Have adequate liquidity to weather condition, says Yatra CEO after failed Ebix merger

Shringi was speaking during an investor call by Yatra to provide an update on its operations, business strategy and financial outlook. The Yatra management did not answer any questions on the ongoing litigation with Ebix.

In response to a query from Moneycontrol about the possibility of an alternate mechanism or backup plan to provide an exit for its shareholders in the backdrop of the failed Ebix merger, Shringi said, “Our plan now is to grow the business independently for the time being and we are adequately capitalised for it.”

With small and medium travel players struggling for survival currently, would Yatra be open to an opportunistic acquisition at a cheaper price? “We have always been open to growing inorganically and have done quite a few acquisitions in the past,” Shringi quipped.

On being asked about a potential renegotiation of the deal with Ebix by another media agency, Shringi said, “At this point in time, let that be. At the appropriate time, all of that will be discussed.”

The Ebix-Yatra deal was aimed at expanding the Indian footprint of the US software firm as well as helping the domestic player to enter more geographies. Ebix’s Indian subsidiary, EbixCash, had bought Mumbai-based Mercury Travels and Delhi-based Leisure Corp in 2018 with an aim to create a travel division focused on luxury, events and sports-related travellers.

Moreover, the B2B (business-to-business) expertise of Ebix was expected to complement the strong corporate travel focus of Yatra. But primarily, the transaction would help the combined entity to pose a challenge to domestic market leader MakeMyTrip, which had leapfrogged ahead of competition after buying rival Ibibo in 2016.

According to industry estimates, the corporate travel market size in India is $32 billion with a mere 5 percent online penetration. Moreover, the market is highly fragmented with 60 percent of the market being served by small and medium travel agents. Shringi believes that Yatra would benefit with an increased number of corporates looking to adopt digitisation in the post COVID-world. Gurugram- headquartered Yatra is listed on the Nasdaq and gets nearly all its revenue from the Indian market.

On the domestic front, Shringi expects domestic capacity would come by gradually and by the same time next year, he expects the firm to hit pre-COVID run rates. Pick up in international travel would depend on macro factors like the progress on the development of a vaccine and the differing policies of each country, he said.

The firm has been focusing on reduced costs for the last 12-15 months with salary cuts across the board, deferred non-critical capex, reduced marketing spends and renegotiated contracts and payment terms with suppliers.

On July 17, 2019, Ebix, the international supplier of on-demand software and e-commerce services to the insurance, financial, healthcare and e-learning industries, and Yatra Online announced that they had entered into a definitive agreement under which Ebix would acquire Yatra via merger at an enterprise value of $337.8 million. The transaction was aimed at creating India’s largest and most profitable travel services company.