India’s top online travel agency MakeMyTrip has joined hands with its largest shareholder – private equity firm SAIF Partners – to acquire a majority stake in Gurgaon-based Le Travenues Technology Pvt Ltd, which owns and operates travel search engine iXiGO. While MakeMyTrip is picking 19.9 per cent for a cash consideration of $4.8 million, SAIF is acquiring 56.7 per cent for $13.7 million. Representatives from SAIF Partners will be joining the board of iXiGO. 

IXiGO is a search engine which trawls inventory on other online travel sites to help people choose the best prices for airlines tickets, bus tickets, railway booking, hotels and travel deals. Launched in June, 2007, by Aloke Bajpai, Rajnish Kumar and Dharmendra Yashovardhan, the start-up first raised a seed investment from BAF Spectrum, Singapore, in 2008 and is currently valued a little under $25 million. BAF Spectrum has completely exited from iXiGO with this deal.

The website witnesses 1.7 million searches per month and has recorded one million visitors (not unique) per month. It claims to cover more than 2 per cent of all online transactions in the country, enabling for its partners a total transaction size of $4 million per month. The company, however, has not shared its revenue and profitability status.

The decision to purchase shares was taken on July 4, 2011, and the acquisition will be completed this month. “We believe this investment has synergies and benefits our online travel business,” MakeMyTrip has said in its quarterly financial report.

"There is no conflict of interest," said Aloke Bajpai, Founder-CEO of, speaking to VCCircle. "We will remain separate entities and the objective is to continue to grow iXiGO. IXiGO has a different business model and operates in the travel media space, compared to the transactional business of MMT. There are synergies; we can work together on growing the offerings. This can turn out to be a win-win situation."

On the future possibility of a merger with MakeMyTrip, Bajpai said, "What happens in the long run is not something I can comment on today. Promoters will continue to run the company. We will continue to have significant skin in the game. The business plan and future direction of iXiGO is something that the board will decide. It's not a merger or acquisition. MakeMyTrip is not going to consolidate it in the financials as its stake is less than 25 per cent." 

The funds will be used to expand its product range for online travel research and trip planning. “We are looking at how we can expand the scope of research and planning in travel space. We will enable more efficient travel buying decisions, research and information for our users,” he added. Currently, iXiGO operates one office and has 20 people on board. Without sharing the specifics, Bajpai has said that he plans to increase his team size significantly.

Ravi Adusumalli, managing partner and head of India operations for SAIF Partners said, “Online travel remains the leading growth driver of e-commerce and online advertising in India. We are glad to be backing a passionate team with a proven track record of innovation and product-led growth in this space.”

SAIF’s top investments include One97 Communications (mobile VAS), JustDial (local search) and HomeShop18 (e-commerce). Recently, SAIF Partners and MakeMyTrip founder Deep Kalra had jointly invested $5.5 million in, an exclusively online clothing brand launched in India.

In May this year, MakeMyTrip had acquired 79 per cent equity stake in Singapore-based Luxury Tours & Travel Pte Ltd for $3 million. It will now acquire the remaining shares of LTT from the existing shareholders in cash, in three tranches and over a three-year earn-out period ending June, 2014. In June, MMT had approximately invested $0.4 million of the total $0.8 million, which it had planned to invest in tranches until June, 2012, for the subscription of new equity shares to be issued by LTT.


Quarterly Financials: Net Profit Shrinks; Revenues Jump

MakeMyTrip’s net profit has fallen 79.7 per cent on a sequential basis to $0.75 million for the quarter ended June, 2011. The net profit has also dropped 42.7 per cent, as compared to $1.31 million in the corresponding quarter last fiscal.

Adjusted net income (profit for the period excluding employee share-based compensation costs, Cost related to follow-on public offering, interest expense on the liability portion of preference shares, interest accretion on financial liability related to business combination, changes in the fair market value of embedded derivatives in the preference shares and income tax benefit (expense)) also dipped to $1.5 million compared to $1.7 million in the corresponding quarter last fiscal.

The NASDAQ-listed company has reported revenues of $52.04 million for the quarter, up 65.7 per cent quarterly from $31.4 million, and 54.3 per cent on an annual basis, from $33.72 million in the June quarter of last fiscal.

“MakeMyTrip was able to maintain strong growth in the quarter despite uncertain global economic conditions. Our success and market leadership were driven by offering customers great value for innovative travel products and by continuously improving their entire experience with MakeMyTrip.

Additionally, our strategic marketing investment in this quarter has resulted in very robust growth in transactions and expansion of margins in our hotels & packages business, as we worked to further differentiate ourselves from our competitors,” said Deep Kalra, chairman and CEO of MakeMyTrip Ltd.

The company has shared that excluding the effects of employee share-based compensation costs, follow-on public offering costs of $0.9 million in the current quarter, interest accrued on the liability portion of preference shares, interest accretion on financial liability related to business combination and changes in fair market value of embedded derivatives in the preference shares, it would have recorded a net profit of $1.5 million in the quarter ended June 30, 2011. The operations of LTT were consolidated into the company’s financials from May 9, 2011.

Revenue from its hotels & packages business, which has tied up with more than 4,700 hotels in India, increased 57.6 per cent to $36.6 million, from $23.2 million in the corresponding quarter last year, and has more than doubled from $16.9 million in the previous quarter. In comparison, revenue from the air ticketing business rose 46.9 per cent annually to $14.7 million in the quarter ended June 30, 2011, from $10 million, and 5.75 per cent sequentially from $13.9 million in the previous quarter.

Gross bookings rose 49.4 per cent, but were offset by a fall in the net revenue margin, from 6.8 per cent in the quarter ended June, 2010, to 6.6 per cent in the quarter ended June, 2011.

Personnel expenses increased to $4.3 million in the quarter ended June 30, 2011, from $3.5 million in the quarter ended June, 2010.

MMT had posted a profit of $4.82 million for the year ended March 31, 2011, while revenues rose 49.3 per cent to $124.7 million, with both airline ticketing and hotels & packages divisions registering considerable growth. For the fiscal 2011-12, MakeMyTrip will maintain its full-year guidance range for revenue-minus-service-costs at $86-$89 million, as global economic uncertainties persist.

MakeMyTrip competes with companies like and in India. According to a recent report, 18.5 million online users above the age of 14 did visit travel sites in April this year. Out of them, Indian Railways had the highest number of visitors at 8.4 million, followed by MakeMyTrip with 3.9 million visitors while Yatra had 3.5 million, had 2.1 million and US-based Expedia Inc. saw 1.8 million visitors.

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