Mahesh Iyer, CEO & Executive Director, Thomas Cook (India) Limited (TCIL), spoke about restructuring at TCIL, acquisition of Kuoni and future acquisition plans during an interview with Swati Khandelwal, Associate Editor, Zee Business. Edited Excerpts: 

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Q: There has been a lot of nervousness about the debt level of your parent company. Will this nervousness have an impact on Indian operations, if yes, then to which level?
A: Not at all as Fairfax took over the Indian operations of Thomas Cook in 2012 and since then the Indian operations of our company is directly controlled by the Fairfax group. But the brand license agreement enables us to use their, Thomas Cook's, brand name. Apart from this, we don't have any association with Thomas Cook.

Not at all as Fairfax took over the Indian operations of Thomas Cook in 2012, which means that it has a direct control over the Indian operations of our company. But the brand license agreement enables us to use their, Thomas Cook's, brand name in our business. Apart from this, we don't have any association with Thomas Cook.
 
Q: The company has gone through the restructuring in recent past. What’s the current status and the kind of structure that we will be able to see by FY19?
A: We had certain acquisitions of 2013, when Fairfax was invested in Thomas Cook India, the only investment vehicle available, and hence we had certain portfolio investments sitting in our books. We are carving out Quess, one of our portfolio investments that have grown and gone public, as part of our restructuring exercise. In the process, we are giving direct ownership to the shareholders of Thomas Cook that shareholding of QUess. This is the restructuring that we are going through at present. 

No changes are being introduced in the business of TCIL, which is solely into travel and tourism. In fact, in H1FY19, we have seen our travel business growing at about 17% and passenger growth has been around 12%. Our forward bookings for the coming quarter is higher by about 20% and this is a reason that we are excited to see what the future is holding for us. 

The sector is showing a buoyancy because of two reasons and they are:
i) The consumption story in India is very strong.
ii) India is moving from a savings economy to a spending economy, where they want everything now and here and the millennials are driving this strive for us. We believe a huge potential and feel that the growth in coming years will range between 12-15% in the industry overall and we will be topping in that growth. 

Q: You have acquired destination management business from Kuoni this year. How is it contributing to the business strategically and kind of contribution that it will have in FY19? 
A: The global destination management business of Kuoni has expanded our global footprint and today we are operating in 21 countries and are ambitious grow further. If I look at what it brought to us then it brought the backward integration to us and is helping us in servicing the outbound businesses that go to these countries. At the time when we acquired it, it used to be a loss-making company and was running at a loss of about $3.5 million for the year but has reached a breakeven situation in the first half of FY19. SO, our estimates for the full year is that we should be at a breakeven or at a marginal loss but there will be a substantial improvement from the previous year. 

Q: Are you planning more acquisitions in FY19?
A: Hope, you are aware of our latest acquisition of a travel company that is a start-up enterprise. It is our first investment in a start-up enterprise because we felt that the new millennials are using technology to get across the customers and we thought that it is the right platform to get invested in. We don't have any specific targets that we go after but clearly, if there is a good opportunity at an attractive price we will acquire it.

At the standalone level, we are debt free and are able to generate about Rs200 crores of free cash every year. Hence have fairly deep pockets to walk out and acquire.

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Q: Will currency depreciation have an impact on your business in the ongoing quarter and the next quarter? Is there any conscious shift in the international and domestic travel pattern?
A: It, currency volatility, didn't have any impact on our business even when it was at its peak in August-September season because Holiday is a category where the plans are postponed but not cancelled. This is a reason that I mentioned that our forward booking is looking at 20% higher. 

Secondly, the playout between the international and domestic, are very strong and heavy for us. As on the international front, we are seeing a growth of around 12-13% and on the domestic side, we are eyeing at 25% growth. Strong growth is visible in both portfolios and we believe that Indian travel story is very strong.