Thanks, Rajesh.

From a financial perspective, the second quarter came in slightly better than we expected at a time when we experienced high volatility in air passenger demand as well as a steep weakening of the rupee.

Our revenue less service cost [through the dollar going to $3.3 million], representing year-on-year growth of 29.3% in constant currency terms.

Now let me elaborate on the (technical difficulty) performance in our various business segments.

Our revenue less service costs from air ticketing grew by 18.2% year-on-year in constant currency terms.

This was driven by strong transaction growth of nearly 25% as domestic airlines dropped [rates] significantly during July and August to stimulate demand in the low season quarter.

This reinforces our belief that there is good demand for domestic air travel when fares remain affordable and stable.

However, we are seeing this demand taper off with increasing domestic fares since September as we approach the festival season in India.

Additionally, as Rajesh mentioned earlier, we experienced strong growth in our international flights business with continued enhancements made to improve user experience to drive online bookings in a market that has traditionally purchased off-line.

For the [air met] revenue margin during the reported quarter improved to [7% from 5.7%] in the previous quarter.

This was largely an impact of the reduced airfares during the months of July and August, although absolute margins per transaction did not change significantly from the previous quarter.

I would now like to talk about the connection highlights of our hotels & packages business which continues to receive our primary strategic focus.

For the revenue less service costs in the Hotels & Packages business stood at $7.1 million which was a 58.2% year-on-year growth in constant currency.

And this was largely driven by transaction growth of 58.5%.

Our margin in the agency business improved 12.5% in same quarter of the last fiscal to about 12.9%, and was in line with the margins achieved in the preceding quarter.

The continued growth in hotels business, aided by bookings of international hotels with the acquisition of Hotel Travel, has helped us offset the subdued growth in our [other] holiday packages due to a steep weakening of the rupee during the quarter.

With net revenues off about $1 million, our other businesses grew by 52.6% in constant currency terms.

While we have reported adjusted operating losses of $2 million in the previous high travel quarter, in this quarter we managed to contain our losses to $1.5 million.

This was achieved by ongoing benefits from cost rationalization steps as well as optimization of brand spending during the low holiday season quarter.

With the strength of our balance sheet and improved competitive position within the domestic OTA market, we will continue to invest behind our strategic initiatives.

As we enter the second half of the fiscal year, we continue to invest in technology with mobile as a priority.

We also continue to finance strategic marketing and technology spend at Hotel Travel to scale our bookings while working on an ongoing integration with MakeMyTrip.

Lastly, while we are encouraged by the performance of the reported quarter, we continue to remain cautious in the near-term due to volatility in the rupee and domestic airfares.

We would therefore like to maintain our annual constant currency growth guidance of 15% to 20% for revenue less service costs.

As the rupee-to-dollar exchange rate depreciated further from last guidance rate of 58.79 to current estimated full-year rate of 60.12 rupees to a dollar, we're revising the dollar guidance range purely on a (inaudible) translation rate to $93 million to $97 million for the full fiscal.

With that, we would like to open the call for Q&A.

Operator, please?

(Operator Instructions) Lloyd Walmsley, Deutsche Bank.

Thanks.

I'm wondering if you can just comment on the take rates being stronger on the air side.

I'm assuming some of that was due to the promotional activity the summer and not anything that we should expect going forward, but if you could comment on that.

And then another question if I may, on the new website, if you can just comment on what you're seeing in terms of improvement with the rollout.

Is that coming through in better conversion and is it -- are you seeing anything between air and hotel in particular there?

And then just lastly, if you could give us a little help on what to expect on margin in the second half?

Let me take the question on the take rates.

And as I was mentioning during the earlier part of the call, we have seen depression in the airfares on loading of the airfares during the last reported quarter, particularly in July and August.

So domestic airfares were down close to about 20% year-on-year and even versus the previous reported quarter.

And that's what largely caused the change in terms of air margins.

You know, as a result of being compared with the lower airfares compared to the previous quarter.

The previous quarter we had reported about 5.7% air margin.

And if you look at it, considering that the airfares have average dropped by about 20%, you know these margins are looking healthier in percentage terms at about 7%.

And as I also mentioned, the absolute take rates are going to be remaining in the same range as in the previous quarter.

So we don't really have -- seen our improvement in the overall absolute take rate.

But I guess this is more a function of the airfares being lower.

And we believe that, you know, season upon season as the airfares change this kind of percentage of trends is likely to come in, in the [individual] quarters.

Lloyd, if I could just build on what Mohit said.

It's effectively a denominator effect.

So it's more optical and no real change from the take -- on our overall take rate from the [suppliers], if you will, or all the three components.

So that's on air.

And on Hotel & Packages take rates continue to be -- our outlook on take rates continue to be as we have been talking about in the past from a long-term perspective.

And also we reported 12.9% right now, so that's previous quarter was also 12.9%.

But year-on-year there's an improvement and we continue to be optimistic on that as we grow our volumes from a long-term outlook perspective, just to incrementally keep improving as we grow our volumes.

So Lloyd, I think what we were talking about, basically on the last call if you recall the new homepage was still on [AB more].

We exposed a fairly large number of folks to it.

So in the process of this quarter we managed to move all visitors to the new homepage and we are seeing positive results on conversions across all the lines of business.

And as you realize from the new homepage, the real rationale behind this is a far more effective way for us to cross-sell and up-sell other higher-value products.

There's a lot of emphasis on the standalone hotel as well as the Flight Plus Hotel side of the product supply chain and finally on buying and discovering holidays online.

So we're actually quite excited about the new homepage.

We think it's cutting edge design and will also lead to a further increase in conversions.

Thanks, and then any comment on margin expectations in the second half?

Margin expectation on air and H&P together?

Just operating margins really.

Right, so on operating margin the large, you know, so we -- like we mentioned that we will continue to invest in strategic areas like mobile and largely I guess in the H&P space.

But more specifically in technology with respect to mobile, and also in the coming quarters there's going to be investment strategically on the marketing -- a new TV campaign etc.

as well.

So, on the overall basis I think we will see some from a percentage -- from a trend perspective we'll see some incremental improvement, if you will, in certain areas.

But on an overall basis, so we -- from -- on a full-year outlook standpoint, so we would definitely see some incremental improvement but not necessarily a material improvement.

And that's more from the point of view that we would like to stay invested at this point time just to bring the growth back, from our perspective, in the H&P segment.

So, you know, that's how we should look at it.

As you know we haven't really been guiding on the operating margin per se, so therefore this is the qualitative comment that I would like to mention here.

Okay, thanks guys.

Manish Hemrajani, Oppenheimer.

Thanks, first of all let me wish you all a very Happy Diwali and Happy New Year.

Thank you, thank you, Manish.

The air -- air was surprisingly strong, although not really [effective] in gross bookings due to the fare discounting.

You touched upon it your prepared remarks.

Can you dig a little bit deeper into the air market for the rest of fiscal 2014 and beyond?

And how do you see supply side dynamics shifting in air with the advent of AirAsia and Singapore airlines?

Manish, like as I pointed out during my speech, I believe that we will have to wait a bit to see the full impact of these airlines.

The earliest which is expected is AirAsia, which is the leading locals carrier in Asia.

They expect to be up and running in the first quarter of the next calendar year.

The Tata-Singapore airline joint venture as of now is targeting June 2014 and the other investment in Jet should hopefully happen before both of these.

We believe that a fundamental positive growth trend should come from the fact that we will have a tremendous increase in supply.

Currently the market, as you know, is supply-constrained, which in turn is causing airfares to remain fairly high as you see currently.

You know, while the first two months of last quarter [has attracted] low fares, by September and that in October we have had really high fares.

This is expected to continue right through until the end of the calendar year.

And this can only happen because there is a severe shortage of airline seats.

Prices are kept, in a sense, artificially high and not allowing for, I guess, true competition.

So we think with enhanced capacity that's going to be the biggest benefit the markets going to see.

Softening of prices, more competition and therefore just a much larger people -- much larger pool of people being able to really take that flight instead of a rail or much longer bus ride from point to point.

So we think that's going to be the biggest benefit.

From our margin scenario, we believe that the model is fairly well insulated already.

As you know we've got three components.

And the direct commission from airlines is anywhere -- [at hot button], the official rate is already down to [a percent].

You had overrides from time to time taking it sometimes to 2%, 2.5% or so.

And the rest of the fees are really a function of either convenience fees from customers or GDS commissions that we make from [our mediators] in our case.

But -- so we think that the model is fairly well insulated.

That being said, we have guided even before over time we do expect that margins will be -- will come down probably by about a percentage over the next 12 to 18 months, and then flatten out and plateau down at that point.

Got it.

Can you touch upon the competitive landscape, especially iXiGO.com, which seems to be the price aggressor?

And are competitive pressures forcing you to spend above plan on marketing?

Also any change in the competitive landscape that you think you can take advantage of and gain share as a result?

Yes, surely.

So the competitive landscape is definitely getting quite interesting.

We believe that number two and number three, our current Cleartrip, did feel some competitive pressures.

And from the market feedback as well as all the other collected data from various sources, when you triangulate that between traffic and air segments and some of the hotel data, we believe that they have lost a little bit more ground this quarter.

[GoID], the company that you mentioned, has been discounting steadily and that has helped them to gain both traffic as well as transactions.

From our experience, we don't think that that is a very durable kind of strategy because when you tend to bring back your prices as you need to at some point of time, to the market norm and cut all kinds of cash backs other discounts that you're doing on a rear-ended basis, you typically tend to lose a lot of the volumes that you picked up because of discounting alone.

So we think that that might be fleeting, and the market shares will probably go back again to similar kind of numbers -- a case between number two, three and four.

We've been steadily gaining.

This quarter we reported a holding on at about 12% market share on the air side.

Overall, on the OTA side, we also reckoned that we've kept on to our close to 47% market share within OTAs.

On the hotel side and on the packages side, we've definitely been gaining.

And we think that is clearly the area where we want to focus rather than -- also at this current point of time, we don't think we don't see the need to necessarily discount to gain share on air.

We believe the long-term way out of this is definitely a better customer experience, and as you can see, most of our efforts are there.

And what becomes very interesting is now the mobile opportunity where, with a far more focused and targeted audience, from time to time you can do some specials, get people to come on, on mobile.

There are some distinct benefits for customer acquisition on the mobile channel and we think that's a pretty smart way for us to grow, and that's what we've been doing going forward.

So we will be keeping up our planned levels of marketing, which is not really reactionary, but has been planned pretty much for the year on a seasonal -- on a quarter to quarter basis.

So you will see that happen.

And you will see, as we get into this high season quarter, you're going to see some higher advertising spend from us, particularly on the brand side and focus on Hotel & Packages products.

Got it.

Last one for me can you comment on both HotelTravel.com and iXiGO.

What's the contribution from these businesses to the top line, and are they growing faster than corporate average?

And where do you see this trending over the next 12 months?

Sure, Manish.

So iXiGO has been our financial investment as you would know.

So we just have our strategic investment out there 19 point -- a little less than 20%.

And they have been doing progress -- actually in the last couple of quarters there's been good progress on the broader discovery side.

But from a contribution standpoint, there is no real material contribution to the P&L yet.

So as we come close to the -- probably would have also noticed that soft launch as well.

But as it becomes more material and all, we will talk more about that.

But as far as hotel travel is concerned, you know the integration has been going on with hotel and travel fairly well.

We made material progress on supply integration.

We've made significant progress on technology integration.

And we have started seeing some early benefits coming in from the integration efforts already.

But in terms of just contribution, material contribution coming out of Hotel Travel, we -- I know it will start reflecting in the new fiscal from first quarter onward.

And I guess that would be probably the right time to talk about that.

So far, our focus has been to make sure that on all aspects of our businesses we just integrate really well, and that we've been quite satisfied with the progress of that.

And -- but very soon, starting from first quarter of next fiscal, we will start seeing good contribution coming in as far as the international hotel segment is concerned.

And you know we will talk more about that when we get to that stage.

Got it.

You guys had spoken in the past that you probably had look at increasing your stake in iXiGO.

Has that been put on the back burner or are you still actively looking at that?

So we have the option contractually.

And it's not ruled out definitely, definitely not ruled out.

But in the immediate term, there is no plan of increasing it as well.

So, as and when we have any plan you know we would share.

But the option is very much open at this point in time.

Are you the backend for them?

No.

I don't think that's they mentioned going in.

The intention going in.

the idea of keeping the minority is also so that they're going to do what's best for their company.

We do have a Board seat.

But other than that the company really is going to do only the thing that is best for them.

Okay, that's all I have, thanks.

Chad Bartley, Pacific Crest.

Thank you, I wanted to ask about H&P transactions.

That fell sequentially.

Was that line with your expectations?

Also can you comment on -- and I guess hotel room pricing, we continue to see declines there.

When could that potentially stabilize?

Thanks.

Chad, as I have mentioned, we typically have two high season quarters and two low season quarters in a year.

This reported quarter was a low travel season quarter, low holiday season quarter.

And therefore sequentially you see a decline in your number of transactions as well as revenues on the Hotels & Packages side.

And you should -- we now kind of approach -- are getting to the high season quarter in the October to December period.

Just to build on what Mohit said, also it's -- so that's the explanation to, I guess, the sequential quarters.

But you know even if you keep the seasonality in mind and you compare it with the last year's same quarter, it has gone down.

So it's a great observation.

The reason for that is rupee depreciation definitely is part of the H&P segment.

We have overseas holidays, as you know, as well.

And in this quarter, because of the rupee depreciation, the preference for the consumers were more short-haul than long-haul, so there was a small impact coming from that side as well.

And the other thing that, as we've been talking about from a mix perspective, we have more contribution coming in from standalone a la carte hotels.

As we keep growing that, that is the segment that has been faster-growing for us, much more robust growth than the holidays relatively speaking.

So that's contributing a bit as well.

So from a rate perspective, I would say if we take the rupee depreciation impact, which came in from the overseas holidays, it should probably settle around the $350 mark.

Okay, very helpful, thank you very much.

Vipin Khare, Morgan Stanley.

Vipin Khare from Morgan Stanley.

Just a few questions on (inaudible) results.

I just wanted to understand what has your experience been in terms of traffic on the website.

We see the transaction numbers and the revenue growth.

But I guess you must be monitoring the traffic.

And a qualitative understanding or anything you can share there in terms of the new users you're getting, what has been the trend there?

And obviously the amount of time or page views they kind of spend on the website?

Sure, Vipin, great question again.

No, we didn't -- actually seeing very encouraging results on traffic as well.

And we monitor that absolutely religiously as well, both quantitatively and qualitatively.

And as you can perhaps also see comScore, we've been growing our traffic.

And when you compare it with the competition, you know, the growth is actually much healthier.

And we maintain our position, and from a trend perspective it continues to just -- going in one direction, which is positive.

So we continue to maintain our leadership as you highlighted on the call as well, and also continue to grow.

And from a quality standpoint, also from a page views or a time spent on our site, also continues to improve.

And again, as compared to the competition in the OTA space, actually much, much better than many of them, again, neutrally looking at comScore data.

So, all good news there and we continue to build that.

And that, in a way, when you compare when you look at the marketing spend, it kind of reflects in there as well because our repeat rate has been improving.

And also the contribution of data traffic has been fairly robust as well, so, all good news on traffic side.

[Were the views or attracted] to that site, have you seen any trends in terms of users coming in from areas of -- sections that were not present in (inaudible)?

Or are you still seeing large cities kind of distribution?

No, in fact, you know the sole-source traffic from cities perspective it has been expanding perspective, it has been expanding to tier 2, tier 3 cities as well, directly linked to the Internet penetration and the consumers' behavior on those cities changing clearly.

And we kind of see that from a destination perspective as well.

And the bookings happen from a travel standpoint.

So definitely it has been coming in for more than tier 1 tier 2 cities now.

Some time back, some years back it used to be more metro than next level tier 1 cities, if you will.

But now it has been just going much beyond that.

Also, I think it's worth mentioning out here when we are talking about traffic, there has been significant growth of traffic on the mobile platform that we have witnessed over the past few quarters as we've been talking about that as well.

And there are two aspects there.

So if I can share that data point with you, so we now have 20% of our traffic coming through the mobile platform apps and the mobile site.

And also, you know, we're getting a good significant portion of that as new users of Internet, if you will, as well.

So it's not necessarily a complete overlap with the desktop or access through the desktop as far as Internet is concerned.

And a lot of the new users are adopting the Internet for the first time through mobile platforms.

So that's a very encouraging trend as well.

Can you give us some sense of your overall sales force, how that's changed over the last few quarters and you know there -- which segments are they focused on?

Plus, in your experience, have you seen any increase into productivity in terms of their ability to convince the hotels, even in terms of rate, or to get onto the website?

And on the Hotels & Packages side, especially on the packages side, their ability to convince users to book the holidays even in terms of the quantum of the package or the turnaround time of those conversations?

Yes, sure.

In fact, you know, the game of market managers from a size perspective hasn't really grown because we didn't really need to grow that, because they have really been doing a great job in terms of just productivity improvements.

Because, you know, the whole driver of this expanding network of hotels -- as we heard mentioned it earlier, what big drivers we wanted to do to ramp the supply side from 5000 to 10,000-plus, that has happened already.

And now there are only incremental sign-ups.

So right now what they do is to, on an ongoing basis, and they have been just working on relationships.

And they have done a fantastic in terms of just educating them and making sure that the adoption on [extranet], for example, goes up, and also on price negotiations.

So price negotiations between -- is data correlation, would be kind of volumes that we are producing for them.

And, yes, they have been doing a great job and kind of reflecting in our overall H&P margin, if you will, as well.

And also on the standalone a la carte hotel transaction growth.

So, you know, all in all, this market managers team has been really effective and continue to be very effective in terms of price negotiations, inventory allocations or, you know, just improving the relationship on an ongoing basis.

So it's been really -- like I also mentioned on the call, that when we were focusing H&P transaction growth strategically, specifically on the hotel side, touching upon every lever of the business.

And this side, the supply side on the hotel side is definitely one of the most important ones.

And there has been a lot of focus on that front, and we have really been improving and showing continuous improvement on that.

And that's kind of definitely helping us maintain the robust growth on the H&P side.

On your guidance, your first half is been very strong in terms of revenue growth.

And even though you have taken the impact of rupee depreciation in your guidance, you don't seem to have given yourself the benefit of a strong first half.

So are you kind of just (inaudible) or is this something you expect in the second half that's making you just take the drag of the rupee?

Yes, so it's a good observation.

But you know, besides the fact that we have factored in rupee depreciation and, yes, it is a bit stable right now, but you know the other important factor also is that the airfare that we highlighted.

So we immediately saw in the reported quarter, July/August from a fares perspective were substantially lower, and therefore there was a direct correlation from a growth perspective.

But September when the sales went up, you know there was a negative correlation also -- I mean direct correlation and the result was negative in terms of growth immediately going down as well.

And the fares continued to be high because -- as we get into a high travel season quarter.

So there is -- there are enough indications right now, because the fundamental underneath capacity issue hasn't really been resolved as yet, because there are no real additional planes that have [gone into] since the time, the capacity constraints were created because of (inaudible).

And so therefore we didn't want to be -- to get super ambitious about the growth coming back until we see this growth of transactions at least for two or three quarters on a sustained basis, before we could have -- look to the (inaudible) guidance if you will.

So that was the real reason.

So as we see, let's see how the high season quarter goes.

And then by the end of this quarter if there is -- if we continue to see positive trends, we would definitely look at revisiting it by the end of December quarter.

Okay, Rajesh, you mentioned that the tickets -- [higher note of] rates were a lot lower in the first two months of the quarter, and then most of the airlines increased it in September.

So did you -- I mean in terms of your transactions growth month-on-month, so that we get a sense, did you see any [steep] for a number of transactions in September?

Or that still grew month on month despite the trend increases.

I won't call it as a steep fall, but it is a noticeable fall that happened.

So -- because the jump then was also significant.

So if you see (inaudible) overall, if (inaudible) as Mohit was highlighting, if overall transaction revenue had gone down by 20%, and two months out of the quarter were lowered, so they were really substantially lower because there were more like sale fares, if you will.

And therefore there was a quantum jump when they came back.

And they continued to be more, and also for the advanced bookings etc.

as well.

So you do see -- and over a period of time that you actually get a better sense of what happens, because it's really very dynamic at this point in time.

So we haven't really been able to pick up a pattern here.

And that is also one of the reasons why you know we also stay more conservative on this, because once this pattern becomes clear in terms of how airlines are trying to revenue optimize from their point of view, then the underneath pattern of fares becomes very clear.

And then it becomes more easier for us to estimate the real trend on transaction growth etc.

as well, which has not been happening in not been very clear in the past few quarters.

So, therefore, you know we stay cautious on this.

Okay and just one last question from my side.

In terms of the investments needed for your business right now, are we right in assuming that the Hotel & Packages segment needs a lot more investment from the [SI]?

And then internally how do you decide which areas need more investment?

Is it more in terms of a sales and marketing approach?

Is it more in terms of giving a better [price] to customers, to attract traffic?

Or is it just in terms of signing more hotels?

And what internal metrics do you track to see whether your investments are going in the right direction?

Do you need to change the strategy (technical difficulty) or do you need to kind of increase investments at this [point]?

Thank you.

Sure, no there are two strategic areas of investment, as we've been mentioning.

That has been clearly identified and they are more strategic [than each other].

So one is mobile.

So the investment in technology is growing because it's significant traffic movement trend that is happening as I mentioned earlier on the mobile platform.

So we continue to make technology investment on that trend.

And we measure it with a metric that we measured to enhance the investment is very clear -- how much is the growth of traffic is happening there and what kind of conversion that we want to achieve on that platform and so on.

So it's an ongoing thing.

It's exactly the way we run our desktop side of the business, if you will.

And the other area is continuous investment in the international hotel space.

Both are gaining technology as well as marketing, which include investment in HotelTravel.com.

Like I mentioned there is a lot of potential from the international hotel segment standpoint and therefore that is a strategic investment going in that direction, including investment in technology because of the integration between MakeMyTrip and HotelTravel.com.

So these are two strategically identified areas of investment at this point time.

And they will continue to be for some time, until we kind of just see the results and then look at probably identifying other areas.

On an ongoing business, on a running business or on the existing line of businesses, there are ongoing investments that happen.

And the driver for those investments are specific to the line of businesses, specific to the areas of business and they will vary from -- for example we have been talking about automation as one of the areas of investment, which we continue to do.

And already actually some of the benefits have already been reflecting, as Mohit was highlighting in his section of the call, already on certain cost trends now on our P&L.

There will be an ongoing investment.

You know, for example, just one of the things that we rolled out in the reported quarter is the [numbered office] system for the holidays business.

As I think we had mentioned it in the past is one of the important investments from improvement of productivity efficiency for the sales force and the agents point of view.

We rolled out last quarter.

So automation is definitely another area of investment which kind of cuts across and it's an ongoing thing.

So these are the areas of investment.

In terms of measuring, in terms of drivers for investment, obviously we look at the ROI for the investment and the need for the investment in a particular area.

And the results of the investment, there are various metrics which will vary from area to area, which we measure.

Vipin, I hope I answered your question.

Do you have any other questions?

No that answers it, thank you, thank you very much.

(Operator Instructions) At this time there are no further questions.

Thank you for your participation in today's conference.

This concludes the presentation, you may now disconnect.

Good day.