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Thomas Cook Ltd. (TCIL)– Notes of analyst meet

May 5, 2000

Thomas Cook is the world’s largest financial service provider having over 20 m customers. It is also single largest corporate travel company and forex dealer. The company also offers services pertaining to leisure holidays, global services, credit cards and financial services. The size of the global tourism industry is estimated to be US$ 1.83 trillion, which is larger than the size of $ 935 bn software industry. India employs only 0.3 m people in software industry as compared to 23 m in tourism industry. Tourism, which is also the highest export earning industry in India, has huge growth potential and TCIL is all set to capture a major share of the industry.

Sales Mix

The major revenue earner for TCIL continues to be forex business, which generates more than two thirds of total revenue. The developments in each of the above segments are described in brief below.

Forex Business: During FY1999, TCIL opened 5 new foreign exchange branches. A new foreign exchange counter was opened at the Delhi Railway station and at Cochin airport.

Travel Management Business: TCIL continues to enjoy brand loyalty from many corporate clients for their travel management related matters.

Leisure Travel Business: The leisure travel business will be major focus area for TCIL in the coming years and domestic travel will be the key business driver. It is also eyeing acquisitions for inorganic growth in this business. TCIL plans to offer customised packages for religious tours which it believes has large untapped potential. The company visualizes 15-20% growth in the leisure travel business. It is also likely to benefit from the increase in tourist traffic.

E-initiative: TCIL is actively gearing up for doing business on the web. It has a put in place a strategy to build a vertical portal and provide all links and information in travel related areas. It is planning to announce atleast 1 acquisition by the end of year 2001 in this area.

Aggressive Strategies: As part of its strategy, TCIL has plans to grow organically (10-15% growth) by introducing new products and by geographic expansion. The company is also exploring the possibilities of mergers & acquisitions in travel related areas. It has plans to go in other related areas like global services and tele-direct, insurance, e-commerce, call centres and credit cards. In the insurance business it has plans to go in the areas of basic non-life, broking and retail.

At current market price of Rs 605, TCIL is available at a P/E of 29 times is FY1999 earnings with a market cap to sales ratio of 0.75 times. The stock is trading near to its 52 week low.

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