Thomas Cook India : TCIL Q1 FY24 Transcript

August 14, 2023
The Manager,	The Manager,
Listing Department	Listing Department
BSE Limited	National Stock Exchange of India Limited
Phiroze Jeejeebhoy Towers,	Exchange Plaza, 5th Floor, Plot No. C/1,
Dalal Street,	G Block, Bandra-Kurla Complex, Bandra (E),
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Scrip Code: 500413	Scrip Code: THOMASCOOK
Fax No.: 2272 2037/39/41/61	Fax No.: 2659 8237/38
Dear Sir/ Madam,

Subject: Transcript of the Analyst and Investor Earning Conference Call

In furtherance of our intimations dated August 1, 2023, August 9, 2023 and August 10, 2023 giving intimations on the Q1 FY24 Earning Conference Call for the Analysts and Investors and pursuant to Regulations 30 and 40(2)(oa) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please note that the transcript of the Earnings Conference Call held on August 10, 2023 has been uploaded on the website of the Company within the prescribed timeline and can be accessed on the following weblink: https://resources.thomascook.in/downloads/TCIL_Q1_FY_24_Investor_Earning_Call_Transcript.pdf

This is for your information and records.

Thank you.

Yours faithfully,

For Thomas Cook (India) Limited

AMIT JYOTINDRA PAREKH

Digitally signed by

AMIT JYOTINDRA PAREKH

Date: 2023.08.14 20:09:43 +05'30'

Amit J. Parekh

Company Secretary and Compliance Officer

Encl: a/a

THOMAS COOK INDIA LIMITED

Q1 FY2024 Earnings Conference Call

August 10, 2023

MANAGEMENT:

MR. MADHAVAN MENON - EXECUTIVE CHAIRMAN, THOMAS COOK (INDIA) LIMITED

MR. MAHESH IYER - MANAGING DIRECTOR AND CHIEF EXECUTING OFFICER ‐ THOMAS COOK (INDIA) LIMITED MR. DEBASIS NANDY ‐ GROUP CHIEF FINANCIAL OFFICER - THOMAS COOK (INDIA) LIMITED

MR. BRIJESH MODI ‐ CHIEF FINANCIAL OFFICER ‐ THOMAS COOK (INDIA) LIMITED

MR. VISHAL SURI - MANAGING DIRECTOR - SOTC

MR. VIKRAM LALVANI - MANAGING DIRECTOR -STERLINGHOLIDAYS

MR. RAMKRISHNAN - MANAGING DIRECTOR AND CEO - DEI

MR. KRISHNA KUMAR - CHIEF FINANCIAL OFFICER ‐ STERLING RESORTS

Moderator: Ladies and gentlemen, good day and welcome to the Thomas Cook Q1 FY2024 earnings conference call hosted by IIFL Securities Limited. As a reminder all participant lines will be in the listen‐only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vidit Shah from IIFL Securities Limited. Thank you and over to you Mr Shah!

Vidit Shah: Thank you, Rio. Ladies and gentlemen good afternoon and thank you for joining us on the Q1 FY2024 earnings conference call of Thomas Cook India Limited. I invite the company's senior management team to discuss the results and business strategy. We will begin the call with opening remarks from Mr. Madhavan Menon and thereafter we will open the call for Q&A Session. I would like to now hand over the call to Mr. Menon to take the proceedings forward. Over to you Sir!

Madhavan Menon: Thank you, Vidit. Thank you, Rio. Before I start ladies and gentlemen very good afternoon to you. Let me also introduce the other participants. Mr. Mahesh Iyer, the Managing Director of Thomas Cook India Limited, Mr. Vishal Suri, Managing Director of SOTC Limited, Mr. Vikram Lalvani, Managing Director of Sterling Holiday Resorts,

Mr. Debasis Nandy, Group CFO, Mr. Brijesh Modi, CFO of Thomas Cook India Limited and Mr. Ramakrishnan, Managing Director of DEI.

Ladies and gentlemen, this has been another good quarter for us and instead of looking at it purely from a sequential point of view let me say that there are several reasons why this quarter has looked very good. The first being that historically this quarter is a quarter where all the travel businesses especially the leisure businesses both across Thomas Cook India, SOTC and Sterling have very good volumes because they execute the holiday season. The second important point is that coming out of COVID as we mentioned over the last couple of calls, we have restructured ourselves by managing our costs and as you will see that our costs are significantly down from what we were pre‐COVID and we believe that we have reached a level where it could be sustainable over a period of time. If you look at the margins, if you look at the cost‐to‐revenue ratio, if you look at the other costs in the business you will note that the margins are much higher and they have been for nearly a year now. If you look at the costs, they are down, if you look at productivity numbers, they have improved. So, in reality I think we are sitting at a point where the productivity of the businesses has improved significantly. Again, Thomas Cook, SOTC and Sterling have led the profitability drive in this quarter and we expect that going forward something that Mahesh, Vishal and Vikram will explain. Our bookings look good.

Before I hand over, let me just make a couple of comments of the other businesses. The foreign exchange business had an exceptional quarter and Mahesh will talk about this where we have seen some record numbers. If you look at the MICE business across both Thomas Cook and SOTC they have had a very, very good quarter, they have exceeded their budgets, this year as well as in the previous year. If you look at the leisure business despite recoveries from pre‐COVID still being low they have actually managed to increase their profitability significantly. Look at Sterling Holiday results as I mentioned earlier record quarter, they have record profits also. As far as DEI is concerned, we have seen from the news that the domestic markets in China are firing on all cylinders and Southeast Asia has reopened. It is a relatively low season in the Middle East where a lot of our businesses are concentrated. However, having said that I think the group as a whole has done fairly well, couple of businesses, especially the one that is TCI and Asian Trails have been a little slow in recovering because they conduct long haul business where most of their customers come in from Europe and the United States and these have been slow to take off. Having said that I expect the next couple of quarters to continue the trend that we are witnessing. I will hand over to Debasis now who will explain the numbers and hand it over to Mahesh, Vishal and the others. Thank you.

Debasis Nandy: Thank you, Madhavan. I will spend a few minutes on the balance sheet side because on the P&L side while Madhavan talked about it and will hear more about it from Mahesh, Vishal and Ram so, would like to spend some time on the consolidated balance sheet because that reflects the strength of the company. So, on the debt side

between March and June we managed to reduce our debt by Rs. 78 crores. Our current debt balance is about Rs.313 crores out of which Rs.143 crores is long‐term debt, another Rs.174 crores of short term. This represents a 20% reduction of debt in a matter of three months. For reference against the Rs. 313 crores of debt that we have now, the debt position as of March 2020 when the pandemic began was Rs.508 crores so we have gone down over Rs.200 crores from our debt position that was there at the beginning of the pandemic. During the same time in the last three months our equity position improved by Rs.81 crores this is coming purely from profits. This is efficient through profit after tax so our equity position is now Rs. 1,794 crores which represent a 5% increase over what it was in March of this year.

Coming up to current assets and liabilities, on the current assets side our current assets grew by 19% during the quarter, it increased by Rs. 465 crores from Rs. 2,395 crores to Rs. 2,860 crores and largely because of two factors, one is increasing the sales by about Rs. 118 crores which represented a 21% increase which actually reflects a growing volume that the business is seen particularly on the B2B side and the cash balance about Rs. 382 crores increase came from increase in cash and investments which are in a liquid investments which are in mutual funds, etc. So, this represents a 47% increase in the cash balances. It is interesting to note that increase in cash as percentage of the total increase in current asset is 82% out of the Rs. 465 crores, Rs. 382 crores is the increase in cash balance. On the current liability side and this excludes the loan specifically, so it is just primarily the trade payables. Overall increase is about Rs. 458 crores from Rs. 2,746 crores to Rs. 3,204 crores, a 17% increase largely guided by trade payables of Rs. 425 crores which essentially reflects again just like the receivables and the cash balance reflects increase in the volume of business. I will pause here and pass this on to Mahesh so that he can take you through more on the business details particularly on the foreign exchange and the travel‐related items.

Mahesh Iyer: Thank you Debasis and thank you Madhavan. As Madhavan just guided, I think it is important to mention that it is traditionally a strong travel quarter that we are in and across all matrices that we monitor internally and that the market has performed very, very well. Noteworthy to mention here income from operations grew by about 95% from about Rs. 989 crores to Rs. 1,932 crores year‐on‐year and on a quarter‐on‐quarter which is sequentially improved 68% from Rs.1,324 crores to Rs.1,932 crores. As a result, operating EBITDA improved 2.6 times from Rs.55 crores to Rs.147 crores. These are some real record numbers that we are talking about and as a group as Madhavan rightly mentioned, Thomas Cook, SOTC and Sterling had a very good quarter as recovery in volumes coupled with margins and cost prudence played to the bottomline that we reported in the current quarter.

It is also important to mention what are the key drivers as far as their businesses are concerned and I will begin with talking about foreign exchange. On the foreign exchange side, we have had a very good quarter in the current one where income from operations or revenue actually grew 91% from Rs. 47 crores to Rs. 91 crores this increase in revenue led to an improvement in profitability that PBIT from Rs.11 crores to Rs.42 crores. The noteworthy things that

led to this kind of a phenomenal growth are the growth in retail business while the recovery was close to 110% to the pre‐pandemic level. While we look at the corporate business a lot of the corporate volumes that were subdued in Q4 of FY2023 came back in Q1FY2024 and we have close to about 90% recovery as far as the corporate Fx is concerned. Also, the retail business was aided by the recovery in the travel volumes as outbound travel started off that part of the business also fired very well for us. On the education segment, our volumes grew by about 22% despite the fact that this is traditionally not the seasonal quarter for education actually comes in the current quarter that we are in but despite that we had a 22% growth in volumes year‐on‐year. Noteworthy thing is the prepaid card volumes they grew 55% while year‐on‐year and as we speak, we have a flow which was about Rs.880 crores of March currently stand at about Rs.1,200 crores. During the quarter we also launched the Study Buddy programme which is focused on the students, this is a programme that on the prepaid card portfolio that we offer, there are offers for students on this and we believe we kind of set ourselves for a larger market share on this business. As you would know the education business is about $3.5 billion and we currently do about $150, $160 million out of that portfolio. Our expectation is to double that over the next three years and this product that we have launched along with a set of offerings that associate along with this will actually put us into close to about 15% market share as far as the education segment is concerned. During the quarter we also collaborated with one of the largest banks in the country to manage the hard moment where there is a large traffic where we supplied currency notes across 300 plus locations of the bank and that was one of the business, we did which also aided the performance in the current quarter. Also, to mention here that we also acquired a large number of marquee clients during the quarter, both in the retail, telecom, consulting, infrastructure and manufacturing, I think all of this will add somewhere close about 15 to $18 million of annualized volumes to the corporate foreign exchange business. It is important to mention here that when I look at the recovery to 2019, we are in this quarter saw 106% recovery in terms of volume to 2019 and on a year‐on‐year basis growth we are at about 60%. If I look at the digital adoption on this business, we continue to be at about 21% which is the forex contract centre as well as the digital tool that we enabled our customers to book through overall adoption is at 21% and this 21% continues to be there despite an increase in the volume. So clearly if you look at the overall business per se we have had a very strong growth and getting into the current quarter and beyond we believe the tailwinds that are supporting the business will continue to drive for us.

Moving over to the travel segment quickly to comment on the overall recovery as far as travel is concerned, we are about 78% overall recovery and as you will recollect when we guided the market previously our expectation for the full year is anywhere between 75 to 85% recovery is what we expected. At this point in time the recovery stands at 78% for the overall portfolio and if I look at the growth from a year ago the growth is at 76%. So, the point that one will initially made, we have seen some smart volumes coming back to us. The drive to travel is back both the domestic and international recovery has been strong and I think you will hear from my colleague Vikram and he speaks about the