MakeMyTrip recently raised capital from its Nasdaq-listed parent company through a rights issue that took the Gurugram-based company’s valuation to Rs 26,000 crore.
Documents filed by the Indian tour and travels aggregator to the Registrar of Companies demonstrate that MakeMyTrip received around Rs 128 crore from its parent company over the last six months through subscriptions to the rights issues.
The RoC filings reveal that the board of directors of MakeMyTrip agreed to allocate 323,649 equity shares at an issue price of Rs 1,000 in February of this year to its parent company MakeMyTrip Limited Mauritius on a right basis.
“Consent of the board… is hereby accorded to the allotment of 3,23,649 equity shares of Rs 10 each in the capital of the company… at an issue price of Rs 1,000 per share, including a premium of Rs 990 per share to its holding company MakeMyTrip Limited Mauritius on right basis,” read a copy of the resolution approved by board members of MakeMyTrip India.
Mohit Kabra, Chief Financial Officer of MakeMyTrip, claimed that these investments were destined to invest in marketing of the company and promotion deals.
“While the air ticketing business has moved online in a big way, various other travel segments like hotels and holidays, etc… are still very under-penetrated. We are investing in these in a big way. Over the last two years, we have been significantly investing in marketing and promotion. A large amount of this funding would be for the same purpose,” Kabra said.
MakeMyTrip Limited reported losses in the December quarter of 2017 worth $45.3 million which strike a sharp contrast to the profit of $16.6 million reported in the same period in 2016. The company reported revenues of up to $172.5 million while marketing and sales promotion expenses amounted to $109 million in Q4 2017. In the December quarter of 2016, MakeMyTrip poured only $44.5 million in this segment.
MakeMyTrip attributed several factors driving this year-on-year increase in marketing and sales promotion expenditure; notably, considerable customer incentives, acquisition, increase in brand advertisement expenses and consolidation of marketing and sales promotion expenses of the ibibo group.