Global Issues like COVID-19 will impact our South East Asia business: Debasis Nandy, Thomas Cook India

Debasis Nandy, President & Group CFO, Thomas Cook India Limited, talks about how the global concerns can impact his business, buyback program and further plans related to it and business from the foreign market during an interview with Mansee Dave, Zee Business. Edited Excerpts:

Q: Provide an outlook on the global impact?

A: Everyone knows about the impact that coronavirus (COVID-19) has had since last one month. It has started but no one knows when it will end and everyone is thinking that it will exist till the summers. When it comes to the Thomas Cook than slight impact has been seen on our outbound business from India in terms of bookings especially in South East Asia, which is down. But no shortage has been seen in the bookings for Europe and the US. When compared to the last year then the forward bookings are down by 8% but our season starts from April and runs till August-September. Thus, it is just a beginning, if this issues of coronavirus are over by April-May then it will not have any major impact on us, however, no one can say how long it will last and when it will come to an end.

Q: Thomas Cook (India) has approved buyback at a price of Rs 57.50 per share. But having a look at the comfortable reserves don't you think that the prices would have been better than this?

A: We kept two things while deciding the buyback price and they are:

(i) Our share price stood at around Rs41-42 at the time when the buyback was declared. Thus, the buyback price per share of Rs 57.50 is at a premium of 40 per cent. If we have a look at the prices of the last two weeks, before the buyback was notified, then the premium stands at 20%. Similarly, have a look on the buyback programs that were done by others in the last one year and you will find that their range of premium stands between 12-30% and 20% premium being offered by us comes almost at the mid-point. So, it was done on the basis of the same. 

(ii) You may remember that there was a demerger from Quess in December and there was a re-pricing of the shares. It opened at Rs62 on December 6, 2019, and this Rs57.50 apiece is around the same. 

Q: Do you have any further buyback plan in FY21?

A: There is a limitation on buyback. Fully subscription of the buyback will take the stakes of our promoter Fairfax to 70%. Interestingly, the stakes should be within 75% and that's why the second buyback is not possible in the near future. 

But, our cash flows are very strong and we receive a cash flow of around Rs200 crore annually. We don't have any immediate expansion plans and that's why we would like to give a return to our shareholders. We are doing so via a buyback this time and the next time it can be in the form of dividend but can't say a lot about it because it will depend on the results of FY20. 

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Q: How much of your work is coming from the foreign market and what is the status there at the moment?

A: Most part of the travel business comes from outside India but the impact is selected. It had a major impact on South-East Asian Business but Europe and the US business is untouched with it. Our outbound business stands around Rs 2000 crore of which around 25% depends on South East Asia, which is impacted but rest of our business like corporate travel, domestic travel and inbound business - in which visitors come here from the US and Europe - is also protected. Almost 50% of the total profit comes from foreign exchange business.