Money & Banking

With Tata Capital’s travel, forex biz in the kitty, Thomas Cook eyes $100 m in extra volumes

Purvita Chatterjee Mumbai | Updated on January 09, 2018 Published on November 13, 2017

After completing the acquisition of Tata Capital’s travel and forex business, Thomas Cook India expects $100 million of extra volumes to come into its fold.

During an analysts call, Debasis Nandy, President & CFO, Thomas Cook, said: “Foreign exchange is a large business for the group and is an engine of growth. We completed the acquisition of Tata Capital’s forex business last month and expect $100 million of extra volumes to come in, which would also include business from non Tata Group companies.” Currently, about 60 per cent of Tata Capital’s travel and forex business comes from group companies.

With operations across 25 locals, Thomas Cook expects the newly added forex business to grow its retail footprint and distribution reach. It also envisages an omni channel strategy for the business going forward.

“Corporate travel alone is expected to give us incremental volumes of $40 million from the forex business. The benefit in volumes (from the acquisition) will also help us benefit when we negotiate for better rates from airlines,” Nandy said.

At present, the Ebita margin in the forex business is 40-42 per cent, with products like prepaid forex cards enjoying higher margins. However, during the second quarter, Thomas Cook did see its Ebita margins in travel getting impacted by GST in the corporate and MICE segments.

“There was a slowdown in corporate travel as there was confusion regarding GST and its classification, which brought down the working capital requirements significantly during the quarter,” said Madhavan Menon, CMD of Thomas Cook. In fact, the second quarter is also a traditionally lean period for the travel business.

Thomas Cook is also seeking to improve its margins in the acquired business of Sterling Holiday Resorts. While it has reduced its losses, there has been a slowdown this quarter in the vacation ownership business. It has now completed refurbishing the resorts and will be relaunching the brand in the third quarter. “By next year we should have better margins for Sterling Resorts and should be headed towards break-even; and we have never given discounted prices. There will be an ATL (above the line) and digital campaign and we are seeking substantial growth in the coming quarters,” said Nandy.

Thomas Cook hired Accenture last year for a cost optimisation exercise, and is now extending it for sales optimisation.

Published on November 13, 2017
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