oravel stays pvt ltd Management discussions

A We bear negligible storefront operating expenditure with respect to a small number of hotel and home storefronts, which includes expenditure relating to the provision of housekeeping and cleaning services and insurance costs.

Our revenue recognition methodology is depicted in the chart below.

As at March 31,2021, we hold minority interests in certain non-consolidated joint venture entities that own a total of eight storefronts.

We bear negligible storefront operating expenditure with respect to a small number of hotel and home storefronts, which includes expenditure relating to the provision of housekeeping and cleaning services and insurance costs.

Notes:

(1) GBVfrom hotels and homes is defined as the amounts payable by Customers for storefront bookings, net of cancellation and gross of discounts (such as loyalty points and OYO discounts), through all of our distribution channels including through our OYO mobile application, website, call centers, online travel agents and other offline channels.

(2) GBVfrom listings is defined as the amount of subscription fees paid by Patrons from our listing business to us for listing their storefronts on our platform.

(3) Direct costs comprise storefront operating expenses such as property consumables, food and beverage expenses, electricity and power costs and other direct expenses (such as customer insurance and variable operating expenses).

(4) Please refer to "- Our Key Financial and Operational Performance Indicators - Gross Profit and Adjusted Gross Profit" for a reconciliation of Adjusted Gross Profit to our revenue from contracts with Customers.

Impact of COVID-19 on our Business

The COVID-19 pandemic has resulted in global travel restrictions and a corresponding significant reduction in travel and tourism. While many industries have been adversely impacted, travel and tourism have been disproportionately affected, as governments have implemented travel restrictions and as people have become reluctant to travel irrespective of such restrictions. As a result, our financial results for the last quarter of Fiscal 2020 and the whole of Fiscal 2021 were materially and adversely affected by the COVID-19 pandemic. Our revenue from contracts with Customers declined by 69.9% from ^131,681.52 million in Fiscal 2020 to ?39,616.49 million in Fiscal 2021 and our GBV declined by 66.9% from ?200,883.73 million in Fiscal 2020 to ?66,388.94 million in Fiscal 2021. However, we experienced improved unit economics during this period, driven by certain strategic initiatives that we undertook. Our Adjusted Gross Profit improved from ?12,771.80 million in Fiscal 2020 to ^13,136.78 million in Fiscal 2021 and our Adjusted Gross Profit Margin (being Adjusted Gross Profit as percentage of revenue from contracts with Customers, being ^131,681.52 million in Fiscal 2020 to ?39,616.49 million in Fiscal 2021) improved from 9.7% in Fiscal 2020 to 33.2% in Fiscal 2021, driven by the rationalization of our global portfolio with a focus on profitable supply in our Core Growth Markets and the significant decrease in our storefronts with minimum guarantees or fixed payout commitments from 14.7% as at March 31, 2019 to 0.1% as at March 31, 2021. Further, we believe that our introduction of innovative technology solutions helped us to decrease our costs and drive operating leverage, resulting in a reduction of other expenses from ?48,277.32 million in Fiscal 2020 to ?14,695.00 million in Fiscal 2021, our restated loss for the year from continuing operations from (?110,797.88) million in Fiscal 2020 to (?41,022.80) million in Fiscal 2021, our restated loss for the year from (^131,227.77) million in Fiscal 2020 to (?39,438.44) million in Fiscal 2021 and our Adjusted EBITDA from (?82,772.74) million in Fiscal 2020 to (^17,447.22) million in Fiscal 2021. Please refer to "Our Business—Our Strategy for Adapting to COVID-19’ on page 257 for further details on certain measures that we implemented as part of our COVID-19 response strategy.

The extent of recovery is uncertain and will be largely dependent on the effectiveness of COVID-19 prevention (vaccination and continued social distancing) and treatment and infection rates in the cities and countries in which we operate. The COVID-19 pandemic transformed how society works, connects, and travels, while at the same time creating incredible challenges, particularly for the travel and tourism industry and us. Although the longterm impact of COVID-19 is uncertain, we believe that we have adapted to the changing needs of our Patrons and Customers, while using this opportunity to build a more resilient business. Going forward, as the travel and tourism industry recovers from the impact of COVID-19, we believe that we are well-positioned to capitalize on the recovery and growth of the industry.

Principal Factors Affecting Our Financial Condition and Results of Operations

The following diagram describes certain factors that have had, and we expect will continue to have, a significant effect on our financial condition and results of operations.

Revenue drivers

Number of storefronts

The number of storefronts represents the total number of storefronts that are available for booking on our platform as at a particular date and comprise hotel and home storefronts and listings on our platform. The number of storefronts is a measure of width and reach of our platform, which in turn drives our financial performance. The number and variety of storefronts on our platform is a key value proposition to our Customers. We attract and retain Patrons by offering full-stack technology solutions for all aspects of our Patrons’ mission-critical business operations and providing access to our sizeable Customer base and potential for increased earnings for our Patrons.

We experienced strong growth and increased our number of storefronts by 4.3 times from 5,078 in March 31, 2018 to 21,616 in March 31, 2019, largely due to our rapid expansion in India. The number of storefronts on our platform increased from 21,616 as at March 31, 2019 to 158,176 as at March 31, 2020, driven largely by our acquisition of our Europe vacation homes business and our listings business. Our number of storefronts decreased slightly from 158,176 as at March 31, 2020 to 157,344 as at March 31, 2021, as the number of new storefronts was offset by the number of storefronts that temporarily ceased operations or were not available for booking on our platform as a result of domestic and international travel restrictions imposed due to the COVID-19 pandemic.

GBVper storefront per month

GBV from hotels and homes is defined as the amounts payable by Customers for storefront bookings, net of cancellation and gross of discounts (such as loyalty points and OYO discounts), through all of our distribution channels including through our OYO mobile application, website, call centers, OTAs and other offline channels. GBV from listings is defined as the amount of subscription fees paid by Patrons from our listing business to us for listing their storefronts on our platform.

Our GBV, as depicted in the chart below, increased by 170.9% from ?74,151.78 million in Fiscal 2019 to ?200,883.73 million in Fiscal 2020, driven by the significant growth in the number of storefront bookings as a result of an increase in the number of our storefronts from Fiscal 2019 to Fiscal 2020. Our GBV decreased by 66.9% from ?200,883.73 million in Fiscal 2020 to ?66,388.94 million in Fiscal 2021 as a result of a reduction in the number of storefront bookings, largely due to the impact of the COVID-19 pandemic. Our revenue from contracts with Customers increased by 108.0% from ?63,297.36 in Fiscal 2019 to ^131,681.52 million in Fiscal 2020 and; declined by 69.9% to ?39,616.49 million in Fiscal 2021.

Our GBV per storefront per month for hotels and homes, as depicted in the chart below, decreased from ?458,037 in Fiscal 2019 and ?444,669 in Fiscal 2020 to ?205,870 in Fiscal 2021 for our hotels business and from ?47,926 in Fiscal 2020 to ?35,582 in Fiscal 2021 for our homes business, as a result of a reduction in the number of storefront bookings during the COVID-19 pandemic. We began experiencing the effects of the COVID-19 pandemic during the third quarter of Fiscal 2020, which resulted in a decrease in GBV per storefront per month from Fiscal 2020 to Fiscal 2021.

Subscription fees per storefront

Our subscription fees from each storefront from our listings business is based on a fixed fee that is typically payable annually by our Patrons. An increase in the annual subscription fee amount is a driver of increased GBV from our listings business.

Adjusted Gross Profit and Adjusted Gross Profit Margin drivers

Our Adjusted Gross Profit Margin, being our Adjusted Gross Profit as a percentage of revenue from contracts with Customers, depends on the share of direct demand from our D2C channels versus third party channels, the proportion of storefronts with minimum guarantees or fixed payout commitments from us in their contracts, the proportion of revenue from Patron contracts that generate higher Adjusted Gross Profit Margins and the extent to which Patrons subscribe for paid value-added services from us. The chart below shows our Adjusted Gross Profit and Adjusted Gross Profit Margin during the last three Fiscals. Our Adjusted Gross Profit improved from ?12,771.80 million in Fiscal 2020 to ?13,136.78 million in Fiscal 2021 and our Adjusted Gross Profit Margin (being Adjusted Gross Profit as percentage of revenue from contracts with Customers, being ^131,681.52 million in Fiscal 2020 to ?39,616.49 million in Fiscal 2021) improved from 9.7% in Fiscal 2020 to 33.2% in Fiscal 2021. Our operating expenses reduced to ?27,727.03 million in Fiscal 2021from ?97,377.77 million in Fiscal 2020.

Our D2C channels comprise our OYO mobile application, OYO websites, corporate and travel agent tie-ups, dedicated call centers and physical walk-ins for hotel storefronts, and indirect channels, such as third party OTAs. We generate a significant share of demand through our D2C channels. Our share of direct demand on our platform, measured as a percentage of booked nights through our D2C channels, was 74.5% in Fiscal 2020 and 71.2% in Fiscal 2021 globally and 90.9% in Fiscal 2020 and 94.4% in Fiscal 2021 for India. Our Adjusted Gross Profit Margin is higher for storefronts booked by Customers through our online D2C channels, when compared with storefronts booked by Customers through indirect channels such as third party OTAs, as we are able to charge a higher percentage of revenue share where our contribution from online D2C channels is higher.

An increase in our share of direct demand is primarily driven by an increase in the number of storefronts on our platform, which provides our Customers with a wider variety of accommodations. In addition, our growing Customer loyalty and referral programs also drive significant organic and repeat demand for bookings through our D2C channels.

Proportion of storefronts with minimum guarantee or fixed payout commitments

Prior to Fiscal 2020, we entered into contracts with certain Patrons which included minimum guarantee or fixed payout commitments from us, as we were expanding our platform into newer markets where our value proposition was not yet established. Such commitments were provided by us in order to incentivize Patrons in such markets to join our platform, in order to scale our business quickly in these markets.

From the second half of Fiscal 2020, the number of new contracts that we entered into with minimum guarantees or fixed payout commitments was significantly reduced. We also renegotiated a significant proportion of existing contracts to remove minimum guarantees and fixed payout commitments, which we replaced with simpler revenue sharing arrangements. Our proportion of storefronts with minimum guarantees or fixed payout commitments, as depicted in the chart below, decreased from 14.7% as at March 31, 2019 to 0.1% as at March 31, 2021.

Cost drivers

Our total expenses for the Fiscal 2021, Fiscal 2020, and Fiscal 2019 were ?69,360.75 million, ?228,001.20 million and ?88,094.28 million. Our profitability depends on our ability to maintain a cost-effective platform, primarily driven by effective management of employee benefits expenses and other expenses (which includes marketing and promotion expenses and general and administrative expenses). This is enabled by constant improvements in our Patron and Customer facing technology offerings, as well as through automation and digitization of various internal processes.

Employee benefits expenses

Our employee benefits expenses, as depicted in the chart below, decreased by 63.4% from ?47,652.89 million in Fiscal 2020 to ?17,421.21 million in Fiscal 2021. This was driven by our various cost optimization initiatives, including rationalization of employees, centralization of key functions in our strategy, revenue management, supply acquisition and corporate support teams from a country level to a regional level, divestment and rationalization of non-core businesses and increased operational efficiency as a result of automating certain functions such as Patron and Customer service and support.

Marketing and promotion expenses

Marketing and promotion expenses represent expenses incurred on brand development and acquiring customers/generating demand and comprise advertisement and sales promotion expenses, commission and brokerage expenses paid to travel agents and business development expenses. The following is the table for reconciliation of Marketing and promotion expenses for the years:

Our marketing and promotion expenses, as depicted in the chart below, decreased by 71.1% from ^18,797.11 million in Fiscal 2020 to ?5,426.98 million in Fiscal 2021. Our marketing and promotion expenses as a percentage of our revenue from contracts with Customers (being ^131,681.52 million in Fiscal 2020 to ?39,616.49 million in Fiscal 2021) decreased from 14.3% in Fiscal 2020 to 13.7% in Fiscal 2021, primarily due to our focus on organic growth and our effective digital marketing strategies. Our advertising and sales promotion decreased by 83.0% from ?10,182.05 million in Fiscal 2020 to ?1,729.24 million in Fiscal 2021. We increased Customer engagement through various measures, such as our OYO Wizard loyalty program and our "Invite & Earn" referral program. Our Discover OYO product, a Customer acquisition engine that enables Patrons to offer discounted room rates to new Customers, generates additional revenue for us in the form of increased commissions from Patrons, while providing Patrons with the opportunity to increase visibility of their storefronts to Customers with the aim of driving repeat demand for their storefronts. We intend to continue to monitor our Customer acquisition and retention costs.

General and administrative expenses primarily consist of legal and professional fees, IT infrastructure costs, rent for our offices and warehouse, utilities and travel costs, insurance cost and provisions for expected credit loss. The following is the table for reconciliation of General and administrative expenses for the years:

Our general and administrative expenses, as depicted in the chart below, decreased by 68.6% from ?29,480.21 million in Fiscal 2020 to ?9,268.02 million in Fiscal 2021. Our other expenses decreased by 69.6% from ?48,277.32 million in Fiscal 2020 to ?14,695.00 million in Fiscal 2021. As many of our employees have transitioned to a work-from-home arrangement due to the COVID-19 pandemic, we have rationalized various expenses such as office lease, utilities and travel costs. We achieved further savings by negotiating reductions in rates across various vendor contracts to optimize our technology costs, insurance expenses and other variable costs, and exercising discipline in discretionary expenses.

Impact on our Adjusted EBITDA

As a result of the above factors, our restated loss for the year from continuing operations reduced from (?110,797.88) million in Fiscal 2020 to (?41,022.80) million in Fiscal 2021, our restated loss for the year reduced by 69.9% from ^(131,227.77) million in Fiscal 2020 to ?(39,438.44) million in Fiscal 2021 and our Adjusted

EBITDA improved by 78.9% from ?(82,772.74) million in Fiscal 2020 to ^(17,447.22) million in Fiscal 2021 and our Adjusted EBITDA Margin improved from (62.9)% in Fiscal 2020 to (44.0)% in Fiscal 2021.

Please refer to "-Our Key Financial and Operational Performance Indicators-Gross Profit and Adjusted Gross Profit" for a reconciliation of Adjusted Gross Profit to our revenue from contracts with Customers and to "-Our Key Financial and Operational Performance Indicators-EBITDA and Adjusted EBITDA" for a reconciliation of EBITDA and Adjusted EBITDA to our restated loss for the years indicated.

Our Key Financial and Operational Performance Indicators

The following table provides a snapshot of our key financial and operational performance indicators.

Notes:

(1) Hotel and home storefronts are the number of storefronts available for booking by Customers on our platform as at the relevant date (excluding India-based non-hotel businesses such as wedding venues under our Weddingz business, coworking spaces under our OYO Workspaces business and co-living spaces in India under our OYO Life business). Hotel storefronts are storefronts where we act as principal in the arrangementfor stay services provided to its Customers, while home storefronts are storefronts where we act as an agent in stay services provided to Customers. Listing storefronts are the number of storefronts that we billed subscription fees to during the last month of the relevant period.

(2) GBVfrom hotels and homes is defined as the amounts payable by Customers for storefront bookings, net of cancellation and gross of discounts (such as loyalty points and OYO discounts), through all of our distribution channels including through our OYO mobile application, website, call centers, OTAs and other offline channels. GBVfrom listings is defined as the amount of subscription fees paid by Patrons from our listing business to us for listing their storefronts on our platform. GBVfrom others is defined as the amounts payable by Customers to us for the sale of wedding packages under our Weddingz business, the rental of co-working spaces under our OYO Workspaces business and the rental of co-living spaces under our OYO Life business.

(3) GBV per storefront per month for hotels and homes is calculated by dividing GBVfor hotel or home storefronts for the relevant period, as applicable, by the average number of hotel or home storefronts on the first and last day of the relevant period.

(4) Revenue from contracts with Customers is recognized on a gross basis for hotel storefronts, on a net basis for home storefronts and on a monthly accrual basis for subscription income (which is typically payable on an annual basis) for our listings business. Please refer to "Our Business Model" for details on how we recognize revenue.

(5) Please refer to "—Our Key Financial and Operational Performance Indicators—Gross Profit and Adjusted Gross Profit" for a reconciliation of Adjusted Gross Profit to our revenue from contracts with Customers.

(6) Please refer to "—Our Key Financial and Operational Performance Indicators—EBITDA and Adjusted EBITDA " for a reconciliation of EBITDA and Adjusted EBITDA to our restated loss for the years indicated.

Our business and financial results were materially and adversely affected from the last quarter of Fiscal 2020 through to Fiscal 2021 and the first quarter of Fiscal 2022, as described in "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of COVID-19 on our Business". This Draft Red Herring Prospectus excludes certain key financial and operational performance indicators for certain periods between Fiscal 2019 to Fiscal 2021, as we believe that such data does not provide investors with a meaningful overall picture of our business and results of operations. See "Risk Factors—Risks relating to our Company, our Business and Industry—1. 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 travel industry and our business, results of operations and financial condition. The extent to which the COVID-19 pandemic will impact our business, operations and financial performance is uncertain and cannot be predicted’ on page 52.

Non-GAAP Financial Measures

In addition to our results determined in accordance with Ind AS, we believe the following Non-GAAP measures are useful to investors in evaluating our operating performance. We use the following Non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Non-GAAP financial information, when taken collectively with financial measures prepared in accordance with Ind AS, may be helpful to investors because it provides an additional tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial results with other companies in our industry because it provides consistency and comparability with past financial performance. These non-GAAP measures are supplemental measures of our performance and liquidity that are not required by, or presented in accordance with, Ind AS, Indian GAAP, IFRS or US GAAP. Further, these Non-GAAP measures are not a measurement of our financial performance or liquidity, profitability or cash flows generated by operating, investing or financing activities under Ind AS, Indian GAAP, IFRS or US GAAP.

Non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented

in accordance with Ind AS. Non-GAAP financial information may be different from similarly-titled Non-GAAP measures used by other companies. The principal limitation of these Non-GAAP financial measures is that they exclude significant expenses and income that are required by Ind AS to be recorded in our financial statements, as further detailed below. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these Non- GAAP financial measures. A reconciliation is provided below for each Non-GAAP financial measure to the most directly comparable financial measure prepared in accordance with Ind AS. Investors are encouraged to review the related Ind AS financial measures and the reconciliation of Non-GAAP financial measures to their most directly comparable Ind AS financial measures included below and to not rely on any single financial measure to evaluate our business.

Gross Profit and Adjusted Gross Profit

Adjusted Gross Profit is a non-GAAP financial measure that represents our revenue from contracts with Customers after deducting operating expenses and after giving effect to adjustments to exclude the impact of

(i) the application of the new Ind AS 116 accounting standard on leases and

(ii) transformation expenses, being upfront capital expenditure that we incurred when we entered into contracts with Patrons, which are amortized over the period of our contract with the relevant Patron.

Adjusted Gross Profit Margin is the percentage derived by dividing Adjusted Gross Profit by revenue from contracts with Customers.

We use Adjusted Gross Profit Margin as a key metric in evaluating our operating performance and believe it is a useful measure as any minimum guarantees or fixed payout commitments from us to Patrons for stay services provided to our Customers are directly attributable to our costs of providing such services, and the reclassification of such costs to depreciation and finance expenses a result of the application of the new Ind AS 116 accounting standard on leases does not reflect the true picture of the gross margin that we earn. In addition, we continued to recognize transformation expenses in Fiscal 2021 which relate to the amortization of capital expenditure obligations from certain legacy Patron contracts that we entered into prior to Fiscal 2021. We no longer enter into Patron contracts which contain capital expenditure obligations on our part.

Our Adjusted Gross Profit Margin has improved over the last three Fiscals, primarily due to the significant decrease in the proportion of Patron contracts with minimum guarantees or fixed payout commitments from us, a shift in our focus to Patron contracts that were accretive to our Adjusted Gross Profit Margin and termination of Patron contracts that did not generate healthy Adjusted Gross Profit Margins (including contracts that relate to storefronts in Tier 3 and 4 cities in India) and a high proportion of storefronts booked through our D2C channels compared with our indirect channels for hotel storefronts in our Core Growth Markets. In addition, we shifted our focus to Patron contracts that were accretive to our Adjusted Gross Profit Margin and terminated Patron contracts that did not generate healthy Adjusted Gross Profit Margins, including contracts that relate to storefronts in Tier 3 and 4 cities in India.

The following table reconciles our revenue from contracts with Customers to Gross Profit, Gross Profit Margin, Adjusted Gross Profit and Adjusted Gross Profit Margin for the years indicated.

EBITDA and Adjusted EBITDA

EBITDA is a non-GAAP financial measure that represents our net loss, before depreciation and amortization expense, provision or benefit for income taxes, share based compensation expense, finance cost, other income, gain or loss from discontinued operations, exceptional items and share of profit/(loss) of associates/joint ventures.

Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA after giving effect to adjustments to exclude the impact of the application of the new Ind AS 116 accounting standard on leases and transformation expenses.

We use Adjusted EBITDA and Adjusted EBITDA Margin as key metrics in evaluating our operating performance and believe these are useful measures as it provides a more accurate picture of costs that are directly attributable to our provision of products and services to Patrons and Customers.

Adjusted EBITDA Margin is the percentage derived from dividing Adjusted EBITDA by revenue from contracts with Customers.

Our Adjusted EBITDA Margin has improved from Fiscal 2020 to Fiscal 2021 primarily due to an increase in our Adjusted Gross Profit, a significant decrease in the proportion of Patron contracts with minimum guarantees or fixed payout commitments from us, a shift in our focus to Patron contracts that were accretive to our Adjusted Gross Profit Margin and termination of Patron contracts that did not generate healthy Adjusted Gross Profit Margins (including contracts that relate to storefronts in Tier 3 and 4 cities in India) and our various cost optimization initiatives which resulted in a reduction in our general and administrative expenses by 68.6% from ?29,480.21 million in Fiscal 2020 to ?9,268.02 million in Fiscal 2021 and a reduction in o ur employee benefits expenses by 63.4% from ?47,652.89 million in Fiscal 2020 to ?17,421.21 million in Fiscal 2021. Our restated loss for the year from continuing operations reduced from (?110,797.88) million in Fiscal 2020 to (?41,022.80) million in Fiscal 2021 and our restated loss for the year reduced from (^131,227.77) million in Fiscal 2020 to (?39,438.44) million in Fiscal 2021

The following table reconciles our restated loss with EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin for the years indicated.

Revenue recognition

We primarily earn revenue from our operations. Our revenue from our operations comprises revenue from the sale of accommodation services from hotel storefronts, commission from bookings of vacation homes and listing storefronts, cancellation income, value-added services, sale of tours, packages and events including wedding related services, rental income, food and beverages, subscription income (comprising subscription fees paid by subscribers of our OYO Wizard loyalty program) and other operational revenue.

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration that we expect to receive in exchange for those products or services.

The variable consideration is estimated at contract inception and not recognized until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur.

Judgment is required in determining whether the Group is the principal or agent in transactions with Patrons and Customers. The Group evaluates the presentation of revenue on a gross or net basis based on whether it controls the service provided to the end Customer and is the principal (i.e., "gross"), or the Group arranges for other parties to provide the service to the end Customer and is an agent (i.e., "net").

Revenue is recognized net of any taxes collected from Patrons or Customers, which are remitted to governmental authorities.

Revenue from sale of accommodation services

The Group earns revenue from sales of accommodation services, which consists of revenue from bookings of hotel storefronts.

Revenue from sale of accommodation services is recognized on a gross basis as the Group gains control of stay services before providing them to Customers. The Group considers itself as the principal, as it assumes obligations towards performance of stay services to Customers, including the acceptability of the services, takes a significant amount of risk in the service delivery of the room stays and enjoys a significant degree of latitude in establishing prices for stay services. Revenue from sale of accommodation services is recognized on the basis of used room nights by Customers, on an accrual basis to the extent that it is probable that the economic benefit will flow to the Group and can be reliably measured.

Revenue is recognized net of cancellations, refunds, discounts, incentives and taxes payable by the Group.

Cancellation income related to sale of accommodation services is recognized on cancellation of bookings by Customers.

Revenue from commission from booking

Revenue in the form of commission from booking of vacation homes and listing storefronts is recognized on a net basis, as the Group does not gain control over services in vacation homes and listings before such services are provided to Customers. The Group acts as an agent, and earns commission income, from the sale of storefront bookings of vacation homes and listings. Commission income (net of cancellations) is recognized on completion of storefront bookings by Customers, on accrual basis to the extent that it is probable that the economic benefit will flow to the Group and it can be reliably measured. In these arrangements, the Group does not recognize the gross amount as revenue but only the fee consideration it expects to be entitled to.

Revenue is recognized net of cancellations, refunds, discounts, incentives and taxes payable by the Group.

Revenue from value added services

Value-added services include services in the nature of marketing and data analytics and preferential performance listing which results in enhanced traffic to Patrons. It is recognized on the basis of actual performance to the extent that it is probable that the economic benefit will flow to the Group and it can be reliably measured.

Revenue from rental income

Rental income from leased properties (such as managed workspaces and long stay services) and allied services (being services rendered to Customers as part of leasing managed workspaces) is recognized on a gross basis as the Group gains control before renting such spaces and providing such services to Customers. The Group consider itself as the principal in such arrangements as it assumes obligations to rent such spaces to Customers, takes a significant amount of risk in the delivery of leased working spaces to Customers due to committed rental and investments in improvements to such leased properties and has the discretion to establish rental prices. Revenue from rental income is recognized over time on an accrual basis, to the extent that it is probable that the economic benefit will flow to the Group and can be reliably measured.

Goodwill

Goodwill acquired in a business combination is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in other comprehensive income and accumulated in equity as capital reserve. However, if there is no clear evidence of bargain purchase, the entity recognizes the gain directly in equity as capital reserve, without routing the same through other comprehensive income.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

A cash generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized in restated consolidated statement of profit and loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted through goodwill during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date. These adjustments are called as measurement period adjustments. The measurement period does not exceed one year from the acquisition date.

Intangible assets

Intangible assets are initially measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortization and any accumulated impairment losses.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit or loss when the asset is derecognized.

Amortization on other intangible assets is calculated on straight-line basis using the useful lives, which are as follows:

The amortization method, useful lives and residual values are reviewed at the end of each financial year and prospectively if appropriate.

Share-based payment transactions

Our employees (including senior executives) and board members of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity- settled transactions).

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.

That cost is recognized, together with a corresponding increase in share-based payment reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The restated consolidated summary statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.

No expense is recognized for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

When the terms of an equity-settled award are modified, the minimum expense recognized is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through restated consolidated statement of profit and loss.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

Principal Components of Statement of Profit and Loss Income

Our revenue comprises revenue from operations and other income.

Revenue from operations

Our revenue from operations comprises revenue from the sale of accommodation services, commission from bookings of vacation homes and listings, cancellation income, value-added services, sale of tours, packages and events including wedding related services, rental income, food and beverages, subscription income and other operational revenue.

Revenue from the sale of accommodation services depends on the number of storefronts on our platform and the GBV per storefront on our platform. We generate revenue from cancellation fees when Customers cancel storefront bookings, depending on the cancellation terms and policy applicable to the relevant booking.

Revenue from value added services represents additional revenue generated from sales of add-on services to our Patrons, including services that boost the visibility of their storefronts on our distribution channels and provide competitive insights through data analytics, such as OYO Discover and OTA Powerplay, with the aim of increasing the number of bookings on their storefronts.

Revenue from sale of tours, packages and events including wedding related services represents revenue earned from the sale of tours, packages and weddings events.

We receive rental income from leasing our managed workspaces and co-working spaces to corporate and individual Customers, revenue from the sale of food and beverages at our storefronts and subscription income from paid subscribers of our OYO Wizard loyalty program. We earn other operational revenue from Patrons and Customers primarily through insurance fees and cleaning services.

The following table shows a breakdown of our revenue from contracts with Customers for the years indicated:

Other income

Other income comprises interest from bank deposits, interest income on bond, interest income on income tax refunds, interest income from related parties loans, profit on the sale of current investments, fair value gain on financial instruments at fair value through profit or loss, gain on lease modifications, net profit on sale of property, plant and equipment and net exchange difference, interest income on security deposits and miscellaneous income comprising incentives and subsidies from government authorities and reversals of provisions.

The following table shows a breakdown of our other income for the years indicated:

Expenses

Our major expenses include operating expenses, employee benefits expenses, depreciation and amortization expenses, finance costs and other expenses.

Operating expenses primarily comprise partner cost, property consumables, food expenses, electricity and power costs and other direct costs including amortization of transformation expenses, third-party service provider fees associated with customer support provided by phone, email and chat to our partners and expenses associated with our partner protection programs.

Our employee benefits expenses include salaries, wages and bonuses and share-based payment expenses.

Our depreciation and amortization expenses relate to the depreciation of property, plant and equipment, the depreciation of right of use assets and the amortization of other intangible assets.

Our finance costs comprise interest on loans and interest on committed lease liabilities as per Ind AS 116, other processing fees and bank charges.

Our other expenses are all other expenses, including legal and professional fees, marketing and promotion expenses and commission and brokerages.

Income tax

Income tax comprises current and deferred tax.

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.

Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognized in respect of carried forward tax losses and tax credits.

Results of Operations

The following table sets forth financial data from our restated consolidated statement of profit and loss for Fiscal 2019, 2020 and 2021, the components of which are also expressed as a percentage of revenue from contracts with Customers for such years.

Fiscal 2021 compared to Fiscal 2020 Income

Our revenue from contracts with Customers decreased by 69.9% to ?39,616.49 million in Fiscal 2021 from ^131,681.52 million in Fiscal 2020, primarily due to a decrease in our revenue from sale of accommodation services, value added services and sale of tours, packages and events including wedding related services as a result of the impact of the COVID-19 pandemic across all of our markets.

Our revenue from sale of accommodation services in hotel and homes decreased by 75.3% to ?28,628.82 million in Fiscal 2021 from ^115,908.18 million in Fiscal 2020, primarily due to a decrease in the number of storefronts on our platform as a result of domestic and international travel restrictions imposed due to the COVID-19 pandemic and correspondingly lower demand for our accommodation services.

Our revenue from commissions from bookings of vacation homes and listings increased by 9.8% to ?7,830.58 million in Fiscal 2021 from ?7,133.26 million in Fiscal 2020, primarily due to higher commissions from our Europe homes business.

Our revenue from cancellation income increased by 25.4% to ^1,152.39 million in Fiscal 2021 from ?918.61 million in Fiscal 2020, primarily due to increased cancellations as a result of domestic and international travel restrictions imposed due to the COVID-19 pandemic.

Our revenue from rental income decreased by 55.0% to ?712.50 million in Fiscal 2021 from ?1,584.03 million in Fiscal 2020, primarily due to lower demand for co-working and co-living spaces due to the COVID-19 pandemic.

Our revenue from sale of tour packages and events (including wedding-related services) decreased by 90.5% to ?179.75 million in Fiscal 2021 from ?1,890.12 million in Fiscal 2020, primarily due to the closure of our non - core holiday packages business segment in May 2020.

Our revenue from value added services decreased by 99.9% to ?1.59 million in Fiscal 2021 from ?1,397.14 million in Fiscal 2020, primarily due to a decrease in demand for our value added services arising from lower demand for our accommodation services as a result of the COVID-19 pandemic.

Expenses

Our total expenses decreased by 69.6% to ?69,360.75 million in Fiscal 2021 from ?228,001.20 million in Fiscal 2020 from, primarily due to a decrease in operating expenses, other expenses, employee benefits expenses and depreciation and amortization expenses.

Our operating expenses decreased by 71.5% to ?27,727.03 million in Fiscal 2021 from ?97,377.77 million in Fiscal 2020, primarily due to a decrease in the service component of leases and lease rentals as a result of the streamlining of our operations in our self-operated co-working and co-living spaces businesses due to lower demand, and a decrease in property consumables, loss from bookings and other direct expenses as we scaled back our operations and implemented cost reduction measures as a result of the COVID-19 pandemic.

Our other expenses decreased by 69.6% to ?14,695.00 million in Fiscal 2021 from ? 48,277.32 million in Fiscal 2020, primarily due to a decrease in marketing and promotion expenses as a result of more targeted digital marketing campaigns, increasing our share of bookings from our D2C channels and optimizing our customer acquisition costs, and a decrease in legal and professional fees as a result of centralizing and streamlining our professional services, such as payroll processing, audit services and consultancy spend.

Our employee benefits expenses decreased by 63.4% to ?17,421.21 million in Fiscal 2021 from ?47,652.89 million in Fiscal 2020, primarily due to a decrease in salaries, wages and bonuses as a result of a reduction in our workforce arising from our centralization of key corporate functions, increased automation of customer support functions through the introduction of Yo! Help and Yo! Chat, our focused growth strategy in our Core Growth Markets and our reduction of headcount and closure of non-profitable locations in certain of our Future Growth Markets.

Our depreciation and amortization expenses decreased by 85.6% to ?3,918.09 million in Fiscal 2021 from ?27,281.67 million in Fiscal 2020, primarily due to a decrease in depreciation of right of use assets as a result of a significant decrease in the number of Patron contracts with monthly minimum guarantee payments from us, reduction in our leased office premises and a decrease in the depreciation of property, plant and equipment as a result of the streamlining of our operations in our self-operated co-working and co-living spaces businesses due to lower demand in Fiscal 2020.

Exceptional items

We recorded ?10,010.90 million of exceptional items in Fiscal 2021 as compared to ?16,439.30 million in Fiscal 2020 primarily due to an estimate of uncertainties relating to the COVID-19 pandemic, comprising primarily employee-related severance payments, write-offs of property, plant and equipment and other receivables.

Restated share of (loss)/profit in joint venture

We recorded ?2,549.41 million in our share of loss in joint venture in Fiscal 2021 as compared to ?910.51 million in Fiscal 2020 primarily due to losses incurred by one of our joint ventures engaged in the operation of hotels

Income tax expense/credit

Our income tax expense was ?675.60 million in Fiscal 2021 as compared to our income tax credit of ?420.45 million in Fiscal 2020, primarily due to an increase in current tax expense and a reduction in deferred tax credits.

Restated loss for the year

As a result of the foregoing factors, our restated loss improved by 69.9% to ?39,438.44 million in Fiscal 2021 from ^131,227.77 million in Fiscal 2020.

Fiscal 2020 compared to Fiscal 2019 Income

Our revenue from contracts with Customers increased by 108.0% to ^131,681.52 million in Fiscal 2020 from ?63,297.36 million in Fiscal 2019, primarily due to an increase in our revenue from sale of accommodation services and commission from bookings of vacation homes and listings, and rental income.

Our revenue from sale of accommodation services increased by 91.4% to ^115,908.18 million in Fiscal 2020 from ?60,551.34 million in Fiscal 2019, primarily due to our accelerated expansion in our then-existing markets such as India, China, Southeast Asia, the Middle East and Europe and into new markets such as the United States.

Our revenue from commissions from bookings of vacation homes and listings increased by 2,312.3% to ?7,133.26 million in Fiscal 2020 from ?295.71 million in Fiscal 2019, primarily due to an increase in the number of storefronts from Fiscal 2019 to Fiscal 2020, driven largely by our acquisition of our Europe vacation homes business and our listings business in the first quarter of Fiscal 2020.

Our revenue from cancellation income increased by 269.3% to ?918.61 million in Fiscal 2020 from ?248.73 million in Fiscal 2019, primarily due to increased cancellations as a result of domestic and international travel restrictions.

Our revenue from rental income increased by 1,884.0% to ?1,584.03 million in Fiscal 2020 from ?79.84 million in Fiscal 2019, primarily due to the expansion of our co-living spaces business and the launch of our co-working spaces business.

Our revenue from sales of tours, packages and events including wedding related services increased by 93.9% to ?1,890.12 million in Fiscal 2020 from ?975.02 million in Fiscal 2019, primarily due to the expansion of our holiday packages business and our expansion of the wedding business we acquired in Fiscal 2019.

Our revenue from value added services increased by 265.7% to ?1,397.14 million in Fiscal 2020 from ?382.03 million in Fiscal 2019, primarily due to increased demand for our value added services arising from an increase in revenue from our sale of accommodation services in hotel and homes.

Expenses

Our total expenses increased by 158.8% to ?228,001.20 million in Fiscal 2020 from ?88,094.28 million in Fiscal 2019, primarily due to an increase in operating expenses, other expenses, employee benefits expenses and depreciation and amortization expenses.

Our operating expenses increased by 81.2% to ?97,377.77 million in Fiscal 2020 from ?53,726.28 million in Fiscal 2019, primarily due to an increase in lease rentals as a result of the expansion of our self-operated coworking and co-living spaces businesses, an increase in loss from bookings as a result of additional payments to Patrons pursuant to contracts with minimum guarantees or fixed payout commitments, an increase in other direct expenses driven by an increase our business and transformation expenses as a result of capital expenditure incurred to renovate newly added storefronts on our platform, which was partially offset by a decrease in the service components of leases as a result of the application of the new Ind AS 116 accounting standard on leases which resulted in a portion of the service components of leases being reclassified as depreciation and amortization expenses.

Our other expenses increased by 261.1% to ?48,277.32 million in Fiscal 2020 from ^13,368.18 million in Fiscal 2019, primarily due to an increase in our marketing and promotion expenses as a result of an increase in paid online advertising on search engines and social media to drive traffic to our platform, an increase in our commission and brokerage paid to OTAs as a result of an increase in the number of storefront bookings through OTAs that was driven by our domestic and international expansion and an increase in legal and professional fees as a result of our acquisitions of our Europe homes business and listings business, our expansion into overseas markets and our higher number of temporary contract staff during Fiscal 2020.

Our employee benefits expenses increased by 219.8% to ?47,652.89 million in Fiscal 2020 from ?14,899.34 million in Fiscal 2019, primarily due to an increase in salaries, wages and bonuses as a result of an increase in the size of our workforce to support our global expansion efforts, as well as an increase in related staff welfare expenses.

Our depreciation and amortization expenses increased by 446.9% to ?27,281.67 million in Fiscal 2020 from ?4,988.82 million in Fiscal 2019, primarily due to an increase in depreciation of property, plant and equipment and an increase in depreciation of right of use assets as a result of the application of the new Ind AS 116 accounting standard on leases which resulted in the rental cost of storefronts and office leases being reclassified as depreciation and amortization expenses.

Exceptional items

We recorded ?16,439.30 million of exceptional items in Fiscal 2020, primarily due to restructuring costs of ?4,074.95 million arising from the streamlining of our operations in our self-operated co-working and co-living spaces businesses due to our change in strategy by moving from a minimum guarantee and fixed payment commitment model to a revenue sharing model and an estimate of uncertainties relating to the COVID-19 pandemic of ?12,364.35 million, comprising employee-related severance payments, the termination of leases and other contracts, write-offs of inventory, trade receivables and other assets and other related costs. We did not record any exceptional items in Fiscal 2019.

Restated share of (loss)/profit in joint venture

We recorded ^910.51 million in our share of loss in joint venture in Fiscal 2020 as compared to ?5.00 million in our share of profit in joint venture in Fiscal 2019 due to new joint ventures that we entered into in United Kingdom and India relating to our hotel segment that incurred losses as a result of the COVID-19 pandemic.

Income tax expense/credit

Our income tax credit was ?420.45 million in Fiscal 2020 as compared to income tax expense of ?38.34 million in Fiscal 2019, primarily due to an increase in deferred tax of ?474.63 million for one of our subsidiaries.

Restated loss for the year

As a result of the foregoing factors, our restated loss increased by 455.0% to ^131,227.77 million in Fiscal 2020 from ?23,645.32 million in Fiscal 2019.

Liquidity and Capital Resources

Overview

Historically, our primary liquidity requirements have been to finance our working capital needs for our operations. We have met these requirements through cash flows from operations, equity infusions from shareholders and borrowings. As at March 31, 2021, we had ^21,071.02 million in cash and cash equivalents, ?6,916.44 million in other bank balances other than cash and cash equivalents and ?1,420.07 million in other financial assets.

We believe that, after taking into account the expected cash to be generated from operations, our borrowings and the proceeds from the Offer, we will have sufficient liquidity for our present requirements and anticipated requirements for capital expenditure and working capital for the next 12 months.

Cash Flows

The table below summarizes the statement of cash flows, as per our restated consolidated cash flow statements, for the years indicated:

Net Cash Used in Operating Activities

Our net cash used in operating activities for Fiscal 2021 was ?24,326.33 million, while our operating loss before working capital changes was ?20,445.00 million. We had negative cash flows in Fiscal 2021, primarily due to operating losses and on account of additional working capital requirements that were primarily attributable to a decrease in trade payables of ?13,910.15 million, decrease in other non-financial liabilities of ?855.13 million, and decrease in other financial liabilities of ?656.14 million, which was partially offset by a decrease in trade receivables of ?4,417.24 million, a decrease in other non-financial assets of ?3,523.52 million and a decrease in other financial assets of ?4,178.54 million.

Our net cash used in operating activities for Fiscal 2020 was ?67,650.79 million, while our operating loss before working capital changes was ?67,598.61 million. We had negative cash flows in Fiscal 2020, primarily due to operating losses and on account of additional working capital requirements that were primarily attributable to an increase in other financial assets of ?7,580.16 million, an increase in trade receivables of ?4,688.16 million and an increase in other non-financial assets of ?4,436.65 million, which was partially offset by an increase in trade payables of ?14,147.90 million and an increase in other non-financial liabilities of ?3,112.90 million.

Our net cash used in operating activities for Fiscal 2019 was ?20,006.98 million, while our operating loss before working capital changes was ?18,912.58 million. We had negative cash flows in Fiscal 2019, primarily due to operating losses and on account of additional working capital requirements that were primarily attributable to an increase in trade payables of ^5,211.89 million and an increase in other financial liabilities of ?2,052.15 million, which was partially offset by an increase in other non-financial assets of ?6,395.14 million.

Net Cash (Used in) /From Investing Activities

Our net cash from investing activities for Fiscal 2021 was ?17,056.71 million, which primarily consisted of proceeds from the sale of investments of ?85,044.80 million and proceeds from fixed deposits of ?6,979.97 million. This was partially offset by payments for the purchase of investments of ?71,413.86 million.

Our net cash used in investing activities for Fiscal 2020 was ?46,828.24 million, which primarily consisted of payments for the purchase of investments of ?56,942.98 million and the acquisition of subsidiaries, net of cash acquired of ?33,148.56 million. This was partially offset by proceeds from the sale of investments of ?72,862.19 million.

Our net cash used in investing activities for Fiscal 2019 was ?25,693.62 million, which primarily consisted of payments for the purchase of investments of ?64,749.12 million and property, plant and equipment (including intangibles, capital advance and capital work in progress) of ?5,357.66 million. This was partially offset by proceeds from the sale of investments of ?49,408.30 million.

Net Cash (Used in) / From Financing Activities

Our net cash used in financing activities for Fiscal 2021 was ?4,771.19 million and primarily included proceeds from long-term borrowings of ?5,662.55 million and proceeds from security premium on issuance of share capital of ?609.24 million, partially offset by payment of interest expense of ?5,285.26 million and principal repayment of lease liabilities of ?3,733.50 million.

Our net cash from financing activities for Fiscal 2020 was ?103,853.10 million and primarily included proceeds from security premium on issuance of share capital of ?105,538.93 million and proceeds of long-term borrowings of ?26,512.89 million, partially offset by a principal repayment of lease liabilities of ?23,979.64 million.

Our net cash from financing activities for Fiscal 2019 was ?90,746.03 million and primarily included proceeds from security premium on issuance of share capital of ?34,092.39 million and proceeds from the issue of shares to non-controlling shareholders of ^31,811.05 million, partially offset by a principal repayment of lease liabilities of ?3,810.63 million.

Contractual Obligations

The table below sets forth our contractual obligations with definitive payment terms as at March 31, 2021. These obligations primarily relate to our borrowings and trade payables.

Contingent Liabilities

The following table and notes below sets forth the principal components of our contingent liabilities as per Ind As 37 - Provisions, Contingent Liabilities and Contingent Assets as at March 31, 2019, March 31, 2020 and March 31, 2021 as derived from Restated Consolidated Financial Information.

As at March 31, 2021, claims against us that have not been acknowledged as debt primarily relate to two tax cases on appeal and a tax proceeding against us. We believe that the ultimate outcome of these proceedings will not have a significant impact on our financial position.

As at March 31, 2021, bank guarantees amounting to ?1,542.67 million have been provided by OYO Vacation Homes to one of our OTA partners for safety of trip money of Customers.

Cash Outflow for Capital Expenditures

Our historical capital expenditures were primarily on property, plant and equipment due to our accelerated geographic expansion and entry into new markets in Fiscal 2020. We expect our future capital expenditures to comprise primarily IT assets to be used by our employees. In Fiscal 2019, 2020 and 2021, our purchase of property, plant and equipment (including intangibles, capital advances and capital work in progress) were ?5,357.66 million, ?9,479.90 million and ^911.14 million, respectively.

Off-Balance Sheet Arrangements

As at March 31, 2021, we do not have any off-balance sheet arrangements, derivative instruments or other relationships with other entities that would have been established for the purpose of facilitating off-balance sheet arrangements

Related Party Transactions

We enter into various transactions with related parties. For further information see " Other Financial Information— Related Party Transactions’’ on page 489 of this Draft Red Herring Prospectus.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks in the ordinary course of our business. Market risk is the risk of loss of future earnings to fair value or to future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rate, foreign currency exchange rates or other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments, foreign currency receivables and payables and borrowings. Our market risks include interest rate risk, currency risk, credit risk and liquidity risk.

Interest Rate Risk

Interest rate risk primarily arises from floating rate borrowing involving revolving and other line of credit. Our investments are primarily short-term investments, which do not expose us to significant interest rate risk. Certain borrowings are also transacted at fixed interest rates.

Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in exchange rates. Our exposure to the risk of changes in exchange rates relates primarily to our operations and our net investments in foreign subsidiaries.

The exchange rate risk primarily arises from assets and liabilities denominated in currencies other than the functional currency of the respective entities and foreign currency forecasted revenue and cash flows. A significant portion of our revenue is in Indian Rupees, Chinese Yuan, Euro, Singapore Dollars, Malaysian Ringgit and Japanese Yen.

Credit Risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. To manage this, we periodically assess the financial reliability of our counterparties (primarily our Patrons), taking into account the financial condition, current economic trends, analysis of historical bad debt and aging of account receivables. Individual risk limits are set accordingly. No single customer or counterparty accounted for more than 10% of our account receivables as at March 31, 2019, March 31, 2020 or March 31, 2021, or revenue for Fiscal 2019, Fiscal 2020 or Fiscal 2021. There is no significant concentration of credit risk. As at March 31, 2021, we had outstanding trade receivables of ^1,011.42 million.

We have established an allowance for impairment that represents our expected credit losses in respect of trade and other receivables. We use a simplified approach for the purposes of computing expected credit loss for trade receivables and 12 months expected credit loss for other receivables. An impairment analysis is performed at each reporting date on an individual basis for major counterparties.

Liquidity Risk

Liquidity risk is defined as the risk that we will not be able to settle or meet our obligations on time or at a reasonable price. Our corporate treasury department is responsible for liquidity and funding as well as settlement management. In addition, processes and policies related to such risk are overseen by senior management. Management monitors our net liquidity position through rolling forecasts on the basis of expected cash flows. As at March 31, 2021, cash and cash equivalents are held with major banks and other financial institutions.

Significant Economic Changes

Other than as described in this Draft Red Herring Prospectus, to the knowledge of our management, there are no other significant economic changes that materially affected or are likely to affect income from continuing operations.

Unusual or Infrequent Events of Transactions

Except as described in this Draft Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as "unusual" or "infrequent".

Known Trends or Uncertainties

Our business has been affected and we expect will continue to be affected by the trends identified above in the heading titled "Principal Factors Affecting Our Financial Condition and Results of Operations" and the uncertainties described in the section titled "Risk Factors’’ beginning on page 52. To our knowledge, except as described or anticipated in this Draft Red Herring Prospectus, there are no known factors which have had or which we expect will have a material adverse impact on our sales, revenues or income from continuing operations.

Future Relationship Between Cost and Income

Other than as described elsewhere in this Draft Red Herring Prospectus, including disclosure regarding the impact of COVID-19 on our operations, to the knowledge of our management, there are no known factors that might affect the future relationship between costs and revenues.

See "Risk Factors—Risks relating to our Company, our business and industry—1. The novel coronavirus (COVID- 19) pandemic and the measures taken by the government to curb its spread has materially and adversely impacted and may continue to materially and adversely impact our business, results of operations and financial condition. The extent to which the COVID-19 pandemic will impact our business, operations and financial performance is uncertain and cannot be predicted" for the impact of risks relating to the COVID-19 outbreak on our business, operations and financial condition on page 52.

Seasonality

In general, our business fluctuates with the seasons, reflecting the underlying seasonal trends of our Patrons over the course of a calendar year. The seasonality for our business varies by segment and geography. Our Customers include both business and leisure travelers. Business travelers are less affected by seasonality and storefronts booked by business travelers tend to be stable throughout the year across all markets in which we operate, while demand from tourists tends to fluctuate by season. Our business is subject to seasonal fluctuations in demand, with business at some storefronts subject to greater fluctuations depending on location.

The degree of seasonality in our hotel business varies by market. In India, one of our Core Growth Markets, we experience a higher number of booked nights in the first quarter (namely May and June) and third quarter (namely November and December) of the year than in the second and fourth quarters, which aligns with the peak travel season during the summer and winter holidays and wedding seasons. Similarly, the Southeast Asian markets of Indonesia and Malaysia also experience peak demand from May to September, in line with the Eid festival, and from November to December during winter vacations. During the monsoon season, we tend to experience lower customer traffic.

On the other hand, our hotels in Europe and the United States experience a higher number of booked nights in the second and fourth quarters of the year, during the summer months. Demand during the third and fourth quarters tend to spike around the Christmas and New Year holidays. Our European homes business, which primarily caters to demand from Europe, sees higher demand during the summer months of July and August and lower demand in March and November. However, in our homes business, we recognize revenue at the time of booking, and therefore, the booking window also has a significant impact on the degree of seasonal fluctuations in our reported revenue.

In Fiscal 2020 and Fiscal 2021, historical patterns of seasonality were overwhelmed by travel restrictions and changing travel preferences as a result of the COVID-19 pandemic. For example, we have seen the booking window contract significantly in our European homes business, leading to a change in the months in which we recognize the revenue generated from such bookings. Similarly, our revenue from our hotel business, particularly in India and Southeast Asia, contracted due to prolonged government-imposed lockdowns which restricted travel. We expect this impact on seasonality to continue as long as COVID-19 continues to impact domestic and international travel patterns.

Significant Developments after March 31, 2021 that may affect our future results of operations

Except as stated below and in this Draft Red Herring Prospectus (including in the sections titled "History and Certain Corporate Matters" and "Capital Structure" beginning on pages 271 and 130, respectively), to our knowledge, no circumstances have arisen since the date of the Restated Consolidated Financial Information as disclosed in this Draft Red Herring Prospectus which materially and adversely affected or are likely to affect our operations or profitability, or the value of our assets or our ability to pay our liabilities within the next 12 months.

TLB Credit Facility

Our TLB Co-borrower Subsidiaries borrowed U.S.$660.00 million under the TLB pursuant to TLB Credit Agreement. The TLB has been guaranteed by our Company and certain of our Subsidiaries. The purposes for which the TLB loan amount was utilized included repayment of existing debt of the TLB Co-borrower Subsidiaries, funding of the cash collateral account established OYO Netherlands for the benefit of the TLB lenders under the terms of the TLB Credit Agreement, payment of TLB related transaction expenses and general corporate purposes. For further information on the terms and conditions of the TLB, see "Financial Indebtedness" on page 491.