Online travel company MakeMyTrip (MMT) said that it has secured credit and guarantee facilities to the tune of $100 million as a backup source of liquidity for contingencies and potential investments.
The Nasdaq listed company recorded $173.8 million balance as cash and cash equivalents as well term deposits on its balance sheet for the first quarter of the financial year 2020-21, ended June 30. The comparable figure for the last quarter of FY20, ended March 31, was $168 million.
Of the $100 million, $70 million came from an affiliate of the company’s largest shareholder, Chinese online travel giant Ctrip. The remaining credit was sourced from a commercial bank in India, according to MMT’s earnings report. According to reports, Ctrip is in talks to delist from Nasdaq as a result of the growing US-China tensions.
“Considering that we have zero debt, we believe it is prudent in current times to have additional facilities to dip into, particularly to capitalise on any growth opportunities that might come our way and to emerge stronger, post the current crisis,” Mohit Kabra, CFO at MMT, said during the earnings call, hinting at potential acquisitions.
The company has begun to restore salaries of its frontline staff, and expects to do the same for its mid-level management from September. In April, the leadership team at MMT announced a pay cut of 50% due to the impact of Covid-19, apart from graded reductions for other staff, even as the firm laid off nearly 350 employees in June for cost rationalisation.
The company has saved $6 million over the previous quarter in personnel expenses as a result of these measures, Kabra said. “We have also significantly reduced our selling, general and administrative expenses by nearly $17 million on a quarter-on-quarter basis,” he said, adding that it was done by optimising outsourced call centre staff during the nationwide lockdown.
The firm has also adopted the work-from-home model for a longer term to reduce the size of its offices, especially in Gurugram.
It reported adjusted operating losses of $21.3 million for Q1 FY21 compared to $29.2 million for the corresponding quarter in the previous financial year. The company lost 95.5% in reported growth for the quarter, owing to travel restrictions induced by the Covid-19 pandemic.