Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Sagarika Chetty from Antique Stockbroking. Please go ahead.

Yes. Hi. So my first question is on the Flight segment. So you saw an 18% growth in GTV this quarter driven mostly by value than volumes. But your gross margins increased at a much slower pace. Now of course, it is middle of the second quarter, but are we seeing a similar trajectory in the second quarter given the supply cuts and the incentive finalization that you mentioned? And so is it fair to assume that margins further and would be relatively subdued for the year compared to FY '26?

Sagarika, as we mentioned –and you would see this in our investor presentation as well. What's happened at this point of time is that a lot of the Middle Eastern carriers, especially are still trying to figure out what would be the volume and how much capacity will they deploy during this current year on account of which the kind of PLBs, which are the annual productivity-linked bonuses, those targets and those deals have still not been closed. Historically, those get closed in the early part of Q1 itself. But in the current year, given the disruption in Q1, they have remained open. Hence, revenue is recognized at a lower number. As things move forward, we do expect that at least in the second half of the year, we are already seeing some degree of normalization in the capacity. We are seeing some more capacity being

added back. We do expect margins to improve in the second half of the year. So at this point of time, it's driven more by the macros because of which you're seeing GTV rise at a faster pace, and there should be a catch-up effect of this in the second half of the year.

Okay. Fairly clear. And the second question was given the fact that this quarter, there was weaker corporate travel. So what is the proportion of your B2B versus B2C? Has that changed? Or does that remain broadly the same as it was in the previous quarters?

I think there's obviously a slight decline in that. While the corporate business has come down a little bit in terms of share, B2C business has gained a little bit more, but it's not a very substantial change, which would be there in the mix. There is obviously a little bit of mix. On the B2B side, the one part which has really picked up a little bit more is the travel agency part of the business, which has got a bit more boost in terms of volumes. But on an overall basis, the mix would have moved from like late 60s to mid -60s right now. It's not very material in terms of the change.

Very clear. Thank you so much. I will join back for the questions.

Thank you. The next question is from the line of Nitin from Investec. Please go ahead.

Hi, good morning. Thanks for the opportunity. A couple of questions. So the first is on the MICE recovery. So you indicated that there's a INR300 million sort of loss of revenue on a year- on-year basis. Do you think this loss of revenue in terms of at least on a year-on-year basis gets bridged immediately in the following quarter as you see an improvement? Or do you think this maybe sort of gets bridged only sometime next year? So that's the first question.

So, MICE as a segment has gone through a bit of a restructure. And the restructure actually started somewhere around mid of last quarter. And the demand had to shift from international group travel had to kind of transform itself into domestic group travel, which was maybe slightly higher margin, but smaller order sizes. So that transformation was going on as we progress from Q4 to Q1. And what we saw was an industry that was responding to the changing demand and what we could execute from a MICE segment standpoint. And I think that phase of MICE transformation is already over. As Dhruv earlier said in his speech, our Q2 volumes are looking 50% better than what we have seen in Q1 and the margin profile of the groups that we have received and are executing are far better as well. So, we do not expect a very prolonged change in the business now. Now things are stabilizing more and the pipes are looking better and the margin profile is looking better as well. So to answer -- the short answer to your question is that I think the massive change that was to happen has already happened. The industry has responded to the market condition, and I think things are normalizing as we speak now.

Perfect. And on the Travel Pro, it seems to have done pretty well in terms of bookings and seems to be seeing good traction. Do you believe that the INR200-odd crores of bookings that you have sort of done because of Travel Pro, considering the client sizes are maybe relatively smaller than the core corporate. Do you think that this sort of INR200 crores kind of booking run rate should -- is something that you can sort of aspire for on a consistent basis or thereabouts because this sort of does better? And the second part of the question is, do you think that Travel Pro also gives you longer-term contracts like two, three, four, five years? Or is it anyway different from the way it is for the rest of the corporate business?

If you look at our numbers, we've announced 53 new logo acquisitions of about INR220-odd crores annual billable potential. Out of that, 30 logos are Travel Pro, which is just the beginning of the scale of Travel Pro. So we believe going forward, Travel Pro would bring in more number of logos. So from a number of wins perspective, obviousl y, Travel Pro would start reporting a much larger number. INR80 crores out of INR140 crores, again, is a very, very good start. And this business is trending nearly 20% to 30% higher in Q2 already. So we believe there's a huge headroom whitespace, which is still not digitized from a corporate online travel perspective. And our ability to create a product which has really resonated well with very large customers for small and medium enterprises is starting to get traction in the market. What we -- usually our Elite customers would come in with at least a two to three-year kind of a contract. But in Travel Pro, we are seeing that most of our projects are about an annual contract that we sign with our customers. These are still too early days to comment on exac tly how this part of customer cohort would behave going forward and the stickiness. But glad to report that there is no deterioration in our net retention percentage that we have been holding on for the last two to three years, where our corporate net retention is as high as 97%.

Okay. Very helpful. I have some questions on cost, but I'll come back in the queue. Thank you.

Thank you.

Thank you. The next question is from the line of Anmol Garg from DAM Capital. Please go ahead.

Yes, hi. Thanks for the opportunity. A couple of things I wanted to ask. Firstly, I wanted to clarify how much is our international business versus domestic as of now?

So as of now, Anmol, the international shar e would have come down to less than 30%. If you recall, given our higher mix of corporate travel and MICE -- international MICE, we were trending closer to late 30s to almost 40% in terms of the mix. So it's under 30% at the moment.

Understood. Understood. And Dhruv, our underlying volume growth in the air has been 5%, which is greater than the overall market growth. Now this is despite pressure in the corporate bookings at this point in time. So just wanted to understand, have we increased our focus on the B2C side of things, which is leading to relatively a little bit better growth than the market at this point in time within air?

So, we have a diversified business model, and that is one of the advantages of the diversified business model. We've seen, obviously, that B2C is able to scale up and scale up profitably. And that's why we've been able to lean on a little bit on the B2C side to build a little bit of the volume to make sure that when it comes to supplier deals, etc, we remain at the right thresholds. So I think it also reflects -- I think we -- in the last commentary, we had spoken about the fact that we are putting in a lot of efforts to ensure that our tech and platform holds for all our customer cohorts. And that invest ment, which has gone in has resulted in the platform being more stable, the response times being much better. And it has a trickl ing down effect on almost all LOBs. And that's what we've seen that this investment has started reflecting in performance acros s B2C as well. So -- and that's the reason why the volumes have gone up there. Obviously, it's a business that's closest to the domestic spend story of India. I think travel demand hasn't come down, domestic travel demand. That's why we see people travel as well as hotel business doing really well stand-alone. And I think that's why overall, there is a bump up and we've gained market share.

Understood. Just one thing on the margin. So we made a comment that we expect our adjusted margins to be 3 0% plus going ahead. So what will lead to such a strong margin inch up and current -- yeah, so what will lead to this? And will it happen over the next 1 to 2 quarters? Or this is more of a longer-term guidance that you're giving?

I think let me answer that from the last part of your question first. That is more like a midterm guidance, which we had given earlier as well. We were at 20 -plus percent kind of margin, and we have done the walk in terms of how the addition of every incremental c orporate customer has almost 50% net contribution margin. So as the corporate business would have grown, we would have expected to get to that 30% number given the operating leverage in the business. Unfortunately, we've seen things like MICE, which get disrupted, which have gotten disrupted for the last 2 quarters. those are higher -margin businesses. Plus we've had to make some incremental investments for the Kanoo opportunity. So there is some amount of cost impact of that as well, which is there. So the net effect of those is what has brought the margin down. If you were to normalize for these elements, meaning if you were to look at MICE come back, which is what we are expecting in the current quarter, air margins on the international route getting stabilized and some further growth in the corporate travel business, we will see margins come back very quickly to the 20-plus percent mark first. And as the business continues to scale, we do feel confident that we'll get back to that 30% aspiration in the mid term. So my sense at this point based on what trending we are seeing is that in the second half of the year, we should start being pretty close to the 20% mark before scaling up again from there.

I think there is a little bit of improvement on account of MICE, but for the second element, which is the capacity still continues to be coming back only gradually. So I think we'll see a marginal improvement to -- if MICE continues this momentum, hopefully, we might see some more tangible improvement, but largely remaining range bound in the current quarter before we start seeing further improvement going forward.

Sure. That's it from my end Dhruv. Thanks for answering the questions.

Thank you. The next question is from the line of Dhruv from Leo Capital.

Am I audible?

Yes.

Yeah. So firstly, congratulations to the team on the 7-year partnership that we had this quarter. I have just one question on the corporate structure. Could you give us an update on the restructuring merger of Yatra India with the parent company? Where do things currently stand? And what timeline are you working towards to get this concluded?

Hi, Dhruv, so on that front, there is obviously work which has been going on now for the last, I would say, at least 6 quarters on that. That entails different jurisdictions, including India, Singapore, Cyprus and Cayman plus dealing with the SEC. We did do a block back in February, right, from that entity into India to fund that entity's lega l expenses for the collapse. So I think that's one indication that there is work going on over there, hence, we had to fund the legal expenses. But beyond that, from a public disclosure point of view, all I can say is it remains a key priority, and we guys are all working towards that. If I was to give you a sense of a timeline, having seen how regulators in different markets behave, it's very hard to give an exact timeline on that.

Okay. Thank you.

Thank you. The next question is from the line of Chirag from Motilal Oswal Financial Services. Please go ahead.

Hello, sir. Can you hear me?

Yeah, we can.

Yeah. Yeah. So, a couple of questions. If you look at the uh customer inducement cost in the hotel and packages segment or customer promotion expense as a percentage of gross bookings, it has slightly elevated in this quarter. Is it like we provided more discounts in the hotel and packages segment considering the slowdown environment?

Your voice is slightly unclear.

Yeah. So, it's got to do a little bit with the business mix as well, given that this quarter, a greater part of the business mix is coming from B2C, and B2C does have a certain level of discounting which is and marketing which is there. That's part of the reason why you are seeing it at slightly elevated levels. As things normalize back, and we have the MICE mix also coming in again in the next quarter, this number should normalize. So, this is more of a temporary phenomenon on account of the change in business mix.

Okay. And can you also please provide a guidance like, from a near-term point of view, we are expecting, mix shift to happen like air and hotel will be 50/50 in near term? So, is that strategy still intact?

So I think we spoke about these margins. We've already spoke about the fact that in quarter 2 we are seeing the GTV trend better than what -- where we were in Q1. So we expect that the margins would be a bit suppressed because the airline capacities are still continu ing to be constrained. But other than that, we expect the MICE margins to improve in quarter 2 going forward. So hopefully, we'll be reporting better numbers.

Was your question on the business mix between air and hotel?

Yes. So, I'm asking we used to provide guidance like we are looking to have a 50/50 mix over next 2 to 3 years' time frame in hotel versus air. So, is that strategy still intact, or is there any change there considering the current environment?

No, no, absolutely. I mean that strategy continues to be well on track. We are at about a 60 -40 mix when it comes to air and hotels, right, on the gross margin level. And given that air is growing more like early double digits and hotels are growing at 30 -plus perc ent, we would continue to see improvement in the business mix towards hotels. And that strategy of getting to a 50-50 mix between air and hotels over the next 2 to 3 years remains perfectly on track.

Okay. And a few bookkeeping questions I have on the P&L part. If I look at your employee expenses, that's increased by almost 300 basis points on quarter-on quarter. Can you go through -- walk through the math, I mean, what has led to the increase in the employee expenses?

Sorry, I missed your question. Can you just come back -- just clarify your question again?

I'm asking on employee expenses part? I mean as a percent age of revenue has increased significantly. Also the business volume activity was slightly on the lower end conside ring the environment, what has led to the increase in the employee expenses as a percentage of revenue?

Right. The incremental employee expenses as a percentage of revenue that you're seeing, that's happening on account of the investment we' ve made in people for the Kanoo project. The revenue for the Kanoo project has started coming in from 1st of July or middle of July. But the buildup of the people, some part of the infrastructure, the technology platform being hosted on GCP cloud platform, all of those has happened in the current quarter because people had to be hired, people had to be trained.

So there is a hiring cost of people, training cost of people, all of that which has come in the current quarter. That's why you're seeing people costs being higher as a percentage of revenue. The profit element of that will start kicking in from the second quarter onwards.

In second quarter, will it remain in this range or it will normalize like previous quarter?

No. The numb er in absolute terms will remain at similar levels, right? So in terms of people costs now that the people have been hired, the people costs will remain at these levels, but you will see the revenue impact of that, meaning the positive revenue accruing fro m the Kanoo business and the Kanoo contract that will start coming in from the second quarter onwards.

Okay.

Sorry to interrupt, Chirag. Please re -join the queue for the follow -up questions. The next question is from the line of Ankush Agrawal from Surge Capital. Please go ahead.

Yeah. Hi. Thank you for taking my question. So first thing I want to understand is about this MICE as a business and its impact on profitability. I think in Q4 also because MICE was impacted the profitability took a hit and this quarter again. So in the medium to long run, what I wanted to understand is if this is going to be the case that if any quarter or any year we have MICE as the business get impacted, then that takes away the profitability for a toss. So isn't the business sort of overly reliant on MICE generating a certain level of profitability for you?

I think in the short term, there is an element which is correct from what you're saying. MICE is a highly profitable busine ss. It is a cross -sold opportunity to our large existing corporate customer base. So given that MICE has a structure where you have a certain amount of profit margin, right, between 9% to 10%, and you've got very limited amount of incremental cost that you carry on your people, right? Your workforce cost is fixed in nature. So it has very good operating leverage. So when you execute the MICE business, it has a large bottom line flow-through, which ends up happening. The second part which has impacted us in the current quarter, obviously, is the air margins, given that the margins have not really been firmed up right now, there is a depression in the earnings on account of that. So I wouldn't say the entire drop is attributed to that. There are 3 elements whi ch are impacting this drop at this point of time. MICE obviously being the most material along with air margins and then the incremental cost that we've incurred in the setup of the Kanoo project. The Kanoo project will become contribution positive immediately. So in the second quarter itself, you'll see the positive impact of that. Air margins, we do expect air margins to recover in the second half of the year based on the discussions that we are currently having. So that also will fall in place. MICE, the impact of MICE as the MICE business recovers will automatically flow through to the bottom line. So there are 3 components which have impacted this result, not just the MICE business. But yes, MICE does have a disproportionate operating profitability give n that MICE operates at like a 40 -plus percent kind of operating margin versus other businesses which are operating closer to 15% to 20%.

Okay. Okay. So like over time over medium term as the business scales up and the aspiration to achieve that 30% margin that we are sort of thinking? At that scale, would it be fair to assume that MICE would still drive say half of the profitability of the business or it will be more than that? I'm just trying to understand is Yatra's business except MICE, how profitable it is going to be in absolute basis?

Yeah. So MICE will account for anywhere between 20% to maybe -- on an annual basis, 20%, you might have quarters where it tends to be closer to 25%, but that's about it. It's not that more than 50% of the business would come from MICE. I mean even if you were to look at the current quarter, the drop year-over-year in MICE, and you can see this in the service cost, right? You have a service drop of about INR30 crores. You've got a 10.5% kind of margin impact on that. Plus this quarter, there is some greater competition. So the total MICE impact of the drop is between somewhere INR4 crores and INR5 crores. So it's not that MICE is accounting for 50% of the profitability.

I think to add to Dhruv's comments, we have to look at the true nature of how the MICE business operates. MICE doesn't follow a linearity like the way corporate -- pure corporate business follows. It is lumpy in nature. And given that its contribution is to gro ss margin is in the range of 9% to 10% straight away. We have to look at the way and look at MICE business from a year-on-year standpoint rather than trying and comparing one quarter to another. Something that I said earlier in the call, MICE went through a slight transformation moment, the international fares went up. The industry had to rework with new fundamentals. And we believe that both on the customer side as well as on people like us who serve those customers, we have formed new equations and hence , brought the business back , because the inherent nature of rewarding your ecosystem or employees with good travel to keep the motivations up to train them to reskill them, that is a reward in a way which doesn't go away. So the basic nature of the business doesn't change. It's just that we have to look at MICE with different view than just pure air and hotel business coming through consumer and the corporate lines.

Great. Lastly, just this comment...

Sorry to interrupt Ankush. Please rejoin the queue for the follow-up question. The next question is from the line of Sonal from Prescient Capital. Please go ahead.

Hi. This is Sonal Minhas. I hope I’m audible, and thanks for taking my question. My first question is regarding the guidance for the year. Are we still holding on to the guidance or there is a downward revision or a revision to the guidance that we've broadly given for longer term?

See, we haven't given any guidance for the current year, Sonal. And at this point as well, we are not really issuing a guidance for the current year. We will evolve and as the market stabilizes, we should hopefully be coming out with the guidance next quarter. But at this point, we're not giving out a guidance for the year.

See, the Middle East itself -- in terms of the endpoint, would have been under 20%. But Middle East as a transit point, if you were to add all of that, right? That's when you're looking at almost 30% plus of international travel transiting through Middle East. There is a spillover impact as well, which happens that with all this capacity out o f the Middle East and travel out of the Middle East not going through, you have European fares or transit through Europe, which is the key point for business travel into the U.S., those fares are at extremely elevated levels, right? We are seeing ATPs being anywhere between 20% to 30% higher. And if you were to look at - - we say, this in jest, but what was an economy fare has become a premium economy fare, what was the premium economy fare has become a business class fare and the business class fare today is like a first class fare. So you are seeing extreme amount of price increase happening, which is deterring definitely large group movements because compan y’s establish budgets at the start of the year of how much they are going to spend for incentives, etc. So it is deferring the spend level. And even when it comes to corporate movement, nonessential corporate travel is being limited at least in certain industries, right? So industries like IT, etc, continue to be very circumspect. So there is a spillov er effect as well of all of this that's happening. It's not just traffic through the Middle East or Middle East as an endpoint.

Got it. Thanks for explaining that. I have second question, Dhruv. I was going through the annual report of Yatra, which is the listed entity in the U.S. and I presume there are some financial investors who are sitting there. So , just wanted to understand with regard to broader contours of restructuring, those entities look more like they are resident or domiciled investors in the U.S. or internationally. What would be an incentive of them merging with the India entity and bringing that mirror shareholding back to India? From a very broader like zoomed-out perspective, it looks like there is no incentive for, let's say, a U .S. domiciled investors with investors sitting outside India coming and then holding up into India. That's one. And there are obviously some, I think, news rumors about shareholding being sold to outside. I don't want to track towards that, but I just want to understand from a stability perspective of the entity holding and is there financial investors who intend to sell out once this -- the holding gets folded into one entity?

So, without commenting on the second part of the question, if I would just look at from a financial incentive point of view, the holding in that entity in the U.S. is fairly concentrated, right? And that has very limited amount of liquidity in that entity. So there is a big discount that, that entity trades that becau se of lack of liquidity right, and the objective of the collapse from making the shares fungible would be to ensure that from a value creation point of view, there is a value creation opportunity that happens and the price is more

-- price realization is happening for those few shareholders who are holding the majority of the shares in the U.S. Now there will be some smaller shareholders who might not have the wherewithal to hold India shares, who might not be able to do the KYC necessary to open demat acco unts, etc. So for those guys, there would be some kind of an exit mechanism. But the large eight, nine of us who are either large individual shareholders or large institutional shareholders who are long -term believers of the Yatra story, holding a more liquid India stock is the right thing for us to do.

From an economic incentive perspective is what basically you're saying.

Yes.

Got it, Dhruv. Thanks for explaining that. I’ll follow-back in the queue.

Sure

Thank you. The next question is from the line of Moksh Ranka from Aurum Capital. Please go ahead.

Hello. I wanted to understand any update regarding our corporate card platform. And we were working on some other permissions to reduce our working capital intensity. So any update on that?

So on the corporate card platform, we are working with the banks to create a product, right? So that part is still going on with the banks in terms of creating a product. The challenge in that and that we are working through is figuring out how do we balance the MDR cost on that, right? We obviously don't want to be in a situation where we have to pick up 165 basis points of MDR cost. So we are working with banks to see if there is a product which can get created with a lower MDR even if it comes with a shorter credit cycle for the corporate c ustomer. So that's something which is being worked on with the banks, that business model and that business case is being put together with the banking partner. In terms of the other working capital initiatives, we are also working with the likes of American Express for their BTA platform and between HDFC and Citibank for the CTA card platform along with SBI also has a similar product. And we are trying to put that product into place with the corporate customers. In this -- the first step out of this is to make sure that we work with the airline and the hotel supply partners for them to pick up the cost of the credit card, right? So we don't want to be the one picking up this cost in the middle, given that we are more of an intermediary. So these are things which are currently high priority from a working capital management point of view, but they do have a long lead time. But once they get implemented, the impact of these also will then be equally quick. But this remains, needless to say, a key priority for us to be able to get these things in place.

Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I would now like to hand the conference over to the management for closing comments.

So I would like to thank all of you for coming on this call and asking very insightful questions. I want to reiterate, we are a company which believes in investing for future. We have spent 20 years and all of us are really happy about how we have played our role in shaping the travel ecosystem in India as well as globally. And we have a strong belief that we'll continue to reshape this industry as we go forward. Again, commenting on Q1, we believe that these were tough times for the industry, but the way we have thought of navigating that is to innovate, is to invest for future, and we are already seeing very healthy signs that the future looks very, very positive. So we look forward to sharing more exciting news about how Yatra is progressing in the future and how we are reshaping the travel world. So thank you so much for your interest in Yatra. Thank you so much for coming on the call.

And just one parting comment, right, in terms of having seen multiple such cycles, we do have a playbook in place to manage these cycles. And as we have said, we've seen revenge travel happening pretty quickly. So we don't see this time being any different. Our focus is to make sure a t this point of time that we use this opportunity to sharpen our technology and our operations to make sure we come out and deliver even stronger service and customer experience to our large corporate customers. So we will continue to make sure that we hav e progress on this front, and we can execute the playbook that we have done successfully coming out of earlier such disruptions. Thank you so much, and thank you, everyone, for your continued support of Yatra.

Thank you.

Thank you. On behalf of Antique Stockbroking, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.