Introduction
In the accompanying analysis of financial information, we sometimes use
information derived from consolidated unaudited financial data but not presented
in our financial statements prepared in accordance with
measures and the reconciliations to their most directly comparable GAAP financial measures. Certain columns and rows within
the tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers. Discussions throughout this Management Discussion & Analysis ("MD&A") are based on continuing operations unless otherwise noted. The Management Discussion and Analysis should be read in conjunction with the unaudited consolidated condensed financial statements and notes to the unaudited consolidated condensed financial statements.
Forward-Looking Statements
The Company makes forward-looking statements in Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report based on the beliefs and assumptions of our management and on information currently available to us. This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included in this report, including, without limitation, statements regarding our financial position, business strategy and other plans and objectives for our future operations, are forward-looking statements. These statements include declarations regarding our management's beliefs and current expectations. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could", "intend," "consider," "expect," "plan," "anticipate," "believe," "estimate," "predict" or "continue" or the negative of such terms or other comparable terminology. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Our business has been undergoing substantial change, which has magnified such uncertainties. Readers should bear these factors in mind when considering forward-looking statements and should not place undue reliance on such statements. Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those suggested by such statements.
Any number of risks and uncertainties could cause actual results to differ
materially from those we express in our forward-looking statements, including
the risks and uncertainties we describe below and other factors we describe from
time to time in our periodic filings with the
· the adequacy of our financial resources, including our sources of liquidity to
fund business development activities and pursue acquisition opportunities;
· our ability to find, negotiate and close acquisition opportunities at
appropriate risk-adjusted returns and market rates;
· our ability to extend, where needed maturities on existing notes;
· our ability to raise equity capital at the right market terms;
· the initiation of new legal proceedings;
· our ability to effectively manage our regulatory and contractual compliance
obligations;
· our ability to contain and reduce our operating costs;
· the loss of the services of our directors and officers and senior managers;
· uncertainty related to general economic and market conditions, travel and
hospitality market conditions;
· uncertainty related to our ability to integrate the operations of PRAMA, a 51%
equity interest subsidiary to our eCommerce Aggregator business;
· uncertainty related to our ability to conduct future acquisitions to gain
economies of scale and to leverage travel network synergistic benefits;
· credit losses sustained in the event of a failure or lack of insurance coverage
from the
balances maintained in
· uncertainty related to our reserves, valuations, provisions and anticipated
realization of assets.
Further information on the risks specific to our business is detailed within this report, including under "Risk Factors." Forward-looking statements speak only as of the date they were made, and we disclaim any obligation to update or revise forward-looking statements whether because of new information, future events or otherwise.
28 Overview
The Company is an eCommerce aggregator and a hospitality management company. An
aggregator model is a form of eCommerce whereby our website, www.tripborn.com
aggregates, information on various travel and hospitality vendors and presents
them on a single platform, to ease, facilitate, coordinate and effectuate
consumer travel and hospitality needs. The Hospitality segment is an Indian
based operator of 20 hotel properties in 16 cities with 949 keys under 7 brands
as of
The eCommerce aggregator business functions as a Last Mile Commerce and
Connectivity aggregator that delivers product and services to offline consumers
using a service agent network in
The hospitality business is comprised of our 51% equity interest in our
subsidiary, PRAMA, which was acquired on
PRAMA was acquired not only for its asset-light hotel property management business, but also for the expectation that we plan to deliver organic growth and synergies through combining the PRAMA portfolio with the eCommerce Aggregator platform to increase traffic in and capture margin in both segments. In addition, we pursue acquisition targets, for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination to fuel scale and growth within the broad hospitality sector.
eCommerce Aggregator business overview
We have built, advanced and secure, service-oriented technology platforms, that
integrate our sales, customer service and fulfillment operations. Our website is
hosted in the cloud and is used by our B2B customers or service agents to enable
them to sell our full suite of online travel services to their customers. Our
technology platforms are scalable and can be augmented to handle increased
traffic and complexity of products with limited additional investment, an
example of which is the high traffic generated by promotional rates offered
simultaneously by multiple travel operators and suppliers. Our website
facilitates the requirements of the growing Indian middle-class travel market,
which is characterized by lower rates of internet penetration and digital
technology, when compared to more developed countries. We have a network of
approximately 10,200 registered agents across over 200 cities in
We have designed our customer facing websites to be user-friendly to our B2B
customer, providing our customers with extensive low-price options and
alternative routings. We continuously make improvements to our online booking
platforms to enhance the user experience by focusing on automation. Our
cloud-based platform has been designed to link to our multiple suppliers'
systems either through "direct connects" or a global distribution system
("GDS"), we use both Amadeus and Galileo, and are capable of delivering
real-time availability and pricing information for multiple options
simultaneously. Our platform is hosted by a cloud-based IBM service, which
provides a high degree of reliability, security and scalability and helps us to
maintain adequate capacity. Since commencing operations as an online travel
agent in
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eCommerce Aggregator operating metrics
In evaluating our eCommerce Aggregator business, we use operating metrics, including gross bookings and revenue margin. Gross bookings are a measure of the total dollar volume of transactions that we process and is used by us to measure our scale and growth. We calculate revenue margin as revenue as a percentage of gross bookings.
Quarter ended June 30 2019 2018 Gross Bookings1*$15,042,550 $13,720,529 Net revenues$132,120 $95,640 Gross Bookings 0.88% 0.70% Margin2*
1* Gross bookings represent the total retail value of transactions booked through us, generally including taxes, fees and other charges, and are generally reduced for cancellations and refunds. Gross bookings differ from the Company's net revenues, which reflect the revenue earned by the Company.
2* Gross bookings margin is defined as net revenues as a percentage of gross bookings.
The increase in gross bookings is driven primarily by increases in incentives, fees, penalty income, and surcharges paid by our service agent customers. The revenue margin increased quarter over quarter by approximately 18 basis points, due to increased margin from suppliers in our offerings.
Hospitality business overview
Hospitality trends and opportunities
The Indian travel and hospitality segment is highly fragmented, with attention
focused on a handful of higher end luxury brands. There has been a dearth of
branded hotel chains catering to mass segments, where demand is primarily driven
by approximately 650 million young travelers aged between 24 and 35, keen to
travel, enabled by higher disposable income and improved transport options. With
changing times, the young travelers have created demand in
In a country where access to local information and knowledge is rarely available
in an online, social media driven environment, hospitality sales channels have
relied on offline distribution channels, principally word-of-mouth, print,
radio, television and travel agent marketing. Given the ever-growing list of
options available today in
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Hospitality business overview
We look at the number of keys (available rooms), number of properties by brand and the number of cities as a measure of our geographical reach. We plan to present revenue per available room ("RevPar"), average daily rate ("ADR") and average occupancy ("Occupancy") in future quarterly and annual reports. We believe RevPAR, which we calculate by dividing room sales for comparable properties by room nights available for the period, measures the period-over-period change in room revenues for comparable properties. RevPAR may not be comparable to similarly titled measures, such as revenues, and should not be viewed as necessarily correlating with our fee revenue. Occupancy, which we calculate by dividing occupied rooms by total rooms available, measures the utilization of a property's available capacity. ADR, which we calculate by dividing property room revenue by total rooms sold, measures average room price and is useful in assessing pricing levels. We plan to measure our performance on a constant Indian Rupee basis and therefore US Dollar translations may experience currency fluctuations which do not impact underlying local performance. We do not plan to calculate constant dollar statistics, for example, by applying exchange rates for the current period to the prior comparable period. We define our comparable properties as our properties that were open and operating under one of our brands since the beginning of the last full calendar year and have not, in either the current or previous year: (i) undergone significant room or public space renovations or expansions, (ii) been converted between our hotel brands, (iii) sustained substantial property damage or business interruption; or (iv) changed contractual terms.
Given the transaction occurred on
We earn base management fees and in certain cases incentive management fees from the properties that we manage. In most markets, base management typically consist of a percentage of property-level revenue, while incentive management fees typically consist of a percentage of net profit, adjusted for certain contractually agreed items.
We remain focused on doing the things that we do well; that is, selling rooms, taking care of our guests, and making sure we control costs. We provide our guests new and memorable experiences through our portfolio of brands, innovative technology, and a focus on employee training to deliver a consistent customer experience. Our brands remain strong due to our skilled management teams, dedicated associates, superior guest service with an emphasis on guest and associate satisfaction, and desirable property amenities within the budget price range.
We, along with property owners, continue to invest in our brands by means of new, refreshed, and reinvented properties, new room and public space designs, and enhanced amenities, technology offerings, and guest experiences. We address, through various means, hotels in our system that do not meet our standards. We continue to enhance the appeal of our proprietary, information-rich, and easy-to-use websites, and of our associated mobile smartphone applications, through functionality and service improvements.
OUR STRATEGY
We believe that the fast-growing travel market in in
· Expand our hotels and packages offerings. Our hotels and packages offering
generally yields higher margins than our air, rail ticketing and money transfer offerings, and we intend to increase this as part of the sales mix. InApril 2019 , we acquired PRAMA, which operates a budget hotel portfolio acrossIndia . We plan to increase the number of hotels, to increase captive demand, utilizing our last-mile-distribution network, by adopting new technologies, and a deep customer focus to create stronger brand loyalty and customer engagement experience. Our objective is to enable more hotel suppliers to be seamlessly connected to our platform with the latest technology methods which include direct connects, channel managers and direct integrations with various aggregators. We believe that we can increase our total number of transactions as internet penetration inIndia increases, by strengthening our distribution network, cross selling other products and service including vacation packages;
· Expand our service and product portfolio to enhance cross-selling
opportunities. We believe that expanding our service and product offerings (i.e. Money transfer and Payment services) is an important means of customer acquisition as the diversity of our services and products will improve our offerings to customers, attract more customers to our platform and which allow us to cross sell higher-margin service;
· Enhance our service platforms by investing in technology. We intend to continue
to invest in technology to enhance the features of our services and alignment of our platform and technology assets with business objectives which can improve visibility into business operation and profitability, ensure transparency for optimal service delivery, reducing cost, offer new services to customers, and to create efficiency across our businesses by enabling control of every transactions; and
· Pursue selective strategic partnerships and acquisitions. In addition to
organic growth, we will pursue strategic partnerships and targeted acquisitions
that complement our service offerings, strengthen or establish our presence, or
to gain access to technology and building brands.
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CONSOLIDATED RESULTS OF OPERATIONS
Acquisition of PRAMA
The acquisition of PRAMA on
The pro forma combined revenues and net loss before income taxes, for the
combined entity, as though the acquisition of PRAMA had occurred on
The eCommerce Aggregator segment results improved but compared to the PRAMA acquisition did not have a meaningful impact on the results of the Company. The Company does not believe that presenting pro forma information for PRAMA, over and above what is disclosed in the segmental information above, would be meaningful at this time. Quarter ended Quarter ended June 30, June 30, 2019 2018 Net revenues$ 1,825,858 $ 95,640 Cost of revenues and expenses (2,270,134 ) (313,699 ) Loss from operations (444,276 ) (218,059 ) Other expenses, net (118,479 ) (41,100 ) Net loss$ (562,755 ) $ (259,159 ) Net loss attributable to noncontrolling interests$ (135,491 ) $ - Net loss attributable to TripBorn, Inc.$ (427,264 ) $ (259,159 ) Net Revenues
Net revenues increased by
Cost of Revenues and Other Operating Expenses
Cost of revenues and Other operating expenses increased by
Loss from Operations
Loss from operations increased by
32 Other Expenses, Net
Other expenses, net increased by
Net Loss
Net loss increased by
CONSOLIDATED LIQUIDITY AND CAPITAL RESOURCES
As of
Cash Flows: The following table is a summary of our Consolidated Statements of Cash Flows: Three months ended June 30, June 30, 2019 2018 Cash Provided by (Used in): Operating activities$ 112,803 $ (340,244 ) Investing activities$ (558,958 ) $ (396 ) Financing activities$ 548,595 $ (10,518 )
Operating Activities: Net cash provided by operations was
Investing Activities: The change in investing activities related to the net cash
used in acquiring the 51% equity interest in PRAMA of
Financing Activities: During the three months ended
We will require additional capital to continue to fund our operations and will look to raise funds through public and private offerings of our securities. Our liquidity needs are largely impacted by the acquisitions we complete, and our efforts to manage our sales, general and administrative funds, offset by planned growth in cash generation for operating activities and the realization of working capital improvements. There are no assurances that these steps will generate sufficient cash flow from operations or that we will be able to obtain sufficient financing necessary to support our working capital requirements. We can also give no assurance that additional capital financing will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available, we may not be able to continue our operations or execute our business plan.
33 BUSINESS SEGMENTS
The following discussion presents an analysis of operating results of our
reportable nosiness segments: eCommerce Aggregator and Hospitality, for the
first quarter ended
eCOMMERCE AGGREGATOR RESULTS OF OPERATIONS
Quarter ended Quarter ended June 30, June 30, 2019 2018 Net revenues$ 132,120 $ 95,640 Cost of revenues and Other operating expenses (372,016 ) (313,699 ) Loss from operations (239,896 ) (218,059 ) Other expenses, net (46,347 ) (41,100 ) Net loss$ (286,243 ) $ (259,159 ) Segment net loss attributable to TripBorn Inc.$ (286,243 ) $ (259,159 ) Segment net loss attributable to noncontrolling interests $ - $ - Net Revenues
Net revenues increased by
Cost of Revenues and Other Operating Expenses
Cost of revenues and Other operating expenses increased by
Loss from Operations
Loss from operations increased by
Other Expenses, net
Other expenses, net increased by
Net Loss
Net loss increased by
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HOSPITALITY RESULTS OF OPERATIONS
The quarter ended
Quarter ended Quarter ended June 30, June 30, 2019 2018 Net revenues$ 1,693,738 $ - Cost of revenues and Other operating expenses (1,898,118 ) - Loss from operations (204,380 ) - Other expense, net (72,132 ) - Net loss$ (276,512 ) $ - Segment net loss attributable to TripBorn Inc.$ (141,021 ) $ - Segment net loss attributable to noncontrolling interests$ (135,491 ) $ -
Changes in "Net Revenues", "Cost of revenues and Other Operating Expenses",
"Gross Profit", "Loss from Operations", "Other Expenses, Net", and "Net Loss"
are wholly attributable to the purchase of PRAMA on
OFF BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
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