Why I Bought Thomas Cook





Execu(ve  Summary:  Thomas  Cook  India  Limited  (TCIL)  (1/2)
§ Thomas  Cook  India  Limited  (TCIL)  is  India's  largest,  fully  integrated  and  highly  profitable  Foreign  Exchange  and  Travel  Operator  having  
a  current  market  cap  of  ~  INR  14  billion  and  FY12  revenue  of  ~  INR  4.3  billion.  
§ OperaMng  in  India  for  the  last  132  years  with  a  robust  business  model.  Since  it  went  public  30  years  ago,  TCIL  has  never  suffered  a  
loss,  never  skipped  a  dividend  and  experienced  a  revenue  decline  in  only  3  years  
• Dominant  share  of  more  than  50%  in  India's  foreign  currency  bank  notes  exchange  business  (gross  business  volume  of  $1.8  billion  
in  2012)  
• India's  leading  and  rapidly  growing,  leisure  outbound  tour  operator  offering  tour  packages  for  50  countries  to  India's  vast  and  
increasingly  prosperous  middle  class  ci(zens  who  are  brand  conscious  and  eager  to  explore  the  world  despite  significant  
deprecia(on  in  INR  which  makes  foreign  travel  more  expensive  
• India's  leading  MICE  (Mee(ngs,  Incen(ves,  Conferences  and  Events)  player  by  sales    
• One  of  India's  largest  corporate  travel  agents  having  more  than  700  clients    
• One  of  India's  top  three  leisure  inbound  travel  companies  
§ Both  the  forex  and  the  travel  businesses  have  enduring  compeMMve  advantages  and  huge  synergies  which  enable  TCIL  to  deliver  Free  
Cash  Flow/Tangible  Networth  of  more  than  24%  a  year  
• TCIL’s  revenue  and  EBIT  have  grown  at  a  CAGR  of  16%  and  14%  respec(vely  over  last  10  years  
§ Acquired  by  Canada's  Fairfax  Financial  Holdings  (founded  by  legendary  value  investor  Prem  Watsa)  from  distressed  BriMsh  parent  
• Fairfax  has  a  solid  track  record  of  delivering  a  22.7%  CAGR  in  book  value  and  19%  CAGR  in  stock  price  over  last  27  years.    

shareholders  through  both  organic  and  inorganic  growth.

o Fairfax  is  an  experienced  acquirer  of  businesses  (more  than  25  acquisi(ons)  and  has  delivered  long  term  value  to  its  

• Fairfax  paid  10  (mes  free  cash  flow  for  a  75%  stake  in  TCIL  aber  adjus(ng  for  its  undervalued  real  estate  assets.  Fairfax  has  started  
the  process  of  mone(zing  the  real  estate  assets  of  TCIL.  
• Prem  Watsa  sees  a  huge  poten(al  for  TCIL  and  recently  said:  “You  will  understand  the  great  growth  poten3al  of  this  company  
when  you  realize  that  currently  only  one  million  Indians  annually  travel  outside  India  for  holidays.  This  compares  to  some  40  
million  outbound  tourists  in  China  and  hundreds  of  millions  of  outbound  tourists  in  the  western  world."

2




Execu(ve  Summary:  Thomas  Cook  India  Limited  (TCIL)  (2/2)
§ Management  is  confident  of  delivering  significantly  be[er  financial  performance  post  acquisiMon  by  Fairfax  
• Top  management  incen(ves  have  been  shibed  from  delivering  accoun(ng  earnings  to  cash  flow.    
• Management  is  implemen(ng  cost  ra(onalizing  plans  
• Both  the  CEO  and  Chairman  of  the  TCIL's  Board  have  been  buying  shares  from  the  market  for  their  personal  account.  
§ Prem  Watsa  has  announced  his  intenMon  to  use  TCIL  as  Fairfax's  investment  vehicle  in  India  for  acquiring  other  great  businesses  
• In  2013,  Thomas  Cook  bought  India's  third  largest  and  most  profitable  HR  Solu(ons  company  from  private  equity  investors  
(under  exit  pressures)  

o IKYA  Human  Capital  provides  62,000  temporary  staff  (including  professional  staff)  to  more  than  500  clients  including  
Nokia,  IBM,  Accenture,  J.P.  Morgan,  and  HP    
§ At  it's  current  price  of  INR  55  (which  is  just  INR  3  higher  than  what  Fairfax  paid  for  its  controlling  stake  in  the  company),  the  shares  
of  TCIL  are  a  bargain  
• Current  stock  price  provides  an  excellent  “sidecar”  investment  opportunity  along  with  Fairfax  on  very  favorable  terms

3
 

India’s  Largest  Fully-­‐Integrated  Foreign  Exchange  and  Travel  Operator

Low  Vola(lity  Business  derived  from  a  very  RESILIENT  

IntroducMon

Business  Model
Descrip(on No Remarks
Years  since  company  went  
30 -­‐
public
Years  during  which  
Forex  Business

Worst  decline    of  

revenues  declined   3
16%  (2009)

ü 70%  of  travel   compared  to  previous  year  
customers  also  
buy  forex Years  during  which  company  
Nil -­‐
ü Nostro  credit  can   suffered  net  loss

be  used  for  
seIling  outbound   Years  during  which  dividend  
Travel  Business

Nil -­‐
travel  liabili3es was  skipped
ü Weak  rupee  helps  
Years  during  which  dividend  

forex    and   2 -­‐
inbound  travel   was  reduced
volumes  
Years  during  which  net  
ü Strong  rupee   Worst  decline    of  
earnings  declined  compared   7
33%  (2009)
HR  SoluMons

helps  outbound  
to  previous  year  
travel  volumes

Thomas'Cook'(India)'Ltd.'Aggregate'Performance'[INR=Millions] Dec=03 Dec=12 CAGR''''

(Since'2003)
Opportunity

Revenue&from&wholesale&forex&and&travel&and&related&services &&&&1,110 &&4,302 16%

EBIT &&&&&&&&340 &&1,081 14%
EBIT&Margin&(%) 31% 25%
Free&Cash&Flow&to&Average&Tangible&Networth 17% 24%

Source:  Company  Presenta3on

 



TCIL:  Company’s  History
IntroducMon
Forex  Business
Travel  Business
HR  SoluMons

ü Company  changed  hands  three  (mes  in  last  8  years  

Opportunity

ü New  owner  is  long  term  value  oriented  with  an  established  track  record  of  wealth  crea(on    
ü Iconic  Global  Brand:  TCIL  has  13  years  license  to  use  “ Thomas  Cook”  brand  in  India  from  Thomas  
Cook  UK

5
Source:  Company  Presenta3on
 



Promoter  Group

Fairfax  Financial  Holdings  and  Prem  Watsa

IntroducMon
Forex  Business

§ Fairfax  Financial  Holdings  Limited  is  a  financial  services  holding  company  whose  
build  long  term  shareholder  value.    
!


stated  corporate  objec(ve  is  to  achieve  a  high  rate  of  return  on  invested  capital  and  

Thomas  Cook  to  become  Fairfax’s  

Travel  Business

§ Fairfax  Financial  Holdings  Limited  had  a  revenue  of  USD  8  billion  and  total  assets  of  
USD  37  billion  in  2012.
investment  vehicle  in  India

!
§ The  current  market  capitaliza(on  of  Fairfax  is  USD  26  billion.
!

“We  are  so  high  on  Thomas  Cook  India  that  we  
expect  the  company  will  be  our  vehicle  for  further  
expansion  in  India”  

 

!
HR  SoluMons

§ Prem  Watsa  is  the  founder,  chairman,  and  chief  execu(ve  of  Fairfax  Financial  


Holdings,  based  in  Toronto,  Ontario.  He  has  been  referred  to  as  the  "Canadian  
Warren  Buffeq“  in  the  value  inves(ng  community.
  –  Prem  Watsa  at  Fairfax  
Stockholder’s  MeeEng  in  April  2013
!
§ Over  last  27  years,
Process  already  started  through  Ikya  acquisiEon  
(discussed  later)

§ The  stock  price  of  Fairfax  Financial  Holdings  Limited  has  grown  at  a  
Opportunity

compounded  annual  growth  rate  of  19%.

§ The  book  value  has  grown  at  a  compounded  annual  growth  rate  of  22.7%

6
 

TCIL  Has  Significant  CompeMMve  Advantages  in  Forex  Business

TCIL’s  Huge  DistribuMon  Network
IntroducMon

India



• Asset  light  model  means  investment  
150  Own  Stores
131  Franchises
in  fixed  assets  is  very  low  
165  Preferred  Sales  Agents • 21  loca(ons  at  six  major  airports  
39  Extension  Counters provide  cap(ve  customers  for  forex  
Forex  Business

business  at  lucra(ve  margins

Travel  Business

Strength  of  Forex  Business

§ Compe((ve  advantage  in  Retail  Forex  from:  

ü Wide  Distribu(on  Network  (Availability)  
ü The  Global  Recognized  “ Thomas  Cook”  Brand  
HR  SoluMons

ü Synergies  with  Wholesale  Forex  

ü Synergies  with  Travel  Business.  70%  of  Thomas  
Cook  travel  customers  also  buy  forex  from  the  
company.  They  don’t  shop  around  for  a  beqer  
Opportunity

rate  
§ Consequently,  Thomas  Cook  has  Pricing  Power  
over  Compe(tors  and  charges  2-­‐3%  premium

7
Source:  Company  Presenta2on
http://www.youtube.com/watch?v=JnCxcBuyYFg
8
 !
TCIL  is  India’s  Largest  Dealer  in  Foreign  Currency  Bank  Notes

IntroducMon

§ More  than  50%  market  share

§ Buying  /  Selling  and  Export  of  Bank  Notes

Bank  Notes § Handles  more  than  1.6  m  transac(ons  annually
§ Gross  business  volume  of  $1.8  billion  in  2012

Forex  Business

§ One  of  the  world’s  largest  exporters  of  bank  notes  (Flies  cash  to  London  and  UAE  every  
night)  

§ Present  in  over  16,800  agent  loca(ons  across  the  country  

Travel  Business

§ TCIL  is  the  principal  agent  for  'MoneyGram'  in  India  and  has  (ed  up  with  SBI  (rollout  at  
Remi[ances  Business 15,000  branches  of  SBI)    
§ Tied  up  with  'Xpress  Money‘  -­‐  a  UAE  Exchange  offering,  to  offer  its  services  at  TCIL's  forex  
counters
HR  SoluMons

§ Recently  launched  Prepaid  Travel  Card  in  associa(on  with  MasterCard  and  Access  Prepaid  
Worldwide  and  with  it  became  the  first  non  bank  ins(tu(on  to  be  permiqed  by  RBI  to  do  so.    
Prepaid  Forex  Cards  /  
MulM-­‐currency  Forex  
§ TCIL  has  sold  over  10,000  Borderless  mul(-­‐currency  pre-­‐paid  cards  with  $  25  mn  loaded  in  
them  in  as  of  15  February  2013  
Opportunity

Cards
§ Very  aqrac(ve  because  of  mul(ple  earnings  streams:  
ü ATM  Fees,  Merchant  Fees,  fee  from  Inter-­‐currency  transfers

9
 

Business  Overview:  Forex  OperaMonal  Overview
IntroducMon

ü TCIL’s  forex  ecosystem  

delivers  huge  economies  of  
scale
ü

ü
currency  risk

The  company  hedges  all  

Short  working  capital  cycle,  

Forex  Business

not  available  to  its  

compe(tors,  allows  TCIL  to  
operate  profitably  at  thin  

ü
segment

margins    in  wholesale  forex  

Other  wholesale  forex  

Travel  Business

players  become  TCIL  

customers  because  they  
have  to  offload  surplus  
inventory  of  foreign  
currency  bank  notes

HR  SoluMons

ü High  volume  and  low  margin  business

Wholesale  

Business

ü Earns  54%  margins  on  net  revenue  while  keeping  gross  spreads  at  approximately  0.4%
ü In  wholesale  forex  segment  ,  compe(tors  are  Thomas  Cook’s  customers  implying  market  share  well  in  excess  of  50%
ü Extremely  sensi(ve  to  market  movements  and  pricing

Opportunity

Business

ü Retail  segment  spreads  are  4x-­‐5x  wholesale  spreads

Retail  

ü Rela(vely  price  inelas(c  at  airports  and  other  retail  outlets

10
11
12
13
 

Inward  and  Outward  Remi[ances  from  India
Top  10  Recipients  of  Migrant  Remi[ances Remi[ances  and  Other  Resources  Flows  to  Developing  
IntroducMon

stable

Remittances inherently

since they finance

Forex  Business

maintenance of relatives
Travel  Business

Trends  in  Remi[ance  Prices  Worldwide

HR  SoluMons

High  margins  for  

intermediaries
Opportunity

14
Source:  Company  Presenta2on
 

Performance  of  Wholesale  Forex  Business
IntroducMon
Forex  Business

High  Entry  Barriers

!
ü Huge  Scale  advantages  which  allow  TCIL  to  earn  high  EBIT  margins  despite  low  
gross  spreads  of  0.4%  which  are  not  aqracted  from  most  other  forex  players  ,  

Travel  Business

ü Logis(cal  eco-­‐system  created  over  decades  (ability  to  seamlessly  and  safely  
transport  large  amount  of  foreign  currency  notes  within  India  and  globally),

ü


Only  fully  integrated  travel  foreign  exchange    and  travel  operators  willing  to  
compete  as  they  have  foreign  liabili(es  to  pay  hotels  and  airlines,
ü RBI  license  needed
HR  SoluMons
Opportunity

15
 

Business  VerMcals  –  Travel  and  Related  Services
IntroducMon

Overview Posi(oning  of  Thomas  Cook

§ India’s  Leading  Leisure  Outbound  Tour  

Leisure  Outbound

§ Fastest  growing  business  segment   Operator  by  Sales  and  Number  of  Passengers  
§ Distribu(on  through  mul(ple  channels   § Claims  to  have  a  market  share  of  c.4-­‐5%  
§ Focus  on  long-­‐haul  routes  with  high  margins   § India’s  largest  buyer  of  interna(onal  travel  components  
Forex  Business

§ Product  Innova(on (airline  seats,  room  nights  etc.)  delivering  a  low-­‐cost  

advantage  over  smaller  outbound  tour  operators

§ Among  the  top  3  inbound  players  in  India   § One  of  India’s  Top  Three  Leisure  Inbound  
§ Operates  via  Two  brands  –  Thomas  Cook  and  TCI   Players  
§ Key  markets:  Europe,  Japan  and  the  US   § ~85%  of  Leisure  travel  inbound  revenues  is  coming  from  
Inbound
Leisure  
Travel  Business

§ Broad  network  of  travel  agents  and  tour  operators   Non-­‐Thomas  Cook  Global  Customers  
worldwide § France,  Spain,  Japan  and  US  are  biggest  markets

§ Amongst  major  corporate  travel  players  in  India   § More  than  700  clients  
Corporate  

§ Distribu(on  through  stores,  service  centres  and  “implants”   § Strong  rela(onship  and  high  level  of  sa(sfac(on  with  
HR  SoluMons

Travel

§ Many  marquee  clients,  including  Indian  mul(-­‐na(onals exis(ng  customers

§ One  stop  shop  for  all  types  of  corporate  events  

§ Key  customers  include  corporates  in  pharmaceu(cals,  
consumer  durables,  automo(ves  and  financial  services  
Opportunity

India’s  leading  MICE  player  by  sales

MICE

§ Corporate  arrangements  with  a  number  of  event  

management  companies

16
 

A  Dominant  Player  in  Outbound  and  Inbound  Travel  in  India
IntroducMon

“You  will  understand  the  great  growth  potenEal  of  this  company  when  you  realize  that  currently  only  one  million  Indians  annually  travel  

     


outside  India  for  holidays.  This  compares  to  some  40  million  outbound  tourists  in  China  and  hundreds  of  millions  of  outbound  tourists  in  the  
western  world.  Enormous  opportunity  indeed!”
—  Prem  Watsa  at  Fairfax  Stockholders’  MeeEng  in  April  2013
Forex  Business

ü Outbound  Leisure  Travellers  pay  in  advance  but  payments  to  hotels  and  airlines  is  made  later  by  Thomas  Cook  
(nega(ve  working  capital)  
ü This  business  can  grow  significantly  without  requiring  significant  capital
Travel  Business

Inbound  Travel  Growth Outbound  Travel  Growth

HR  SoluMons

India  has  suffered  from  a  series  of  nega(ve  events  over  last  20  
years,  yet  Inbound  travel  industry  keeps  growing
Opportunity

“Wanderlust Will Prove Immune To Patchy Economic Conditions” - The Economist

17
 

A  Dominant  Player  in  Outbound  and  Inbound  Travel  in  India
IntroducMon
Forex  Business
Travel  Business
HR  SoluMons
Opportunity

18
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M E D I A N A G E I N I N D I A : 2 7 Y E A R S ; P O P U L AT I O N : 1 . 2 B I L L I O N
T H E R E W I L L B E A L O!T O F H O N E Y M O O N E R S
!
http://www.youtube.com/watch?v=r2btjiKKIMc
23
24
25
http://www.youtube.com/watch?v=vp1kql2V9ZY
http://www.youtube.com/watch?v=TibxmtTnvy8
!
What Are the Consequences of Such Scenes?

Why are so many Indian Films Shot Overseas?
http://www.youtube.com/watch?v=dslvkze7Sxs
http://www.youtube.com/watch?v=F6ZQs1bUYb4
http://www.youtube.com/watch?v=m_AREWFSwdA
Who paid for this wonderful commercial?

Who will reap the benefit?
33
34
35
36
37
38
Who paid for the “Incredible India” Campaign?

Who will reap the benefit?
 



Performance  of  Travel  Business
IntroducMon
Forex  Business
Travel  Business

Key  ObservaMons

ü The  company  clubs  retail  forex  business  into  the  “travel  and  related  services”  business  segment.  Wholesale  and  retail  
forex  businesses  cons(tute  about  50%  of  total  revenues.
ü


Because  Thomas  Cook  is  a  India’s  largest  buyer  of  interna(onal  travel  components  (airline  seats,  room  nights  etc.),  it  

HR  SoluMons

can  buy  these  components  at  discounted  prices  contribu(ng  to  healthy  margins  in  the  leisure  outbound  business.
ü The  recogni(on  of  the  “ Thomas  Cook”  brand  also  gives  the  company  pricing  power.
ü While  the  forex  business  (wholesale  and  retail)  are  working  capital  intensive,  the  leisure  outbound  business  has  
nega(ve  working  capital,  since  customers  pay  in  advance  and  travel  component  suppliers  are  paid  later.
Opportunity

40
 

IKYA  Human  Capital  SoluMons
IntroducMon

§ In  March  2013,  Thomas  Cook  India  Limited  acquired  74%  stake  in  Ikya  Human  Capital  Solu(ons,  India’s  fastest  growing  HR  
Solu(ons  company  from  private  equity  investors  (under  exit  pressures)
Forex  Business
Travel  Business
HR  SoluMons

62,000  Headcount  as  of  June  2013

!
ü Highly  scalable  business  Model  
 
Opportunity

ü Huge  value  addi(on  to  clients  who  simply  do  not  want  to  hire  permanent  staff  thanks  to  
India’s  restric(ve  labor  laws

41
 

Opportunity HR  SoluMons Travel  Business Forex  Business IntroducMon

42
IKYA’s  Track  Record  of  Growth  and  Profitability
 

IKYA  Group:  Strong  Performance

IntroducMon

§ No.  1  by  Net  Margins  in  India  and  No.  1  by  growth  in  Head  Count  as  well  as  Market  Share

Group  Level
§ Revenue  CAGR  of  69%  for  the  last  4  years
§ Es(mated  Net  Revenue  of  Rs.1,278Mn  for  this  year  with  an  EBITDA  of  Rs.473Mn


§ Management  es(mates  Net  Revenue  of  Rs.4,018Mn  and  an  EBITDA  of  Rs.1,677  Mn  for  the  year  2017
§ Industry  leading  margins  and  margins  comparable  to  interna(onal  peers  in  the  HR  Services  space

Forex  Business

§ Growth  through  market  leading  organic  efforts  and  new  business  lines  through  acquisi(ons

§ Magna  Infotech:  India’s  No.  1  Professional  Staffing  Company  (3  (mes  as  large  as  its  nearest  compe(tor)  
having  more  than  200  clients  including  IBM,  Accenture,  JP  Morgan  and  HP
Travel  Business

100%  Subsidiaries
§ AVON  Facili(es  Management  Services:  Top  3  player  in  the  South  India  and  fastest  growing  in  facili(es  
management  services  segment  in  India
HR  SoluMons

Awards  and  RecogniMons

ü Business  Today  –  May  2008  ,  India’s  Top  10  Hoqest  Start-­‐  ups  
ü Forbes  Magazine  -­‐  September  2011-­‐  Outstanding  Leader  in  the  Start-­‐up  
Opportunity

ü Nominated  for  CII-­‐Business  Line  Emerging  Entrepreneur  Awards  2012  –  January  2012

43
http://www.youtube.com/watch?v=AHzpJIgvp0Y
45
 

IKYA  Profitability  and  AcquisiMon  Analysis
IntroducMon

ü Huge  scale  economics

Forex  Business

ü Huge  value  addi(on  because  of    

professional  staffing  services  
Travel  Business

ü Bargain  price  for  high  quality  and  

HR  SoluMons

scalable  business
Opportunity

46
47
 

Opportunity  to  Invest  at  the  Same  Terms  as  Fairfax
IntroducMon

Thomas'Cook'India'Limited'Opportunity'Analysis'

Number'of'shares'outstanding'(mil) '''''''''''''''248 Notes:

Stock'Price'(July'3,2013)'(Rs)
Equity'Market'Capitalization
Estimated'Debt
''''''''''''''''''55
'''''''''13,615
''''''''''''1,850
acquisi(on  cost  of  INR  52  per  share

§ Current  stock  price  is  INR  3  more  than  Fairfax's  

§ Recently,  both  the  CEO  and  Chairman  of  the  

Forex  Business

Enterprise'Value '''''''''15,465 company  have  bought  shares  in  Thomas  Cook  

Less:'Estimated'Market'value'of'Surplus'Real'Estate ''''''''''''2,000 from  the  market
Less:'Value'of'IKYA'(at'cost)
Market'value'of'Wholesale'Forex'and'Travel'and'Related'Services
PostYtax'Free'cash'flow'for'2012
''''''''''''2,560
'''''''''10,905
''''''''''''1,003
worth  a  lot  more

§ IKYA  valued  at  cost,  even  though  its  probably  

§ Conserva(ve  valua(on  of  surplus  real  estate

Market'value/Free'Cashflow'Multiple 10.9'times
§ Management  is  implemen(ng  cost  ra(onalizing  
Travel  Business

plans

Thomas'Cook'India'Limited'Opportunity'Analysis'

Thomas'Cook'(India)'Ltd.'Cash'Flow'[INR9Millions]
Dec911 Dec912
HR  SoluMons

Revenue&from&wholesale&forex&and&travel&and&related&services &&&&3,738 &&&&4,302

Net&profit&before&tax &&&&&&&&806 &&&&&&&&771
Operating&Profit&before&working&capital&changes &&&&1,246 &&&&1,228
Cash&generated&from&operations &&&&1,539 &&&&1,350
Less&Depreciation &&&&&&&&139 &&&&&&&&142
Pretax&Free&Cashflow &&&&1,400 &&&&1,208
Opportunity

Less&tax&paid &&&&&&&&&&&&&6 &&&&&&&&205

PostKtax&Free&Cashflow &&&&1,394 &&&&1,003
Less&Interest&and&Financial&Charges &&&&&&&&277 &&&&&&&&326
FCF&Equity&Shareholders &&&&1,117 &&&&&&&&677

48
Thank You

49


Appendix:  TCIL’s  Stock  Price  Performance
Market  Performance Ownership  (As  of  May  7,  2012)

Others'
11%'

Ins3tu3ons'
14%'
Promoters  acquired  
stake  in  May  2012  
from  Thomas  Cook  
Parent

Fairfax'
Holdings'
75%'

Stock  Price  Performance

More  than  37%  Decline  in  Stock  Price  

Over  Last  5  Years

50
Source:  BSE  India,  Company  Financials,  Research  Reports


Appendix:  Financial  Performance  

Particulars*(INR*Millions) 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A
Income*Statement
Revenues ))))))))))775 ))))))1,055 ))))))1,141 ))))))1,402 ))))))1,443 ))))))2,551 ))))))3,297 ))))))3,266 ))))))2,795 ))))))3,486 ))))))4,105 ))))))4,405
EBITDA ))))))))))237 ))))))))))416 ))))))))))424 ))))))))))532 ))))))))))548 ))))))))))810 ))))))1,073 ))))))1,102 ))))))))))736 ))))))))))993 ))))))1,254 ))))))1,223
EBITDA'Margin 31% 39% 37% 38% 38% 32% 33% 34% 26% 28% 31% 28%
EBIT ))))))))))189 ))))))))))361 ))))))))))378 ))))))))))475 ))))))))))480 ))))))))))695 ))))))))))985 ))))))))))991 ))))))))))620 ))))))))))858 ))))))1,114 ))))))1,081
EBIT'Margin 24% 34% 33% 34% 33% 27% 30% 30% 22% 25% 27% 25%
PBT ))))))))))162 ))))))))))310 ))))))))))343 ))))))))))439 ))))))))))441 ))))))))))585 ))))))))))656 ))))))))))631 ))))))))))405 ))))))))))636 ))))))))))806 ))))))))))771
PAT ))))))))))))88 ))))))))))199 ))))))))))218 ))))))))))280 ))))))))))285 ))))))))))359 ))))))))))519 ))))))))))373 ))))))))))250 ))))))))))472 ))))))))))562 ))))))))))504
PAT'Margin 11% 19% 19% 20% 20% 14% 16% 11% 9% 14% 14% 11%

Balance*Sheet
Shareholder's)Funds ))))))))))922 ))))))1,072 ))))))1,228 ))))))1,446 ))))))1,669 ))))))1,579 ))))))1,955 ))))))2,240 ))))))3,020 ))))))3,407 ))))))3,923 ))))))4,384
Total)Borrowings ))))))))))255 ))))))))))243 )))))))))))))))4 ))))))))))155 )))))))))))))))2 ))))))2,524 ))))))2,857 ))))))2,605 ))))))1,700 ))))))2,016 ))))))2,378 ))))))2,089
Total)NonHCurrent)Assets ))))))))))459 ))))))))))455 ))))))))))482 ))))))))))547 ))))))))))568 ))))))2,141 ))))))2,176 ))))))2,159 ))))))2,194 ))))))2,476 ))))))2,851 ))))))3,168

51
Source:  BSE  India,  Company  Financials,  Research  Reports


Appendix:  Real  Estate  Assets  of  the  Company

In  2012,  Thomas  Cook  India  had  revenue  of  $80  million.  In  the  last  three  years,  revenue  and  pre-­‐tax  profit  

the  company  at  approximately  ten  Emes  2012  free  cash  flow.  
!


have  grown  at  17%  and  24%  respecEvely.  A^er  adjusEng  for  undervalued  real  estate  assets,  we  purchased  

        —  Prem  Watsa  at  Fairfax  Stockholders’  MeeEng  in  

April  2013

Details  ProperMes

leased  by  the  Company,  15  are  owned,  124  are  leased/licensed.  

§ TCIL  has  various  owned/leased  proper(es  used  for  business  and  commercial  purposes.  From  all  the  proper(es  owned/

§ Many  of  these  proper(es  are  in  key  loca(ons  across  Mumbai,  Delhi,  Kolkata,  Chennai  and  Goa

!
ü Thomas  Cook  will  try  to  mone(ze  these  Proper(es  over  next  few  years
ü Combined  Value  of  all  these  assets  is  es(mated  to  be  in  excess  of  INR  2  billion
 

52
!
!
Appendix:!Cost!Ra0onaliza0on!Poten0al!

A 20% cut in
Payroll costs would
have boosted FY12
PBT from Rs 770
Mil to Rs 1,122 Mil
(46% increase)!

53
54




Appendix:  Online  Players  are  not  a  Threat  to  TCIL  in  Travel  &  Related  Services
TCIL’s  Advantage  over  online  players  like  Makemytrip

ü Package  tours  cannot  be  sold  online  effec(vely  making  TCIL  irreplaceable  vis-­‐à-­‐vis  online  players  

(ckets)  which  is  not  available    to  Makemytrip

ü TCIL  has  a  lower  cost  structure  due  to  its  scale  advantages  as  the  largest  buyer  of  travel  inventory  (hotel  rooms,  airline  

ü TCIL  does  not  bear  many  IT  costs  (payment  gateways,  website)  which  Makemytrip  does

ü TCIL  has  anyways  replicated  online  model  which  Makemytrip  is  doing,  as  it  now  a  sells  holidays,  forex,  visa  services  online

55