Nasdaq-listed Yatra Online expects to break even by 2020, CEO Dhruv Shringi said in a conference call with investors in January.
Nasdaq-listed Yatra Online expects to break even by 2020, CEO Dhruv Shringi said in a conference call with investors in January.

Yatra transitions clients from yet-to-be-closed acquisitions ATB, PL Worldways

  •  The ATB acquisition will close over the next few weeks, says Yatra CFO Alok Vaish, while PL Worldways' 'will be a lot faster'
  • Yatra Online is currently in the process of absorbing employees from Air Travel Bureau (ATB) and PL Worldways

New Delhi: Yatra Online Inc. is transitioning corporate clients from Air Travel Bureau Ltd (ATB) and PL Worldways Ltd—the two acquisitions it had made in the past two years—onto its technology platform, even as the online ticketing company is yet to complete the purchases of the two corporate travel service providers.

Nasdaq-listed Yatra Online acquired ATB in 2017 to boost its corporate business. Yatra, which now handles bookings for 800 companies in India, also bought the corporate bookings business of Chennai-based PL Worldways earlier this year.

“The ATB acquisition is expected to be closed over the next few weeks," Alok Vaish, group chief financial officer, Yatra, said in an interview.

“The first tranche of the majority acquisition was closed in 2017. The second tranche was to be closed based on a certain earn out, so that’s what we are going through right now. Once all of that is done, we will go ahead," Vaish said, explaining the delay in the closure of the deal.

While Vaish did not give a definite timeline to when the ATB acquisition will close, he indicated that it could happen over the next few weeks. ATB promoters will continue to seat on Yatra’s board till the time the final tranche is closed. “After that, they will move out," Vaish said. As for PL Worldways, the deal closure “will be a lot faster, it being a relatively smaller business", he said.

ATB’s former chairman and managing director Sunil Narain said the deal closure was expected to happen by 31 August 2018, as per the understanding between the two companies. “The timeline for the closure has not been followed from Yatra’s end," said Narain.

Vaish said both businesses have been subsumed into Yatra, but the company is still working on transitioning clients onto its technology platform. However, a handful of clients from ATB were off-boarded, as they were not in compliance with Yatra’s internal goods and services tax (GST) workings.

“So there are certain positions taken by various clients (of ATB) on GST...we weren’t okay with some of those. Those are the clients we let go," he said, without disclosing the number of clients that were let go.

Yatra is currently in the process of absorbing employees from both companies.

India’s overall travel bookings market was pegged at $51 billion in fiscal 2017, according to a presentation made by the Yatra management to investors. Of this, corporate bookings accounted for 60-65%. By 2021, corporate bookings are projected to touch $51 billion, up from $32 billion in 2017, according to Yatra. The share of leisure travel or B2C bookings is expected to become bigger in the overall travel bookings market as more customers shift online.

“Traditionally, the corporate bookings business has been less attractive because it takes time to scale up. It’s also largely dominated by standalone travel agencies, but that business has been moving to larger organized players such as Yatra," said a consultant, on condition of anonymity. And, with competition heating up on the leisure side of the bookings business, it makes sense to corner a bigger share of the corporate business.

“The corporate side of the business is more stable and predictable," said Ankur Pahwa, partner and national leader, e-commerce and consumer internet, at EY India.

For Yatra, “both corporate and B2C will be the core focus areas", said Vaish.

Yatra currently generates 60% of its revenue from its B2C travel bookings while the remaining 40% comes from corporate bookings and its B2B business, where it helps small travel agents book through its platform.

For the year ended 31 March 2018, Yatra reported loss of 405 crore on revenues of 1,224 crore. The company expects to break even by 2020, Yatra’s chief executive officer and co-founder Dhruv Shringi said in a conference call with investors in January.

“We might be closer to a break even or marginal profitability in 2020. Our free cash flow profitability might take a bit longer. We’re looking at 2021 for free cash flow profitability, because there is incremental working capital that gets deployed as the corporate travel business grows," he said.