Thomas Cook (India) Ltd Management Discussions

Global economic overview

The global economy dealt with several challenges in FY22 in the wake of geopolitical conflicts and mounting inflationary pressures . The impact of new COVID variants, the food and energy crises in Europe, as well as the Russia-Ukraine war, could trigger further economic disruptions. The IMFs World Economic Outlook for April 2023 reveals that the global economy registered a growth of 3.4%1 in the year 2022.

However, the slowdown is concentrated in advanced economies, particularly in the Euro area and the United Kingdom. Additionally, central banks monetary policies are expected to bear fruit, leading to a fall in global inflation. Emerging markets and developing economies such as India are powering ahead in many cases, with growth rates expected to witness a significant upsurge this year.

Global Economic Outlook

There are positive signs that indicate a gradual recovery from the pandemic-induced shocks and supply-chain constraints. Chinas rebound is particularly noteworthy, considering the recent border openings. Emerging markets and developing economies (EMDEs) are set to be instrumental in driving the revival of the economy in the upcoming years. Growth rates (Jan-Mar 22 over Jan-Mar 23) have increased from an expected 2.8% in 2022 to 4.5% in 2023, indicating that the growth in many emerging markets and developing economies is now accelerating.

The pace and effectiveness of fiscal and monetary policy measures to support economic expansion would also help shape the outlook. Central banks around the world have been tightening monetary policies, but it is yet to be seen whether these measures will be effective in curbing sticky inflation and supporting sustainable growth. Fiscal policies would also play a key role, especially in supporting businesses and individuals affected by the pandemic.

According to the IMF, India, along with China, is expected to drive 50% of global growth in 2023.

Indian economic overview

Notwithstanding the gloomy global outlook, the Indian economy remained relatively shielded from global headwinds and sustained its position as one of the fastest-growing major economies in FY23. It clocked a growth rate of 7%² in FY23 (according to the second advance estimate from the NSO). Employment in the corporate sector is registering a growth surge, as indicated by an increase in net payroll additions under EPFO. The economys corporate sector credit-to-GDP ratio remains below its historical trend, indicating ample room for the corporate sector to enlarge its debt burden. The strong debt profile of the corporate sector has also proven essential in driving macroeconomic stability³.

The growth has been driven by strong domestic demand, particularly in private final consumption expenditure, rising gross fixed capital formation and the Governments enhanced focus on capital expenditure. The Union Budget 2023 announced a 33.4% increase in capital investment outlays to a historic budget estimate (BE) of INR 10 lakh crore for FY24⁴. The governments capital investments are set to have a multiplier effect on the economys manufacturing sector and lend Indian goods a competitive edge in the global market.

Indian Economic Outlook

High-frequency indicators such as GST collections, railway and air traffic, electronic toll collections and the volume of E-way bills generated indicate a robust economic recovery. The countrys sustained growth momentum is poised to make it an attractive destination for pitching in significant investments.

India is expected to remain the fastest-growing nation among the G-20 nations in the years ahead. Also, Indias presidency of the G20 Summit in 2023 has significantly bolstered its international standing.

With reduced uncertainties at the beginning of FY24, businesses are expected to focus on their growth potential. The RBI is anticipated to rein in inflation, manage currency fluctuations and reduce the immediate impact of a fiscal deficit on the Indian economy. Along with a favourable policy environment and an improvement in downside risks, consumer sentiment is expected to further improve, offering some modest relief to the Indian economy.

Industry overview

Global travel industry⁵⁶

In CY22, easing travel restrictions in many countries and a stronger boost from pent up demand facilitated the Global tourism growth. The number of international travellers exceeded 900 million in 2022, which is twice the number in 2021 but still 37% less than reported in 2019. The recovery rate for international tourism was 63%, as predicted by UNWTO in May 2022. While still down 21% from 2019, Europe, one of the worlds most popular travel destinations, witnessed 585 million arrivals, reaching almost 80% of pre-pandemic levels. The Middle East experienced the most remarkable relative growth, with arrivals reaching 83% of pre-pandemic levels, just 17% lower than in 2019.

In light of more stringent pandemic-related restrictions, the Asia-Pacific region recovered only 23% of its pre-pandemic visitors, while Africa and the USA both regained about 65% of them. Other regions that reached closest to their pre-pandemic levels include Western Europe (87%) and the Caribbean (84%). Tourism expenditure witnessed a substantial resurgence in 2022, leading to the recovery of pre-pandemic income levels in many destinations.

New-found and pent-up zest for travel

The travel and tourism business is frequently regarded as unimportant. This perception is changing following the pandemic. People are urged to focus on their mental health, more so in the last two years. Therefore, travel has been a popular option for people seeking to enhance their mental health and has seen a massive surge, popularly termed as revenge tourism.

Revenge tourism is a phenomenon that occurs when people who have suffered lockdown fatigue demand a break from their mundane routine and plan trips without considering the costs. It is simply a frantic desire to travel once restrictions are lifted. With full recovery underway, travel companies are set to restore peoples confidence in vacation planning by providing them with reliable information and aiding them in their decision-making process.

Roadblocks

Since the beginning of this year, the aviation industry has been grappling with concerns about the soaring prices of jet fuel and supply chain disruptions caused by the Russia-Ukraine conflict. The increased costs have been passed on to customers, significantly impacting budget-conscious travellers. According to experts, the cost of both domestic and international flight tickets has surged between 20-40%. Additionally, airlines are not operating at full capacity due to the time it takes to restore mothballed aircraft and a lack of trained staff. The closure of Russia-Ukraine airspace and European countries ban on Russian carriers have also affected travel across the European Union, resulting in longer flight times and higher costs for long-haul flights between Europe and East Asia.

The pent-up travel demand has put immense pressure on the visa application process, leading to longer wait times for visa approvals. The recovery for international travel to certain European countries and the US has been slow due to delays in appointment dates and extended visa processing times. There are several other factors, including the global slowdown, high inflation and the depreciation of the Indian currency, that are hindering the sectors successful recovery.

Outlook⁷

Going forward, the tourism industry is expected to sustain this rebound, with pent-up demand driving growth, especially with the reopening of the Asia-Pacific regions. According to the UNWTO Panel of Experts survey, 72% of tourism professionals anticipate a better performance in 2023. However, most experts (65%) believe that international tourism will not return to 2019 levels until 2024 or later.

UNWTOs analysis for FY2023 suggests that international tourist arrivals could range between 80% and 95% of pre-pandemic levels this year, with Europe and the Middle East expected to reach these levels. Nonetheless, significant economic and geopolitical risks remain. In response to the challenging economic environment, it is anticipated that tourists will explore affordable travel options and select destinations that are closer to home.

Tourism development

The tourism industry plays a significant role in boosting the economy by generating substantial revenue through foreign exchange earnings and investments. It can help communities achieve financial independence and self-sufficiency. In 2019, the Travel and Tourism sector contributed 10.3% to the global GDP, but due to mobility restrictions in 2020, this figure decreased to 5.3%. However, in 2021, the sectors share increased to 6.1%. In 2022, it increased by 22% from 2021 to reach 7.6% of global GDP. During 2023, the tourism sector is forecasted to contribute 11.6% of the global GDP.⁸ Recovery methods may differ from one country to another, but it is crucial for each countrys tourism model to be diversified and demonstrate resilience to external volatility.

Bleisure travel

A rising trend known as ‘bleisure travel involves combining business and leisure by extending a work trip to enjoy leisure activities. Experts predict that this trend will become increasingly popular among the younger workforce. With remote work being embraced by people worldwide, travel companies have an ideal opportunity to capitalise on this growing trend by providing offers that entice people to extend their business trips to include vacations.

Sustainable travel

Sustainable tourism is an emerging trend in the travel and tourism industry. This entails promoting eco-friendly tourism practices that minimise negative impacts on the environment, support local communities and contribute to the preservation of cultural heritage. Some of the other trends that are gaining prominence include the use of technology in travel, such as virtual reality and mobile apps, along with the rise of experiential travel, where travellers seek authentic and engaging experiences that help them connect with local cultures and traditions. Recently, there has been a growing interest in wellness tourism, where travellers seek to enhance their physical and mental health through activities such as yoga, meditation and spa treatments.

Indian travel industry⁹

The domestic tourism sector is also on the upswing, with international tourist arrivals increasing each month as scheduled international flights resume and COVID-induced restrictions ease. As travel restrictions are lifted and health concerns are minimised, global tourism is gradually returning to pre-pandemic levels.

Based on the United Nations World Tourism Organisations (UNWTO) World Tourism Barometer from November 2022, international tourism experienced upbeat growth in the first nine months of 2022, reaching 63% of pre-pandemic levels. This increase is due to strong pent-up demand, improved confidence levels and lifted restrictions. However, the pace of recovery was impeded by inflation in advanced countries amid ongoing global uncertainties. To get their business back on track, hotels lowered tariffs significantly, causing revenue per available room to drop by approximately 57-59%, reaching a low of H1,500 - H1,800. Nevertheless, hotel occupancy began to recover in Q3 2021, with the resumption of domestic leisure travel and the partial resumption of business travel, along with weddings and social events, driving demand. The sectors average occupancy rate was 42-45%, which marked an increase of 10-13% in FY21over the previous year i.e. FY20.

At the beginning of 2022, the reintroduction of travel restrictions due to the emergence of the Omicron variant caused upheaval in the Indian hospitality sector, leading to a decline in demand. This resulted in an average hotel occupancy rate of 50% during January-March 2022, with many leisure and business travel plans being put on hold. However, due to the lower severity and hospitalisation risk for the Omicron variant, travel demand began to return to normalcy in March 2022. The high vaccination rate in the country and effective pandemic management also aided the revival of travel demand. As 2021-22 came to a close, India resumed all regular international flights at full capacity after a two-year hiatus. As a result, the entire aircraft movement in the country witnessed a growth rate of 52.9% YoY between April and November 2022. The hotel industry is now thriving with improvements in occupancy rates, a hike in average room rate (ARR) and a rise in RevPAR. The occupancy rate in November 2022 stood at around 68-70%, completely recovering the average pre-pandemic level of 2019-20.

However, as the pandemic subsides, Indias tourism sector is demonstrating early signs of recovery. Foreign tourist arrivals have been increasing month-on-month in FY23 following the resumption of scheduled international flights and the relaxation of COVID regulations, though they remain below the pre-pandemic level. The profitability ratios of the tourism industry also indicate a strong rebound in the June 2022 quarter. Additionally, with the resumption of corporate travel and flexible work arrangements, MICE tourism and Bleisure travel are regaining traction in India. India is increasingly becoming a preferred destination for MICE events due to its improving infrastructure and amenities.

Government policies

The pandemic has severely affected the tourism industry in India, leading to significant job losses and a decline in foreign tourist arrivals. To revive the sector, the Ministry of Tourism has undertaken several measures:

Tourist Visa Scheme

The Government announced free Tourist Visas for the first 5 lakh foreign nationals visiting India. This scheme was applicable until March 31, 2022, or until 5 lakh visas were issued, whichever was earlier. The benefit was available only once per tourist.

The Ministrys initiatives to boost the tourism sector are already showing positive signs, with a rising number of foreign tourist arrivals and a rebound in MICE tourism and bleisure travel. With continuous improvements in infrastructure amenities, India is increasingly becoming the preferred destination for MICE events.

LGSCATSS

The Loan Guarantee Scheme for COVID-affected Tourism Service Sector (LGSCATSS) offers working capital and personal loans to households impacted by the pandemic. The scheme covers regional-level tourist guides, tourist guides recognised by state governments or UT administrations and travel and tourism stakeholders recognised by the Ministry of Tourism.

NIDHI

The Ministry is collaborating with state governments and union territory administrations to register accommodation units in the National Integrated Database of Hospitality Industry (NIDHI) portal. This comprehensive national database will help create policies and strategies to promote and develop tourism at various destinations.

SAATHI

The Ministry launched the System for Assessment, Awareness and Training for the Hospitality Industry (SAATHI) in association with the Quality Council of India to sensitise the industry on the Governments COVID regulations. The goal is to instil trust in personnel and guests that the hospitality unit has been striving hard to ensure workplace safety and hygiene.

RCS UDAN

The Regional Connectivity Scheme (RCS-UDAN) was launched by the Ministry of Civil Aviation to facilitate regional air connectivity by making it affordable. The Ministry has increased the total number of Tourism RCS air routes to 59, out of which 51¹⁰ are presently operational.

Outlook¹¹

Indias travel market is projected to grow substantially from USD 75 billion in FY20 to USD 125 billion by FY27, with the tourism sector being one of the fastest-growing economic sectors. This sector has a significant impact on employment and accelerates regional development, with a multiplier effect on the related sectors. To further boost tourism, the visa fee has been rationalised and reduced, making it more affordable for tourists. By 2028, Indian tourism and hospitality are expected to earn USD 50.9 billion as visitor exports, compared to USD 28.9 billion in 2018, with international tourist arrivals expected to reach 30.5 million by 2028.

Over the last eight and a half years, India has built extensive tourism infrastructure worth approximately USD 1 billion to enhance the tourist experience. According to the Union Budget for FY 2023, 50 tourist destinations will be selected through challenge mode and developed as a whole package for domestic and international tourism. Another 50 airports, heliports, water aero drones and advanced landing grounds will be revamped to boost regional air connectivity.

Indias ‘Incredible India campaign is expanding the international tourism business in the country, with the E-Tourist Visa facility being extended to 156 countries under five sub-categories. The development of destinations, circuits, mega projects and rural tourism infrastructure projects makes up over 50% of the Ministry of Tourisms budget. The country is also promoting medical tourism with economical treatment, quality healthcare infrastructure and highly skilled doctors. Coastal tourism is being promoted to encourage intra-regional trade among Indian Ocean Rim (IOR) countries while emerging segments such as rural, adventure, medical, pilgrimage, film and sustainable tourism are also being developed.

Green travel

In recent years, eco-friendly tourism has gained popularity. Consumers are now more aware of the carbon emissions generated by their travel and seek solutions to promote sustainable travel.

Customers, for instance, may select an aircraft that generates less CO2 or stay in eco-friendly homes, even if it requires more money. These eco-friendly hotels prioritise garbage recycling, water purification, the use of environment-friendly toiletries and renewable energy. These green initiatives motivate more service providers to embark on their own sustainability journeys.

Key budget announcement¹²

The Government has planned a series of initiatives that are to be implemented over the next three years to boost the economys sustainable development. The Amrit Dharohar scheme aims to encourage the optimal use of wetlands, enhance biodiversity and carbon stock, create eco-tourism opportunities and generate income for local communities. Additionally, a unified Skill India Digital platform will be launched to provide demand-based formal skilling, link job seekers with employers, including MSMEs and access entrepreneurship schemes.

To support youth employment, the Government will roll out the Direct Benefit Transfer under a pan-India National Apprenticeship Promotion Scheme to provide stipend support to 47 lakh youth over three years. Furthermore, sector-specific skilling and entrepreneurship development will be dovetailed to achieve the objectives of the ‘Dekho Apna Desh initiative.

Finally, to promote tourism in border villages, the Government will facilitate tourism infrastructure and amenities through the Vibrant Villages Programme. These initiatives will promote sustainable development, generate income for local communities and provide employment opportunities for youth across the country.

Business review

Organisational overview

ThomasCook(India)Limitedisapioneerinthetravelandfinancial services sectors. The Company has been serving travellers for over 141 years. It offers a wide range of customised services catering to the travel requirements of customers worldwide, spanning four core categories: Travel and Travel-Related Services, Financial Services, Leisure Hospitality and Digital Imaging Services. With a firm focus on the Asia-Pacific region, TCIL has expanded its operations globally. The Thomas Cook brand encompasses various entities, located in 28 countries spread across five continents. The Group diverse team of 8,536 professionals hail from different countries across the world. In FY23, the Companys combined revenue from operations was INR 51,112 million - for more details please refer to pg 28 of the IR.

Travel and associated services

The Group puts a customer first approach and blends innovation with a strong omnichannel presence to offer exceptional solutions that create delightful travel experiences. The Companys travel products and services are available to both B2B and B2C customers and include domestic and international leisure travel, business travel, MICE and destination management services. In response to evolving client needs in the post-pandemic period, the Company leverages its size and widespread reach to curate travel experiences. Thomas Cook (India) Limited aspires to enhance customer satisfaction by implementing digital initiatives and providing cost savings - for more details please refer to Intellectual Capital article on pg 42 of the IR.

Leisure travel (Domestic and outbound)

In the past two years, the leisure travel industry has been severely impacted, with many destinations closing and a decline in travellers even within the country. However, as the vaccination drive progressed, domestic travel reopened and international travel began to revive, leading to higher tourist movement in the last quarter due to pent-up demand. During this time, the Company re-aligned its strategies to cater to customers with varying demands and focused on providing a seamless customer experience by using digital tools. The Company has promoted value-based experiences through targeted campaigns aimed at both Free Individual Traveller (FIT) and Group Inclusive Tour (GIT) customers.

Thomas Cook Group operates LT Business through entities such as Thomas Cook India, SOTC, TC Tours Limited and Travel Circle International Limited in Hong Kong. The Company has witnessed a marked improvement in sales, with a growth rate of 98% YoY. Its customer base has also shifted towards a younger demographic, with the average age of customers decreasing by 10 years. To further cater to this young client base, the Company has launched a range of new products and deals while implementing interesting online campaigns targeting Gen Z/Young India. Additionally, TCIL has been successful with Cordelia Cruises, with over 8,000 customers booked since the restart, making it the Companys bestselling product.

SOTC Travel Limited

With a rich legacy spanning over seven decades in India, SOTC is subsidiary of Thomas Cook (India) Limited that has played a crucial role in the growth of organised leisure travel in the outbound and domestic space. Through its commitment to top-notch customer service, innovative offerings, technological upgrades and expanding destination markets, SOTC has built a robust foundation over the years. Today, it is a leading player in several niches, including domestic and international travel, incentive travel, escorted group tours and customised holidays. SOTCs focus on customer engagement, innovation and operational excellence has not only tapped into the existing market potential but also created new avenues for growth. By leveraging technology and a strong online presence, the business provides its clients with a seamless omnichannel experience.

TC Tours Limited

As a wholly owned subsidiary of Thomas Cook (India) Limited, TC Tours offers air ticketing, hotels, domestic tours and allied services to the Groups various travel offerings across leisure, corporate travel and MICE categories.

Travel Circle International Limited - Hongkong

As the leading tour operator in Hong Kong, this business focuses on the upscale niche market of all-inclusive long-distance group leisure travel. Its B2C segment, which includes four retail storefronts, a call centre and a website, accounts for 90 % of the tour operators sales, while the remainder comes from third-party B2B channels. The Company continues to focus on product development and has deepened its research into new customer behaviour and new offerings in various destinations, offering smaller groups personalised service and flexibility in bookings as led by the new norms of travel.

To capitalise on local demand, the company introduced offerings focusing on staycation packages, island hopping, trekking, and local thematic tours. In response to the significant increase in demand following the reopening of the Hong Kong border, the Company swiftly introduced a range of immersive thematic tours, focusing on gourmet experiences, historical heritage sites, and the festive celebrations of Christmas and Chinese New Year. Taking advantage of the growing interest in travel to China and other Asian destinations, Thomas Cook strategically expanded its offerings and launched Small Group Mini tours across all

Asian countries. This move allowed the Company to cater to the rising demand and capitalise on the resurgence of interest in exploring various Asian regions. In order to boost Hong Kongs reputation as the premier tourist attraction and promote multidestination tourism products to foreign visitors, Hong Kong was also incorporated into the massive Bay Area Scheme.

Corporate travel

The Companys Corporate Travel division is committed to providing business travellers with simple and seamless services. As travel restrictions ease and health concerns abate, corporate travelisgraduallygainingmomentum.TheCompanyiswitnessing sustained growth as business activities across various industries speed up. Since January 2022, there has been a definitive uptick in corporate travel, with a month-on-month doubling of activity. Positive corporate sentiment aided by higher airfare has led to a value growth of 213% YoY; surpassing pre-pandemic levels in FY23, with key sectors such as IT, consultancy and advisory firms, banking and finance, global accounts and SMEs fuelling demand for both international and domestic business travel.

Delhi, Bengaluru, Chennai and Kolkata are among the top domestic destinations driving strong demand, while Mumbai is witnessing the fastest recovery for business travel across key hubs. From an international perspective, destinations such as the US, Canada and the UK are in high demand. . Thomas Cook (India) Limited leverages its expertise and technological capabilities to help clients manage their travel more efficiently. Thomas Cook (India) Limiteds focus has been on increasing productivity through the use of technology and digital tools, such as the deployment of booking BOTs for domestic itineraries to enhance operational efficiency, increasing online booking tool conversion with new and existing customers and deploying new booking tool options to allow customers to choose the right technology for their organisation.

With a remarkable adoption rate of over 50% among corporate clients, the Company have experienced a significant liberation of valuable manpower, a reduction in manual processes, and associated costs. Simultaneously, this has facilitated swift scalability, allowing to adapt and grow efficiently. The online booking tools have been seamlessly integrated with the respective corporate travel policies, approval matrices, and management information system (MIS)/reports, all of which are connected to the centralised mid-office system. This comprehensive integration ensures streamlined and policy-compliant booking processes, enhancing the overall corporate travel experience.

Corporate travel turnover has grown by 213% YoY, with the acquisition of many large and SME new accounts in various industries such as Banking and Insurance, IT services, Infrastructure, Media and Entertainment, Telecommunications, Automobile, Consumer products and Manufacturing. Additionally, over 50% of clients have adopted the corporate self-booking tool, demonstrating rapid digital adoption.

Meetings, incentives, conferences and events (MICE )

The objective of Thomas Cook and SOTCs MICE portfolio is to provide seamless travel solutions for large groups across various industries. The growth in the MICE sector is directly correlated to the economic rebound across industries. The business gained momentum in the later part of the year with a strong preference for in-person events. In FY23, there was a notable and robust comeback for physical events across Domestic, Inbound, and International destinations. Thomas Cook and SOTC played a significant role in this resurgence by successfully organising over 600 MICE (Meetings, Incentives, Conferences, and Exhibitions) groups, each consisting of 100-2500 delegates, since the travel restart in 2022.

Thomas Cook and SOTC have made significant investments in digital technology to enhance internal and external customer interaction and corporate processes to achieve a competitive edge. The outlook is optimistic, owing to the large government contracts that have been secured this year.

Major industries such as Automobiles, Pharmaceuticals, Insurance, Paint and Cement are driving growth for the MICE vertical. The focus is on innovating offerings to cater to the growing demand for activities such as sales meets, brand promotions and activations, product launches, as well as employee training activities. The Company is also working closely with major corporate houses to organise large-scale domestic and international events. The demand for outbound events is growing as Indian multinationals look at international locations as a preferred destination for hosting business meets and events.

The MICE vertical has successfully managed mid- to large-sized groups, ranging from 100 to 3,000 delegates each. They have managed multiple corporate groups for the T20 World Cup in Australia and the FIFA World Cup in Qatar. In addition, they have handled inbound groups of 400 customers in NCR and 6,000 delegates from across 130 countries in Mumbai, including the UK, the USA, Singapore, Australia and Africa.

The MICE vertical has seen a strong resurgence in demand for domestic and outbound corporate groups, resulting in a robust pipeline. There has been a strong comeback from the previous year. This reflects the mood of the nation, with many corporates willing to go out and spend on building their distribution. The focus has been on building sales to get into new markets, which is reflected in the volumes.

MICE Turnover has grown by 711 % YoY, along with 85% recovery Vs pre pandemic. It has managed over 600 groups –including sizeable movements of between 100 to 3000 delegates. It has handled 20,500 customers for Khelo India 2023; managed Digital Yoga Exhibition for Govt. of India; event for ground breaking ceremony for worlds first World Health Organization (WHO) Global Centre for Traditional Medicine.

Indias destination management specialists

For over six decades, TCI has been operating our Companys India inbound travel business, providing personalized travel and related services. With a presence in India, Nepal, Bhutan, and Sri Lanka, TCI boasts a team of approximately 400 seasoned professionals located in 24 locations. TCI operates under three distinct brands: SITA, TCI, and Distant Frontiers, and has established relationships with over 2,000 global partners representing 67 client nationalities.

As a trusted partner to foreign tour operators in the leisure and charter sectors, TCI pledges unrivaled service. The gradual increase in tourist arrivals following the opening of Indias borders to foreign visitors in April 2022 has been an encouraging development. TCIs commitment to providing exceptional experiences is evident in its handling of 30,685 guests during the inbound tourism season from October 2022 to March 2023.

Our partnership with REWE Group - Germany, TCI-Go Vacation India Pvt. Ltd., is a destination management company that customizes travel and related services for REWE Group companies in the European subcontinent. This joint venture is reinforced by a dedicated team of experienced professionals and reinforces our Companys standing in the Indian travel industry.

International destination management specialists

The DMS Group operates in 21 countries, including Southeast Asia, the Middle East, Australia, North America and Southeast Africa.

Asian Trails focused on automation and digitalisation, including the launch of a B2B online booking platform with API connectivity to major online players. Future growth is expected from Europe, South America, the USA, India and North Africa, with an emphasis on eco-friendly tours and incentive travel events.

Private Safaris East Africa is targeting marketing initiatives and quick turnarounds to drive demand growth from the USA and Europe. Sales volumes in Q3 FY23 exceeded pre-pandemic levels, particularly from traditional markets such as Germany, the UK, the US, Romania, France and India.

Desert Adventures increased its market reach in the Online Travel Agency (OTA) market by leveraging Robotics and AI technology to automate manual processes, optimise hotel inventory and reduce costs. Q3 FY23 saw higher volumes from the CIS countries, OTA business, LATAM and Indian markets. The Company intends to sustain growth in the CIS and expand its footprint in the subcontinent market while nurturing other European markets. AlliedTPro, a subsidiary and an inbound market leader in the US, has implemented cost rationalisation initiatives and introduced new products, including Escorted Flex Tours, Self-Drive tours and a new M-Trip mobile app. Sales in Q3 FY23 exceeded pre-pandemic levels despite being a lean season, with cost synergies and JV benefits also contributing to growth.

Private Safaris South Africa focused on cost savings and business growth through initiatives such as enhancing agent interactions with technology, organising online webinars and training, optimising internal processes and conducting training sessions for customer service. The Company also maintained its connection with its existing clientele to capitalise on recovery trends.

Financial Services

Foreign Exchange

Thomas Cook (India) Limited holds licence from the Reserve Bank of India, making it the first non-bank foreign exchange player in the country to do so. The Companys Groups Forex business is managed through Thomas Cook (India) Limited, Thomas Cook Lanka (Private) Limited and Thomas Cook (Mauritius) Operations Company Limited, with verticals covering retail, wholesale, corporate and payment solutions. Thomas Cooks physical distribution network and reliable Digital Forex Centre have established it as the leading omnichannel Forex provider in India. The Companys 29 airport counters across India, Mauritius and Sri Lanka, as well as retail stores in various locations, comprise its extensive distribution network.

Thomas Cook (India) Limiteds Forex business is represented by Thomas Cook India, TC Lanka and TC Mauritius Operations, with Thomas Cook (India) Limited being the largest exporter of banknotes globally. Since its inception, Thomas Cook (India) Limiteds borderless prepaid card has sold cards with a load volume of over Rs. 2,464 billion. The Thomas Cooks borderless multi-country prepaid travel card enables users to load different currencies, providing a convenient alternative to carrying multiple cards/cash. The retail, wholesale, corporate and payment solutions verticals constitute the Companys Forex business, catering to both international tourists and Indian students studying abroad.

Thomas Cook (Mauritius) Operations Company Limited

With the relaxation of restrictions on the movement of foreign workers during FY 23, the money transfer service has steadily increased in popularity. The trends observed since the start of the year have been quite encouraging, boosting optimism for the near future.

Thomas Cook Lanka (Private) Limited

Thomas Cook (India) Limited Sri Lankan subsidiary, Thomas Cook Lanka (Private) Limited, provides foreign exchange services in Sri Lanka through its presence at Bandaranaike International Airport and branches in Colombo and Kandy.

However, the island nations major economic sectors have been severely impacted by the ongoing crisis since the beginning of FY22. Furthermore, the crisis continues to have a negative impact on overseas employment numbers, which are primarily responsible for the countrys foreign exchange reserves.

Value Added Services (VAS)

The Companys value-added services team offers a wide range of services, including:

TBA (Travel Business Associate)- an innovative channel of business that has partners who are associated with the Company for sourcing all business lines.

The VAS Team actively engages with businesses through regular training programmes to help them provide appropriate products and services to their customers.

Leisure hospitality and resorts

Sterling Holiday Resorts Limited (Sterling) is a premier leisure holiday lifestyle company, offering rooms across resorts in diverse locations such as mountains, beaches, jungles, heritage, pilgrimage destinations and drive-to locations from major cities. To ensure that its customers enjoy wonderful vacations, the Company provides them with unique experiences and exceptional accommodations, food and services.

In the upcoming year, while upholding the highest service standards and focusing on customer delight, discoveries and experiences, the Company plans to expand to new destinations. The Company has a strong leadership team with deep expertise in the hospitality industry and other sectors, providing them with the strength, vision and competencies required to shape the Companys growth strategies. Sterling has also implemented a digitisation plan across customer-facing functions and backend processes, enabling them to focus on customer-centric growth. The business has recorded operating profits for several quarters and has been growing its revenue sustainably while optimising costs.

In terms of awards, Sterling has received the Tamil Nadu Tourism Award for Best Leisure Hotel, Asias Excellence Awards 2022 at the CMO Asia Awards and the Best of Bharat Award from e4Media. Onsite sales have increase compared to the previous year. This robust performance reflects the Companys robust growth strategy, which focuses on scaling the resort business, guest expenditures, average room rates and improved occupancy while optimising costs. The Company also launched new resorts in Pench and Tiruvannamalai in Q3 FY23, while expanding and scaling the distribution of resort inventory and room rates using the Sterling One platform. Sterling also extended its focus on technology by launching various digital initiatives, including a robotic automation tool and bots that facilitate efficiencies at an operating level.

Digital imaging solutions

DEI, a prominent player in the digital imaging industry, is renowned for its top-notch imaging solutions that help preserve the unique experiences of tourists at popular attractions. The Company, headquartered in Dubai, operates in 19 countries and has 132 partners across 266 attractions. DEI recently extended its reach by entering into four new agreements and renewing its partnership with two previous partners. Six partnerships, including Snow Oman, Emerald Faarufushi Resort & Spa, Snow Kingdom Hyderabad, and others, also became operational in the previous quarter. During the festive season, DEI was the imaging partner for several events in the UAE, including the Dubai Festive City Market, Souq Madinat Festive Market and various New Years Eve galas. DEIs robust recovery can be attributed to its focus on adding new partnerships and geographies to its portfolio, resulting in higher footfalls and increased captures in most of its locations.

DEI marquee partnerships

UAE - Burj Al Arab, Dubai Balloon, Palm Atlantis, the Dubai Skyline, Sheikh Zayed Grand Mosque, Sky Views Observatory, The Storm Coaster, Adventure Park

Maldives - Taj Exotica Resort & Spa, InterContinental Maldives Maamunagau Resort, an IHG Hotel, JW Marriott Maldives Resort & Spa, The St. Regis Maldives Vommuli Resort China - Universal Beijing Resort, Shanghai Disney Resort, Atlantis Sanya Singapore - Universal Studios Singapore, Marina Bay Sands, Mandai Wildlife Reserve, S.E.A. Aquarium Malaysia - Petronas Twin Towers, Aquaria KLCC, Sunway lagoon India - Ramoji Film City, Snow World, Marine Kingdom, Snow Kingdom, Wonder La and Bounce Inc.

USA - 360 Chicago, Gaylord Hotels, Hard Rock Caf?, Mangos Tropical Caf?, The Incline Railway, The Henry Ford Museum, Rock City

Shared services

The Groups captive Shared Services Centre (SSC) remains committed to consolidating business operations and achieving synergies across multiple entities. To accomplish this, the SSC is constantly seeking better ways to add value through the use of digital workflows and innovative tools, as well as intelligent automation between the front-end and backend systems. Over time, the SSC has evolved from a resource centre to a centre of excellence (COE), delivering innovation, quality and strategic value.

Moving forward, the SSCs focus will be on enhancing and automating its end-to-end transactional services along the customer journey, while also serving as a governance concept for both captive and outsourced functions. Through automated virtual performance dashboards that can be accessed from anywhere within cloud-based ecosystems, the SSC has the potential to deliver real-time insights for all conceivable scenarios. Additionally, the SSC can combine insights gained through processes from different service lines to deliver added value. The future will see the development of a plug-and-play ecosystem for service delivery, aimed at improving agility independent of the outsourcing model.

Fund management

Cash conversion

During the first half of the year, the emphasis shifted from maintaining liquidity to supporting recovery, then gradually to supporting growth, with a consistent focus on timely collections and reworking payables timelines.

OCCRPS conversion

Fairbridge Capital (Mauritius) Limited was privately allotted Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS) by the Company, totalling INR 4.3 billion. The Company has converted all OCCRPS in two tranches, on March 17, 2022, and June 20, 2022, indicating the parent Companys unwavering confidence in TCILs potential for sustained growth. As a result of this complete conversion, the promoters equity shareholding has improved by 72.34%.

Security creation

During FY23, the Company obtained the requisite approvals, including those of its shareholders and created a charge or security on its assets and those of its subsidiaries to secure their borrowings. The primary objective was to ensure prompt availability of funded and non-funded facilities from banks and ensure smooth and efficient operations of the Groups businesses.

Pooling of cash across units

Thomas Cook (India) Limited operations encompass multiple businesses and legal entities. The Company assessed the cash available across its cash-rich units and consolidated any surplus funds to provide financial support to the units that required assistance for recovery and/or growth as per the applicable rules. This approach ensured seamless operations across the group and guaranteed the fulfilment of all payment obligations.

Safety first principle for investments

In light of the various credit defaults and the adverse financial impact of the pandemic on players in multiple industries, the Company decided to divest from Mutual Fund investments and instead limit investments to pre-approved bank deposits as directed by the Board of Directors. Abiding by the principle of ‘Safety first, the Company was able to prevent any adverse impact resulting from credit defaults.

Support for subsidiaries

Throughout the year, Thomas Cook (India) Limited extended financial support to its companies in India and overseas through inter-company loans. This assistance was intended to cover the cash losses and critical payments of the Companys subsidiaries during the earlier part of the year and subsequently transition towards supporting their recovery and growth.

Human resources

At Thomas Cook (India) Limited, a diverse talent pool comprising 62 nationalities collaborates to ensure quality services while maintaining delivery standards. The Company adopts industry best practices to shape its HR policies and strives to raise the proportion of female employees to achieve its diversity goals. The Company believes that a happy workforce leads to enhanced efficiency and productivity, thus supporting employees in up skilling themselves. The Company attracts top-tier talent and promotes cross-functional collaboration to foster a welcoming work environment. Thomas Cook (India) Limited fosters a growth-focused work culture by empowering its people with several training programmes, leadership development modules, and engagement sessions.

Thomas Cook (India) Limited conducts various training and development programmes, including product and process training, behavioural training, sales training, self-management programmes and fraud and risk management training. The Company deploys succession planning to ensure continuity of leadership, utilising HR analytics to find the best fit for succession and understand each persons organisational fit. Succession planning is done for the executive committee.

Thomas Cook (India) Limited engages employees through several initiatives, such as quarterly newsletters, virtual CnC sessions, motivational workshops and the quarterly confluence. The quarterly confluence provides a platform for employees to interact with business leaders, receive key updates, showcase their talents and engage with their families. The Company also provides long-term incentives, stock options and better compensation to retain top talent.

Corporate Social Responsibility (CSR)

Thomas Cook (India) Limited is part of the Fairfax Group of Companies and has collaborated with the Fairfax India Charitable Foundation (FICF) to support a dialysis programme across the nation. This programme caters to those who lack access to nephrology care. Additionally, in line with the Government of Indias Swachh Bharat Abhiyan initiative, FICF maintains prefabricated toilet units in Ooty.

Project dialysis

In the near future, chronic kidney disease is projected to become the 5th leading cause of death in India. Currently, there are 1.3 million patients suffering from Chronic Kidney Disease who rely on twice-weekly dialysis to survive. However, to meet this demand, the country needs around 2 lakh dialysis machines, while the existing number is less than 30,000.

To address this critical issue, TCIL has successfully established a strong network with state governments and hospitals nationwide. The Companys primary objective is to make a meaningful impact on the lives of these patients by fostering a collaborative ecosystem. This ecosystem aims to provide free or affordable, high-quality dialysis services to renal patients, especially in regions of India where there is a limited dialysis infrastructure. Through this initiative, TCIL strives to alleviate the burden of chronic kidney disease and improve the quality of life for those affected by the condition – For more details refer to pg 56 of IR.

Consolidated performance (FY23 v/s FY22)

	FY23 (in million	FY22 (in million
Particulars			% Change
	INR)	INR)
Total Income	51,112	19,461	162.6
Income from Operations	50,477	18,883	167.3
EBITDA	2,752	(1,273)	(316.2)
PBT	268	(3,222)	(108.3)
PAT	104	(2,539)	(104.1)

Standalone performance (FY23 v/s FY22)

	FY23 (in million	FY22 (in million
Particulars			% Change
	INR)	INR)
Total Income	14,759	3,599	310.1
Income from Operations	13,640	2,857	377.4
EBITDA	1,170	(729)	(260.5)
PBT	187	(1,231)	115.2
PAT	15	(825)	101.8

Excluding Mark to Market non cash, non-operational loss of INR 353 mn (Previous Year INR 40 mn) arising from the equity shares held by the Company in Quess Corp Limited through its Employees Benefit Trust Consolidated PBT excluding Mark to Market loss of INR 353 mn (Previous Year INR 40 mn) and excluding exceptional item would be INR 642 mn [Previous Year INR (3,152)] Stand-alone PBT excluding Mark to Market loss of INR 353 mn (Previous Year INR 40 mn) and excluding exceptional item would be INR 561 mn [Previous Year INR (1,140)]

Key Ratio (Standalone)	FY23	FY22	% Change	Explanation
Current ratio (in times)	1.23	1.31	-5.61%
Debt equity ratio (in times)	0.08	0.11	-25.43%	The ratio has improved primarily due to better working capital management and corrosponding lower utlisation of bank credit facilities.
Return on Net Worth (RONW) or Return on Equity (ROE) (in percentage)	2.08%	-4.32%	-148.14%	Improvement in the business operations post Covid 19 pandemic.
Trade payable turnover ratio (in times)	1.49	0.55	170.08%	Improvement in the business operations post Covid 19 pandemic.
Net Capital turnover ratio (in times)	4.14	0.83	398.28%	Improvement in the business operations post Covid 19 pandemic.
Net Profit Ratio (in percentage)	2.70%	-27.46%	-109.82%	Improvement in the business operations post Covid 19 pandemic.
Return on capital employed (in percentage)	4.93%	-5.19%	-195.03%	Improvement in the business operations post Covid 19 pandemic.
Return on investment (in percentage) ##	3.02%	2.09%	44.58%	This is primarily on account of overall increase in rate of interest in the economy.

 

Key Ratio (Consolidated)	FY23	FY22	% Change	Explanation
Debtors Turnover	12.52	10.24	22%
Inventory Turnover	138.96	60.91	128%	Improvement in the business operations post Covid 19 pandemic.
Interest Coverage ratio	1.30	-4.23	NA	Since the Company has incurred profit as compared to losses last year.
Current Ratio	0.80	0.68	18%
Debt-Equity Ratio	0.32	0.36	-11%
Operating Profit Ratio	1.1%	-16.7%	106%	Operating Profit ratio has been improved on account of removal of restriction in travelling across the world post pandemic which has resulted in Increase in r
Net Profit Ratio	0.9%	-13.2%	-107%	Improvement in the business operations post Covid 19 pandemic.
Return on Equity	2.74%	-14.00%	-120%	Improvement in the business operations post Covid 19 pandemic.

Risk management

Risk assessment and management are critical to ensure the long-term sustainability of the business. The Company has in place a strong risk management framework with regular reviews by the senior management. Enlisted below are the key risks identified and the associated mitigation measures.

Risk Management	Mitigation
Economic risk: The Companys business is closely associated with the macro environment that impacts the consumers behaviour and purchasing power. Rising inflation and an unstable political environment have affected the tourism industry.	Thomas Cook (India) Limited have a strong client base and the Companys customer-centric approach and efficient service delivery is driving our growth irrespective of economic instability
Credit risk: As the Company deals with a wide range of corporates and channel partners, it is exposed to major credit risks. Any default or delay in payments may adversely affect the Companys financials.	The Companys well-defined, balanced and comprehensive client policy drives all contracts and business dealings in addition to the finance teams evaluation of financial capabilities of big clients and channel partners.
Forex risk: Being present across diverse geographies, the Company deals in several currencies and runs the risk of unfavourable movement in any currency leading to financial losses.	The Company has a stringent hedging policy to manage its forex risks. It closely monitors all currency fluctuations and enters into hedging contracts to protect margins.
Competition risk: As the Company is a premium brand in all the categories across geographies and competes with local players, there is intense competition and pricing wars, which may adversely impact the Companys operating margins.	Our Companys leadership presence in most markets helps to derive competitive advantages while our pricing strategy is based on healthy targeted margins.
Integration risks: The Companys investment in diversified businesses in divergent geographies requires harmonious integration of people, assets, processes and systems. Any deficiency in the integration process may impact the Companys growth prospects.	The Companys promoters and senior management have successful track records in managing acquisitions and integrations. Also, the Company has recently streamlined its business divisions into four verticals for greater focus and agility in business operations.

Adequacy of Crisis Risk & Environment Risk

Internal control systems are embedded in all processes across all functions within our Company. These systems are regularly reviewed and wherever necessary, they are modified or redesigned to ensure better efficiency, effectiveness and controls. All processes and systems are subject to Internal Audit through an annual internal audit plan approved by the Audit Committee. These are further supported by Internal Financial Auditors and Statutory Auditors who validate that financial reporting is true and fair and that these controls are designed and operate effectively. Our Company has also adopted a system of Concurrent Auditing in line with RBI guidelines for its Foreign Exchange business across branches. Our Companys Anti-Money Laundering policy is regularly reviewed and updated, incorporating applicable revisions therein according to any modified guidelines issued by the RBI. Further, the Company has taken necessary measures and steps in adoption for continued implementation of controls for ensuring the compliances associated with the audit trail. The results of all audits are discussed with Senior Management and reviewed by the Audit Committee, which meets at least once every quarter.

Forward-looking statements

Statements forming part of the Management Discussion and Analysis Report covered in this Report may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence our Companys operations include demand and supply conditions, changes in government regulations, exchange rates, tax laws, monsoon, natural hazards, national and global economic developments and other factors.