Cox & Kings’ initial public offer (IPO) issue will be open between November 18 and 20 and the company will issue of 1.849 crore shares with a fresh issue of 1.54 crore shares. In an exclusive interview with CNBC-TV18, Peter Kerkar, Promoter and Director of Cox & Kings India, spoke on the company’s IPO issue.
Below is a verbatim transcript of the exclusive interview with Peter Kerkar on CNBC-TV18. Also watch the accompanying.
Q: You have grown your consolidated revenues by more than 50–60% over the last three years, can you continue to grow in this environment at that kind of a pace?
A: Cox & Kings is fortunately poised in a market and industry that has been growing at a tremendous rate. If you look at the outbound statistics from this country, we had only 4.4 million people leaving in the year 2000 but that has increased to 10.8 million in the year 2008. Euromonitor predicts that in the next four years we are going to see another 70% growth on the inbound services, that is clients coming into India. We have seen that the passengers have nearly doubled in the last eight years and Euromonitor predicts that going forward we should see a further doubling of the passengers by the year 2012 with positive effects of the Commonwealth Games coming in. So, the company reflects its growth in terms of reflecting the industry growth.
Q: A very large part of your income of your leisure business––about 60%––comes from outbound services and you derive a very large part of your revenues from your overseas subsidiaries as well. How is that part of the story looking, has it been affected by the global downturn or you expect robust growth from the outbound and the overseas business?
A: The outbound business has traditionally been a business driver for us where we can aggregate services and then leverage that and sell that on to the client. We have around 40% of our total revenues in Q1 of this year that came from our overseas operations, and we deliberately chose this strategy to ameliorate risk so that we can tap all markets. Obviously, India is the fastest growing market in fact the World Travel and Tourism Council (WTTC) predicts that India will grow second only to China in terms of outbound as well as inbound travellers in the world. So once again we feel that we are incredibly positively poised to take advantage of this growth.
Q: The one problem people have with your company right now is that because you have been funding this kind of aggressive overseas expansion you have done it via borrowing, so your interest costs are extremely high by consequence your net profit margins are squeezed. How much of the IPO money will be used to pay-off this debt and how much more do you expect to see by way of piling on borrowings?
A: Currently, we have around Rs 400 crore of debt in the company. One of the main objects of the issue proceeds are to write-down our expensive short-term debt of Rs 130 crore. However, the remaining debt is on a very favourable dollar terms, which is backed by our earnings with our foreign outcome. So I don’t perceive as to increase borrowings at all in the future, and in fact our debt ratios have gone down very positively.
Q: You have a couple of other interesting businesses as well within the mother or core business, which is the train business and visa processing. How much does that contribute right now both to revenues and profits?
A: Currently, both the businesses are in an inception phase. In fact, we are very pleased about our joint venture (JV), it is an exclusive joint venture with Indian Railways Catering and Tourism Corporation (IRCTC) which is a 100% subsidiary of the railways. We are positioning this as the most deluxe luxury train in the world. Currently, it does not have any impact on our revenues because we expect the train to rollout in January of 2010, and we will be showcasing India all the way from Mumbai to Kolkata and it has run as an incentive luxury train. So you can enjoy things like elephant polo on it and it is priced at USD 800 a day.
Q: Do you think you will close the year at more than Rs 400 crore revenues and do you think you can continue to hold margins at more than 40% as you have for the last three years?
A: I think that speaking historically if you look at our first quarter this year, it has been a tremendous quarter for us. In fact, aside from around Rs 16 crore of other income which was from our Australian operation, we had 27 crore of income in Q1 alone as opposed to 60 crore plus for all of last year. This has given us the confidence that the environment is very strong for travel and going forward we feel that the growth in the company will reflect the industry figures that have been predicted. So I think that just our Q1 performance is reflective of how confident we feel at the moment.
Q: Will Cox & Kings continue to follow or pursue a fairly aggressive acquisition or inorganic strategy, you have made five acquisitions in the last three years, do you think that will continue going forward?
A: I feel very proud to say two of those acquisitions were our parent company and we see ourselves as being the first Indian multinational travel company in the world. We in the past three years have acquired, through cash acquisitions, an operation in Australia and New Zealand, an operation in the US and an operation in Europe to handling inbound customers. We found that their strategy fits in with our philosophy because we already deal with over 150 countries worldwide and are used to dealing in an international environment. We have appointed merchant bankers, and if you see Rs 150 crore of our proceeds are going specifically for acquisitions and we will continue to look at our core areas of travel which are outbound package leisure holidays overseas as a focus thrust for us.
Q: You were considering a pre-IPO placement, is that still on the cards?
A: No we have no pre-IPO placement but our issue allows for an anchor issue so hopefully we will be able to share that news this evening with you.
Below is a verbatim transcript of the exclusive interview with Peter Kerkar on CNBC-TV18. Also watch the accompanying.
Q: You have grown your consolidated revenues by more than 50–60% over the last three years, can you continue to grow in this environment at that kind of a pace?
A: Cox & Kings is fortunately poised in a market and industry that has been growing at a tremendous rate. If you look at the outbound statistics from this country, we had only 4.4 million people leaving in the year 2000 but that has increased to 10.8 million in the year 2008. Euromonitor predicts that in the next four years we are going to see another 70% growth on the inbound services, that is clients coming into India. We have seen that the passengers have nearly doubled in the last eight years and Euromonitor predicts that going forward we should see a further doubling of the passengers by the year 2012 with positive effects of the Commonwealth Games coming in. So, the company reflects its growth in terms of reflecting the industry growth.
Q: A very large part of your income of your leisure business––about 60%––comes from outbound services and you derive a very large part of your revenues from your overseas subsidiaries as well. How is that part of the story looking, has it been affected by the global downturn or you expect robust growth from the outbound and the overseas business?
A: The outbound business has traditionally been a business driver for us where we can aggregate services and then leverage that and sell that on to the client. We have around 40% of our total revenues in Q1 of this year that came from our overseas operations, and we deliberately chose this strategy to ameliorate risk so that we can tap all markets. Obviously, India is the fastest growing market in fact the World Travel and Tourism Council (WTTC) predicts that India will grow second only to China in terms of outbound as well as inbound travellers in the world. So once again we feel that we are incredibly positively poised to take advantage of this growth.
Q: The one problem people have with your company right now is that because you have been funding this kind of aggressive overseas expansion you have done it via borrowing, so your interest costs are extremely high by consequence your net profit margins are squeezed. How much of the IPO money will be used to pay-off this debt and how much more do you expect to see by way of piling on borrowings?
A: Currently, we have around Rs 400 crore of debt in the company. One of the main objects of the issue proceeds are to write-down our expensive short-term debt of Rs 130 crore. However, the remaining debt is on a very favourable dollar terms, which is backed by our earnings with our foreign outcome. So I don’t perceive as to increase borrowings at all in the future, and in fact our debt ratios have gone down very positively.
Q: You have a couple of other interesting businesses as well within the mother or core business, which is the train business and visa processing. How much does that contribute right now both to revenues and profits?
A: Currently, both the businesses are in an inception phase. In fact, we are very pleased about our joint venture (JV), it is an exclusive joint venture with Indian Railways Catering and Tourism Corporation (IRCTC) which is a 100% subsidiary of the railways. We are positioning this as the most deluxe luxury train in the world. Currently, it does not have any impact on our revenues because we expect the train to rollout in January of 2010, and we will be showcasing India all the way from Mumbai to Kolkata and it has run as an incentive luxury train. So you can enjoy things like elephant polo on it and it is priced at USD 800 a day.
Q: Do you think you will close the year at more than Rs 400 crore revenues and do you think you can continue to hold margins at more than 40% as you have for the last three years?
A: I think that speaking historically if you look at our first quarter this year, it has been a tremendous quarter for us. In fact, aside from around Rs 16 crore of other income which was from our Australian operation, we had 27 crore of income in Q1 alone as opposed to 60 crore plus for all of last year. This has given us the confidence that the environment is very strong for travel and going forward we feel that the growth in the company will reflect the industry figures that have been predicted. So I think that just our Q1 performance is reflective of how confident we feel at the moment.
Q: Will Cox & Kings continue to follow or pursue a fairly aggressive acquisition or inorganic strategy, you have made five acquisitions in the last three years, do you think that will continue going forward?
A: I feel very proud to say two of those acquisitions were our parent company and we see ourselves as being the first Indian multinational travel company in the world. We in the past three years have acquired, through cash acquisitions, an operation in Australia and New Zealand, an operation in the US and an operation in Europe to handling inbound customers. We found that their strategy fits in with our philosophy because we already deal with over 150 countries worldwide and are used to dealing in an international environment. We have appointed merchant bankers, and if you see Rs 150 crore of our proceeds are going specifically for acquisitions and we will continue to look at our core areas of travel which are outbound package leisure holidays overseas as a focus thrust for us.
Q: You were considering a pre-IPO placement, is that still on the cards?
A: No we have no pre-IPO placement but our issue allows for an anchor issue so hopefully we will be able to share that news this evening with you.
No comments:
Post a Comment