Good morning. My name is Henry, and I will be your conference operator today. At this time, I would like to welcome everyone to the MakeMyTrip Limited Fiscal 2021 Quarter 2 Earnings Call. All lines have been placed on mute to prevent any background noise. There will be a question-and-answer session. [Operator Instructions] Thank you very much. Now, I would like to turn the call over to our first presenter for today, Mr. Jonathan Huang, Vice President of Investor Relations. Sir, you may begin the conference.

Thank you. Welcome everyone to MakeMyTrip Limited's fiscal 2021 second quarter earnings call. I would like to remind everyone that certain statements made on today's 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. These statements are not guarantees of future performance, are subject to inherent uncertainties and 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 are contained in the Risk Factors and Forward-Looking Statement section of the company's Annual Report on Form 20-F filed with the SEC on August 17, 2020. Copies of these filings are available from the SEC or from the company's Investor Relations department. I'm joined today by Deep Kalra, MakeMyTrip's Founder and Group Executive Chairman; Rajesh Magow, Co-Founder and Group CEO; and Mohit Kabra, our Group CFO. Now, I'd like to turn the call over to Deep to begin today's discussion.

Thank you, John. Welcome, everyone, to our fiscal second quarter earnings call. I sincerely wish all our listeners good health and safety as the world continues to grapple with the ongoing COVID-19 pandemic. It is encouraging that the word over and in India as well. There are multiple vaccines, which are in various stages of trials, promising a cure sooner than later. That should clearly help restore normalcy to pre-COVID-days, something that we are all looking forward to. We at MakeMyTrip continue to believe that the need for travel is innate in humans. And while we are already seeing green-shoots of demand across different travel services, we believe business recovery would significantly accelerate once a vaccine becomes widely available. As for India, recent trends seem to indicate that we are past the peak of daily confirmed COVID-19 infections. It is also helpful that despite having the second largest number of confirmed infections globally, the country's mortality rate is fairly low. This has helped us to get some travelers back and the travel industry is also adapting and innovating to address the concerns of the travelers in such times. While we had updated on the gradual unlocking in the country post May during our last call in August, thereafter, we have seen the unlocking gain for the momentum. As we speak, the country's domestic airlines have been permitted to operate up to 55% of their capacity as in the same period in the prior year by the DGCA which regulates the sector. The actual passengers flown have already recovered to about 40% levels. As for international flights, restrictions remain in place until at least October 31. So many bilateral country bubbles have already been established for special-purpose flights, and new arrangements are currently being negotiated with countries such as Italy, Bangladesh,…

Thank you, Deep. Hello, everyone. I hope everyone is staying healthy and well during this ongoing pandemic. Before I begin, I would like to thank the entire team, who had been working relentlessly during this last couple of quarters in a constrained environment to help with the industry's reopening and slowly bring MakeMyTrip back on the track of business recovery. Let me now share a summary of our fiscal second quarter of 2021, which is the first full quarter along the journey of recovery, as COVID-19 travel restrictions were largely only lifted in June. Since then, we have seen a gradual return of demand with sequential week-on-week improvements that is fairly in line with the lifting of localized restrictions and opening up of all modes of travel and accommodations in the country in a graded manner. Since restrictions were lifted, we were encouraged to see pent-up demand for the short-stay leisure break segment where travelers flocked to nearby getaway destination after having fatigued out due to the severe lockdown conditions in most of Q1. While the pace of recovery remains uneven state by state, we are encouraged to see continued momentum into the beginning of the festive season here in India, where people typically travel to celebrate with friends and families. Now I would like to share some details of our different lines of business fared during the quarter, along with the efforts we have put in to help us maintain the momentum of our recovery going forward. In our hotels business, as mentioned by Deep, currently almost 50% of the properties across our network have resumed operations, and we are seeing domestic demand recovering to almost 30% so far during this festive season. The hotel demand recovery is currently led by short-stay getaway vacations, great travel deals, and naturally…

Thanks, Rajesh, and hello, everyone. During the second fiscal quarter, our primary focus was to maintain a very tight cost discipline, as we started with the gradual business recovery process, following the various phases of unlock being rolled out by the Indian government. While the overall business recovery in terms of gross bookings for a quarter was about 15%. The recovery in the exit month of September was almost 23%. We are, therefore, hopeful of our business recovery gaining further momentum in the approaching winter quarter. The adjusted operating loss for the quarter at $12.9 million was lower than the previous quarter's loss of $21.3 million, and also better than last year's same quarter loss of $19.3 million. Adjusted further for non-cash depreciation and amortization expenses, the quarter's adjusted cash operating loss is stood at about $7.6 million compared to $16.3 million in the previous quarter, and $14.5 million in same quarter last year. As highlighted by Rajesh, we have seen better business recovery so far in our air ticketing business compared to other business segments. For the quarter, our air ticketing adjusted margin stood at about $11.9 million, which is a recovery of about 19% in constant currency terms versus pre-COVID levels during the same quarter of last fiscal year. The adjusted margin in our hotels and packages business is stood at $5.5 million. It was about $2.5 million for the bus ticketing business, and $3.1 million from other businesses. I'd now like to share some color on our operating cost line during the quarter. We significantly pruned our marketing and sales promotion expenses, which stood at 2.4% of total gross bookings considering that the business recovery during the quarter was very gradual. Our personnel and SG&A expenses stood at about $24.4 million for the quarter compared to about…

[Operator Instructions] We have our first question. Our first question comes from Vijit Jain of Citi. Your line is now open.

Yeah, hi, guys. Congratulations on a great set of numbers. Terrific numbers on the adjusted EBIT yet again. My question is about the adjusted margins of the hotels and packages side, so quite a steep drop there. Does that reflect the fact that budget continues to lag premium in recovery in this quarter? Thank you.

Absolutely, Vijit, you're quite right. And like we have been calling out, the budget segment kind of continues to lag. In fact, the mix is getting skewed more and more in favor of premium properties. And this is kind of relatable, because this is a period where most customers want to kind of address their concerns around safety, hygiene, et cetera, and believe this is better addressed in the premium properties compared to the budget properties. And therefore, we're kind of seeing much better pickup in the premium properties that we have on the website. So, pretty much coming in from there. Also, we have been kind of supporting some of our partners, in appropriate cases, with reduced take-rates. And that's also kind of contributing in a small way. But predominantly, this is coming in from the change in mix in favor of premium properties. So, to a large extent, I would say probably this is a slightly one-off kind of times. We don't really know, whether this change in mix is kind of here to stay. Probably, we should gradually start seeing more and more recovery coming in the other segment or other price point as well, so probably more transient.

Right, thank you. And secondly, just a little bit color. I know you mentioned, Mohit, earlier about some income tax refunds and working capital as the reason for the roughly $35-million-, $40-million-odd net change in your cash when you remove the losses. So can you break that up also a little bit for us, the income tax refunds? I don't see that for that in the release?

Yeah, sure. Like I mentioned, our overall change in the cash position, if you look at it, is close to about $24 million for the quarter, from about $173 million to about $198 million. Probably, half of this $24 million comes in from income tax refunds that we've kind of received. So that's kind of really helped shore up the cash balances. And the rest is largely a mix of multiple changes on the working capital lines.

Got it. And my final question to you guys, with COVID levels dropping quite significantly now in India over the past 1 month or so, I know you've commented a little bit about festive season demand and about exit demand at the end of September, but any meaningful pickup you've noticed very recently? And, I mean, I know it's hard to disambiguate between festive demand and overall demand. But I'm just wondering if the behavior change has been quite as fast as the COVID drop has been.

Yeah, hi, Vijit. This is Deep. Let me take that, sorry. So absolutely, I think we have noticed there has been definitely a distinct uptick. I think this uptick is probably in the last 4 to 6 weeks. So we started noticing pure tourist kind of travel even a bit in September, but definitely thereafter. The second October weekend, as we know in India is a long weekend. I think that was a very positive sign, then the just past weekend for Dussehra et cetera is a pretty positive sign where there was a lot of travel. So like Rajesh called out, a lot of road trips, lot of weekend getaways, et cetera, but also now flights to pure tourist destinations picking up quite a bit. So also off these 50% departures, there are quite a few to tourist destinations or the 40% load factor. So Goa has become increasingly popular. People are now even looking to go beyond and to other places. So I think it's fair to say that October has definitely been more reassuring. And there is a week on week kind of increase. So we are hopeful this will continue. This is peak season, right through from October, November, December. There's no doubt that there is pent-up demand in getaway. But people are still grappling with how can we travel safely kind of thing. So I think as more awareness grows around travel, hopefully better testing protocols, I think that can really help. If we have mandatory testing protocols, it can be of huge advantage. But even until then, I think the fact that it's been quite well proven that people are not really picking up the infection or there's no transmission while they are traveling. So that is really helping people I think, give them the confidence that they can travel forth. And then, in the choice of accommodation, while people are, like you called out, is this a skew towards premium properties? Absolutely. A lot of them tend to have independent villas and cottages where people are staying, also home-stays. So that is where we are seeing the skew going right now. So the premium chains are definitely gaining. Some of them has been quite proactive, to put together programs. And we are obviously helping them, in terms of getting the word out, that there are interesting deals, good deals, and most importantly, safe way to travel. That's the key message.

Right, thank you so much.

Thanks, Vijit.

[Operator Instructions] Presenters, no questions so far. You may continue.

There are no more questions. Thank you, everyone, for joining our conference call today. If you have any further questions for us, please feel free to reach out and you may disconnect at this time. Thank you.

This concludes today's conference. Thank you all for joining.

Thank you.