Le Travenues Technology Limited has Filed DRHP for an IPO with SEBI on 13.08.2022

Le Travenues Technology Limited has filed Draft Red Herring Prospectus with market regulator SEBI on 13th Aug, 2021.

The IPO consists of Fresh Issues worth Rs. 750 crore and an Offer for Sale worth Rs. 850 crore by existing shareholders. As part of OFS, Micromax Informatics, SAIF Partners India IV, Alok Bajpai and Rajnish Kumar will sell their stakes.

Business Model of Company

Le Travenues Technology Limited is a technology company focused on empowering Indian travelers to plan, book and manage their trips across rail, air, buses and hotels. The Company assists travelers in making smarter travel decisions by leveraging artificial intelligence, machine learning and data science led innovations on its OTA platforms, comprising websites and mobile applications.

The Company is focusing on travel utility and customer experience for travelers in the ‘next billion user’ segment is driven by technology, cost-efficiency and its culture of innovation has made it India’s leading travel ecosystem for the ‘next billion users’. Its OTA platforms allow travelers to book train tickets, flight tickets, bus tickets, hotels and cabs, while providing travel utility tools and services developed using in-house proprietary algorithms and crowd-sourced information, including train PNR status and confirmation predictions, train seat availability alerts, train running status updates and delay predictions, flight
status updates, bus running status, pricing and availability alerts, deal discovery, destination content, personalized recommendations, instant fare alerts for flights and automated customer support services.

The Company’s bus-focused app, AbhiBus, was the second largest bus-ticketing OTA in India, with a 10% market share in online bus ticket bookings, in Fiscal 2021. The Company has also the third largest flight OTA in India with a market share of 12% in online air bookings in Fiscal 2021. The Company is the second largest OTA in India in terms of total GTV in Fiscal 2021. On a combined basis in Fiscal 2021 the combined GTV was ₹ 26,946.02 million. The revenue from operations have grown at a CAGR of 83.26% between Fiscal 2019 and Fiscal 2021 and were ₹ 403.68 million, ₹ 1,115.98 million and ₹ 1,355.66 million in Fiscals 2019, 2020 and 2021, respectively.

Who is the Management of the Company?

As on the date of this Draft Red Herring Prospectus, the following is the management of the company:
(i) Aloke Bajpai is the co-founder, Chairman, Managing Director and Group CEO of the Company and has been on the Board since June 3, 2006. He holds a bachelor of technology degree in electrical engineering from the Indian Institute of Technology, Kanpur and a master of business administration degree from INSEAD. He worked as a software development engineer and subsequently, as a system and network engineer at Amadeus in France. He launched ixigo.com in India in 2007. Aloke Bajpai is a charter member of The IndUS Entrepreneurs. Under his leadership, the Company has evolved into India’s leading OTA for the ‘next billion users’ with the highest Monthly Active Users across all OTAs
(ii) Rajnish Kumar is the co-founder, Non-Executive Director and Group CPTO of the Company and has been on the Board since April 1, 2010. He holds a bachelor of technology degree in computer science and engineering from the Indian Institute of Technology, Kanpur. He worked as a software development engineer at Amadeus in France. Under his leadership the Company launched ixigo.com in India in 2007 and developed its mobile application, ‘ixigo-trains’, which was the 10th most downloaded travel and navigation app globally, in the first quarter of 2021.

Why is the company raising funds via IPO?

Each of the Selling Shareholders will be entitled to their respective portion of the proceeds from the Offer for Sale in proportion of the Equity Shares offered by the respective Selling Shareholders as part of the Offer for Sale. The Company will not receive any proceeds from the Offer for Sale.

The Company proposes to utilize the Net Proceeds towards funding the following objects-
1. Organic and inorganic growth initiatives.
2. General corporate purposes.

In addition, the Company expects to receive the benefits of listing of the Equity Shares on the Stock Exchanges, including among other things, enhancement of Company’s brand name among existing and potential users and creation of a public market for the Equity Shares in India.

Is there any OFS in the IPO?

The IPO consists of Fresh Issues worth Rs. 750 crore and an Offer for Sale worth Rs. 850 crore by existing shareholders. As part of OFS, Micromax Informatics, SAIF Partners India IV, Alok Bajpai and Rajnish Kumar will sell their stakes.
Financials of the company?
As per the consolidated financial statements, in FY22, after Covid-19, the total revenue of the Company reported the massive growth in its total revenue. The total revenue of the Company increased 178% to Rs. 384 crore as against Rs. 138 crore in the previous financial year. However, the expenses of the Company have also shown a heavy growth of Rs. 198% to Rs. 135 crore as against Rs. 402 crore in the previous financial year. The total Loss Before Tax of the Company was Rs. 18 crore as against Rs. 2 crore profit in the previous financial year. The net Loss After Tax of the Company was Rs. 21 crore as against Rs. 7 crore profit after tax in the previous financial year.

In FY22, the net assets of the Company increased 191% to Rs. 538 crore as against Rs. 185 crore in the previous financial year. The total equity and liabilities of the Company also increased 191% to Rs. 538 crore as against Rs. 185 crore in the previous financial year.

In FY22, the net cash used in operating activities of the Company was Rs. 34 crore as against Rs. 15 crore in the previous financial year. The net used in investing activities of the Company was Rs. 222 crore as against Rs. 10 crore in the previous financial year. The net cash generated from financial activities of the Company was Rs. 257 crore as against Rs. 14 crore in the previous financial year. The net cash and cash equivalents at the end of the year of the Company was Rs. 22 crore as against Rs. 20 crore in the previous financial year.

Risk in The IPO

COVID-19 and Such Events

In March 2020, the World Health Organization declared the outbreak of a novel strain of coronavirus (COVID-19) a pandemic. In an attempt to limit the spread of the virus, government of India and other countries have taken preventive or protective actions and have imposed various restrictions, including emergency declarations at the central, federal, state, and local levels, hotel, school and business closings, quarantines, “shelter at home” orders, restrictions on travel, limitations on social or public gatherings. The novel coronavirus (COVID-19) pandemic and the measures taken by governments to curb its spread have materially and adversely impacted, and are expected to continue to materially and adversely impact, the industry and the business, results of operations, financial condition and cash flows.

Train Ticketing Services Depend on Agreement with IRCTC

The train ticketing services of the Company depend on agreement with IRCTC. The termination of the agreement with IRCTC could preclude the Company from undertaking train ticketing services and could otherwise have a material adverse effect on results of operations, cash flows, financial condition and business prospects of the Company.

Travel Suppliers May Reduce or Eliminate the Commission, Incentive

The Company primarily generate revenue form-
(i) Rail tickets through agent service charges, payment gateway charges and
ixigo assured charges

(ii) Air tickets through airline commissions, convenience charges, cancellation charges, rescheduling charges, ixigo assured charges

(iii) Bus tickets through commissions from bus operators or bus ticket aggregators and government-owned road transport corporation services and convenience charges, which is typically based on the value of bus tickets sold by the Company.

(iv) Hotels through commissions from Booking.com B.V., which is typically based on the volume of hotel-room nights occupied.

(v) Cabs through a fixed commission from ANI Technologies Private Limited.

Some of the travel suppliers may reduce or eliminate the commission, incentive and other compensation they pay to the Company for the sale of tickets and this could adversely affect business of the Company, cash flows and results of operations.

The Company is Expected to Continuously Innovate, Develop and Upgrade its OTA Platforms

The Company is expected to continuously innovate, develop and upgrade its OTA platforms and to expand and diversify the product and service offerings in order to remain competitive and if the roll-out of new products and services, features, improvements and strategies do not meet objectives or customer expectations could adversely impact business and financial condition of the Company.

Failure to Generate and Maintain Accurate Crowd-sourced Information

If the Company is unable to provide customers with the information they are looking for, or if they can find equivalent or better or other services, they may stop or reduce their use of the Company’s platform and traffic on the platform may decline. Any reduction in the number of users of the platform could materially and adversely impact results of operations and financial condition of the Company.