Chennai: Travel services major Thomas Cook (India) Ltd has signed an agreement to acquire the Thomas Cook brand for Rs 13.9 crore (Dh7.14 million) for use in India, Sri Lanka and Mauritius markets, said a senior company official.
The company signed an agreement with AlixPartners, Thomas Cook UK's appointed Special Managers, he added.
"The brand valuation was done by our internal team and an external team. Both of them arrived at a similar value," Debasis Nandy, President & Group Chief Financial Officer told IANS over phone from Mumbai.
Thomas Cook (India) was previously contracted to pay an annual brand licence fee of Rs 2 crore to Thomas Cook UK until 2024 for usage of the brand.
The brand license agreement also gave TCIL the right of first refusal to acquire the brand in the event of the Thomas Cook UK Group going into liquidation before 2024.
"I didn't think there was an option till 2024 to reduce the price further even though the right of first refusal was with our company. Waiting till 2024 would have resulted in uncertainty as the UK company was sold to a Chinese company. The assets of the UK company were being sold and cash realised to pay off its creditors. There was also the risk of the brand being sold of to somebody else, Nandy said.
"It was a fairly decent valuation, seven times of times of the annual royalty," he added.
According to him, Thomas Cook (India) now owns the brand and can change the look and feel of the brand.
Refuting the view online companies are eating into Thomas Cook (India) business he pointed out the former largely sell airline tickets and hotel rooms whereas his company sells travel packages.
"We get 30 per cent of our business or about Rs.500 crore from online sales, Nandy added.
Ruling out extending the Thomas Cook brand to other group company's offerings Nandy said the plan now is to consolidate our business and then grow it further.
Queried about resort subsidiary Sterling Holiday Resorts he said it will continue to add five/six resorts per year.
"Sterling Holiday Resorts will largely into asset management and will not buy or build properties of its own. The idea is be light on assets and save on outlay," Nandy said.
He said the travel market is expected to pick up in 2020.
Speaking about the market trend he said, tourists are now opting for short haul trips than going for long haul ones.
The Thomas Cook India Group continues to remain financially strong with cash and bank deposits balances of Rs. 1,088.3 crore of September 30, 2019. On a standalone basis Thomas Cook India is debt free. The Group generates an average annual free cash flow of around Rs. 200 crore.