When I came here 11 years ago, the company was owned by the Carlson Leisure Group, Bayerische Landesbank and Midland Bank. Somewhere in 2002, Carlson bought over the entire shareholding of the group, split a part by selling to Travelex which is a financial services firm and then sold the company to Lufthansa and Karstadt. Later in 2005, Thomas Cook India along with some of the family silver was sold to Dubai Financial LLC — a part of the Dubai Investment Group — because the parent (Thomas Cook) was having liquidity problems.
In 2007, Thomas Cook Plc bought the company back from Dubai Financial. By this time Thomas Cook had merged with a company called MyTravel and become a far stronger financial body and re-emerged as a member of the London Stock Exchange (LSE). We were owned by a company called Arcandor to the extent of 52% and the other 48% was in the public domain.
Then Arcandor went bankrupt but since it was only a shareholder, its shares got auctioned.
In 2007, Thomas Cook Plc bought the company back from Dubai Financial. By this time Thomas Cook had merged with a company called MyTravel and become a far stronger financial body and re-emerged as a member of the London Stock Exchange (LSE). We were owned by a company called Arcandor to the extent of 52% and the other 48% was in the public domain.
Then Arcandor went bankrupt but since it was only a shareholder, its shares got auctioned.
So today, Thomas Cook Plc does not have a large shareholder. Our largest shareholder is Scottish Widows with 9%. The balance is all institutional, hedge funds and individuals. So if India has gone through two changes, the parent company has gone through multiple changes along the way.
These ownership upheavals... how has this really affected the company overall?
It hasn’t actually. Honestly, if you look at all the upheavals, we have come out much stronger.
It hasn’t actually. Honestly, if you look at all the upheavals, we have come out much stronger.
For the Indian outfit, was there any kind of a blip of sorts in this entire time frame, especially during Dubai Financial’s ownership?
If I look at change, there is only one aspect that comes to my mind when we were with Dubai Financial. We were run like a private equity investment. In the process we acquired two companies viz LKP Forex and Travel Corporation India (TCI).
How did the integration process go with these acquisitions?
It has been smooth, one better than the other in fact. But the reality is that both have paid their way through in life. If you look at the foreign exchange business, from being a 17 city operation we are today a 72 city operation. And I’am not saying that LKP necessarily gave us the difference between 17 and 72 but it did give us the difference between 17 and 40-odd and then we took it to 72. The business is very profitable. In the travel businesses post acquisition of TCI, we suddenly had two brands. In the inbound business, we have customers in markets who send tourists to India where Thomas Cook also operates. So in a lot of European markets we are known as TCI and not Thomas Cook. It helps because our customers are far more comfortable dealing with us rather than having to deal with the Thomas Cook brand name.
If I look at change, there is only one aspect that comes to my mind when we were with Dubai Financial. We were run like a private equity investment. In the process we acquired two companies viz LKP Forex and Travel Corporation India (TCI).
How did the integration process go with these acquisitions?
It has been smooth, one better than the other in fact. But the reality is that both have paid their way through in life. If you look at the foreign exchange business, from being a 17 city operation we are today a 72 city operation. And I’am not saying that LKP necessarily gave us the difference between 17 and 72 but it did give us the difference between 17 and 40-odd and then we took it to 72. The business is very profitable. In the travel businesses post acquisition of TCI, we suddenly had two brands. In the inbound business, we have customers in markets who send tourists to India where Thomas Cook also operates. So in a lot of European markets we are known as TCI and not Thomas Cook. It helps because our customers are far more comfortable dealing with us rather than having to deal with the Thomas Cook brand name.
Makemytrip.com, after 10 long years in the business has turned profitable. Did you miss out on the online opportunity?
Not at all. Online travel agency (OTA) is a completely different business model from what we are. When you draw a comparison, I’d say that we are migrating towards each other. Their model is online, selling point-to-point tickets and hotel rooms got added along the way. Today,they are trying to sell holidays by using bricks and mortar shops.
Not at all. Online travel agency (OTA) is a completely different business model from what we are. When you draw a comparison, I’d say that we are migrating towards each other. Their model is online, selling point-to-point tickets and hotel rooms got added along the way. Today,they are trying to sell holidays by using bricks and mortar shops.
In our case, we are moving from being a pure bricks and mortar player to having an online presence. We actually allow our own staff to use our online presence to sell products. We are both moving towards the same direction but if the question is whether each has missed the other, the answer is no. The profitability numbers are vastly different in the two and if you looked at the operating income on a per share basis, you’ll be able to see it very clearly.
Our travel business is just about 15-20 years old because in the old days Thomas Cook was known for foreign exchange. So I don’t really think we have lost out on that. In fact, if you ask me what have we really missed out on, I’d say the VFS (the visa processing company) model. When Kuoni started it, we should have gone out and done the same thing. We totally missed out and I deeply regret it even today.
How do you make up for it now?
One can’t really make up for something that’s been missed out. So you have to go out, innovate and try finding new ways to address the market needs. What we did thus was to get into a distribution model. If you look at a travel company, nobody has the distribution capability that we have. With branches in 50 cities, 52 franchisees (operating in existing/overlapping cities as well as the other standalone cities) and 600 agents, we have the strongest distribution in the industry today. On the foreign exchange side we operate in 72 cities. So the distribution model is something that we have taken on and we believe that is what our strength is.
One can’t really make up for something that’s been missed out. So you have to go out, innovate and try finding new ways to address the market needs. What we did thus was to get into a distribution model. If you look at a travel company, nobody has the distribution capability that we have. With branches in 50 cities, 52 franchisees (operating in existing/overlapping cities as well as the other standalone cities) and 600 agents, we have the strongest distribution in the industry today. On the foreign exchange side we operate in 72 cities. So the distribution model is something that we have taken on and we believe that is what our strength is.
What is more difficult to replicate?
I think the distribution model is the toughest. It is driven by one simple rule - that more and more people are travelling, sending their children for education, sending monies outside. In the olden days, if you talk to your parents, they would have talked about receiving money. Classic case in point would be a person from Kerala, everybody talks about how much money that the guy has received. Today, the same Kerala guy continues to receive money but also sends money abroad.
I think the distribution model is the toughest. It is driven by one simple rule - that more and more people are travelling, sending their children for education, sending monies outside. In the olden days, if you talk to your parents, they would have talked about receiving money. Classic case in point would be a person from Kerala, everybody talks about how much money that the guy has received. Today, the same Kerala guy continues to receive money but also sends money abroad.
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