Since 2004, the annual increase in travel & tourism economy GDP has averaged 4% in real terms faster than that of the global economy overall. And in the same period, travel & tourism has created more than 34 million jobs. Although growth is expected to slow in 2008, in line with the recent deterioration in the economic environment in developed economies, led by the USA, WTTC forecasts are still positive pointing to a 3% increase in Travel & Tourism Economy GDP and 6 million additional Travel & Tourism Economy jobs worldwide. World travel & tourism is expected to contribute nearly US $5,890 billion to global GDP in 2008 (equivalent to 9.9% of total GDP), rising to approximately US$10,855 billion over the next ten years. The current global economic downturn will only have a moderate impact on Travel & Tourism Demand in 2008, with the annual growth rate experiencing a slight slowdown to 3.0%, as against 3.9% in 2007. Looking past this present cyclical downturn, the long-term forecasts point to a mature but steady phase of growth for world Travel & Tourism between 2009 and 2018, with growth averaging 4.4% per annum over the period, supporting 297 million jobs and 10.5% of global GDP by 2018. In terms of regional performance, Africa, Asia Pacific and the Middle East are experiencing higher growth rates than the world average, in terms of total Travel & Tourism Demand, at 5.9%, 5.7% and 5.2% respectively, while the mature markets most notably the Americas and Europe are falling below the world average with growth of 2.1% and 2.3% respectively. Source: World Travel & Tourism Council (WTTC); Progress and Priorities, 2008 2009 India Travel and Tourism Industry India is an attractive and preferred tourist destination. A 5,000 years history, rich cultural heritage, natural beauty, diversity of religion and alternative medicine fascinate budget and luxury travelers alike. Tourism in India has registered significant growth in the recent years. In 1951, international tourist arrivals stood at around 17,000 which have gone up to 4.45 million in 2006 and 5 mn in 2007. Indian tourism is one of the most diverse products on the global tourism scene. India has 26 world heritage sites. It is divided into 25 bio- geographic zones and has wide ranging eco tourism products. Apart from this, India has a 6,000 km coastline and dozens of beaches. India's great ethnic diversity translates into a wide variety of cuisine and culture. India also has a large number of villages, plantations and adventure locations. India is home to a great variety of wildlife and its wildlife reserves are well known throughout the world. It also has one of the world's biggest railway systems opening possibilities for those interested in rail tourism. India also has excellent hospitals offering affordable medicare and traditional healthcare systems like Ayurveda. With rising incomes, growing aspirations and increasing globalization the domestic tourism is also on the rise. More Indians are traveling domestically and aboard, for leisure. A growing airline industry, cheaper fares and improvement in the travel related infrastructure has contributed to this. Tourism sector holds immense potential for Indian economy. It can provide impetus to other industries through backward and forward linkages and can contribute significantly towards the countrys GDP. According to the Tourism Satellite Account of India (TSA), tourism contributes to 6% of the total GDP and its share in employment; both direct as well as indirect is 9%. Tourism employs approximately 24.5 million people across India (both direct as well as indirect), which is 5.6% of the total employed workforce of India. (Source: Euromonitor International, October 2007, Travel and Tourism India) The Tourism business in India can be generally classified into 3 areas viz. Outbound Tourism, Inbound Tourism and Domestic Tourism. The same is explained as under: Outbound Tourism A booming economy, rising disposable incomes, higher aspirations, cheaper international air travel and better products from the industry has boosted outbound tourist flow. The number of outbound travelers from India has increased from 1.94 mn in 1991 to 8.2 mn in 2006. Inbound Tourism Focused marketing of tourism products and branding of India as a high value destination coupled with policies targeted at strengthening of tourism infrastructure by the Ministry of Tourism have been responsible for a healthy growth in international tourist arrivals to India. Over the years, the arrival of foreign tourists has grown from about 17,000 in 1951 to 4.45 mn in 2006 and 5 mn in 2007. During the first 7 months of the current year, 2008, the figure is estimated at 3.15 mn arrivals. Foreign exchange earnings from foreign tourist arrivals in India during 2006 and 2007 were approximately INR 40,375 crores and INR 47,925 crores respectively, a growth of about 18.7% over the previous year. For the first 7 months of the current year, this is estimated at INR 29,695 crores. Domestic Tourism Indians travel within India mainly for pilgrimage/religious reasons, leisure, visiting families/friends and business. Foreign Exchange Services Money changing business consists of buying and selling foreign currencies for the needs of the travelers. Foreign exchange comes into the country through tourists visiting India, physical currency deposits into FCNR accounts by NRIs. These foreign currencies are bought by the various foreign exchange players. Similarly foreign exchange is sold by these players to tourist going out of India. Excess currency in the system is exported back to the country of issuance. Indian money changing industry is highly fragmented with very large number of regional and local players providing the money changing facilities to retail and corporate customers. However, these players are niche local players and lack on the scale of operations at national level. The size of their business makes it economically unviable for these smaller players to either consolidate excess currencies from other players and / or export currencies on their own. They are mainly dependent on few large players including our Company for consolidating and exporting the excess physical currency from India to country of issuance of these currencies. RBI, the central banking and monetary authority of India, is the central regulatory and supervisory authority for the Indian financial system. A variety of financial intermediaries / entities in the public and private sectors are authorized to deal in foreign exchange and their major activities include the following: Category Entities Authorised Dealer - Category - I Commercial Banks State Co-op Banks Urban Co-op Banks Authorised Dealer - Category - II Upgraded FFMCs Co-op. Banks Regional Rural Banks (RRBs) Others Authorised Dealer - Category - III Select Financial and other Institutions Full Fledged Money Changers Department of Posts Urban Co-op. Banks Other FFMCs Currently there are 84 Authorised Dealers in category I, 11 Authorised Dealers in category II and 8 Authorised Dealers in category III.
3 Travel Insurance Travel Insurance can protect travelers against contingencies associated with traveling. This insurance provides coverage for emergencies such as emergency hospitalization due to accident or illness, loss or delay of checked luggage, loss of travel documents and accidental death/dismemberment, repatriation of remains and emergency medical evacuation. This policy often includes trip cancellation insurance and Personal liability. Credit Cards There is an increasing trend to issue co-branded credit cards, which are issued by companies who want to create customer and brand loyalty. These cards are typically issued in association with banks, which take up the administrative work related to credit appraisal, issuance and subsequent billing, using their existing credit card business channels. For more details please refer to section titled Industry Overview beginning on page no. 45 of this Draft Letter of Offer.
Business Overview Our Company was incorporated on October 21, 1978 under the Act. It is one of the largest travel and travel related financial services Company in India, offering a wide spectrum of travel-related services that include Foreign Exchange, Travel management, Leisure Travel, and Travel Insurance. It operates in through the following divisions: Foreign Exchange and Financial Services Authorized dealers in foreign exchange focused on providing travel related foreign exchange & payment solutions. Our Company also offers credit cards and financial services relating to travel insurance. Travel & Related Services Services include consumer leisure travel retailing (such as retailing of package tours), travel management services (such as air, hotel reservations and land arrangements), leisure inbound service (services for customers of third party tour-operators at their arrival) and general sales agency business. Competitive Strengths Integrated provider of travel & forex related services Our Company is an integrated provider of travel & forex related services such as travel management, airline ticket and hotel booking, package tours, travel insurance, emergency services and providing forex to domestic and foreign tourists and business travelers and forex services to other forex dealers as well. We provide one stop shop for all the travel requirements from visa to ticketing to holidays to insurance to foreign exchange under one roof. This cross selling of products facilitates our customers, thereby, making it our unique selling proposition. Leadership & highly differentiated presence in forex market We are one of the few non-banking institutions to have been granted Authorized Dealer (AD Category II) license by the RBI. AD license, combined with strong network, helps us offer the widest possible product suite in a cost- efficient manner. Merger of LKP Forex has further strengthened our leadership as a Foreign Exchange service provider. Established institutional customer base Countrys top public and private sector banks are customers of our wholesale forex services Ability to service both institutional and retail customers Provides travel management services for business travel and services to leading corporates including Multi National Companies in India
4 Strong domestic retail presence & growing overseas presence Pan-India footprint for selling all products through a single customer interface presence in around 160 locations in 55 cities in India. Approximately 200 Preferred Sales Agents in India Forex desks at strategic locations such as airport terminals Presence in 13 countries through our subsidiaries Strong brand equity We have a strong corporate image and brand equity Our Company has been recognized as a strong brand both locally and internationally. We enjoy leadership positions in all areas of our operations and believe that we are a benchmark setter for others in the industry. Highly qualified and motivated employee base and proven management team Our Company operates in service industry wherein the biggest asset of the Company is the quality of its human resources. Our Company is managed by Directors who are qualified and are having significant experience in the industry. The Board of Directors is supported by a team of professionals with several years of relevant experience. High integrity and transparency levels Our Company aims at maintaining high level of Corporate Governance - fairness, transparency, accountability and responsibility in the functioning of the Company with the ultimate objective of realizing and enhancing shareholders value. Our Company has in place Anti Money Laundering Policy to ensure that all internal and statutory guidelines are adhered to. Periodic audits are conducted to minimize risks and eliminate areas of concern. Internal control system is in place to continuously monitor transactions. Customer focus Our Company lays great emphasis on customer service and providing quality care to our customers. Our Company works towards providing 100% satisfaction to the customers. Service quality cell has been set up to ensure customer retention and repeat business. Strong information technology infrastructure set-up Our Company has a strong Information Technology infrastructure base with Wide Area Network connectivity covering all locations, to support its operations across the country. All hardwares are installed with anti-virus software to ensure that a virus-free and secured network is maintained. Strategic Alliances / Tie Ups Partnership and collaborations include those with State Bank of India, Citibank, JTB Corp., Cosmos, EuRail, Star Cruises, Cunard and others as also an alliance with Tata-AIG General Insurance Company Limited for underwriting of travel insurance and with ICICI Bank for issuance of co-branded credit cards Our Company has executed an International Money Transfer Agreement with MoneyGram Payment Systems, Inc whereby our Company is authorised by MoneyGram to provide Money Transfer Services.
Worldwide Travel and Tourism Industry Since 2004, the annual increase in travel & tourism economy GDP has averaged 4% in real terms faster than that of the global economy overall. And in the same period, travel & tourism has created more than 34 million jobs. Although growth is expected to slow in 2008, in line with the recent deterioration in the economic environment in developed economies, led by the USA, WTTC forecasts are still positive pointing to a 3% increase in Travel & Tourism Economy GDP and 6 million additional Travel & Tourism Economy jobs worldwide World travel & tourism is expected to contribute nearly US $5,890 billion to global GDP in 2008 (equivalent to 9.9% of total GDP), rising to approximately US$10,855 billion over the next ten years. The current global economic downturn will only have a moderate impact on Travel & Tourism Demand in 2008, with the annual growth rate experiencing a slight slowdown to 3.0%, as against 3.9% in 2007. Looking past this present cyclical downturn, the long-term forecasts point to a mature but steady phase of growth for world Travel & Tourism between 2009 and 2018, with growth averaging 4.4% per annum over the period, supporting 297 million jobs and 10.5% of global GDP by 2018. In terms of regional performance, Africa, Asia Pacific and the Middle East are experiencing higher growth rates than the world average, in terms of total Travel & Tourism Demand, at 5.9%, 5.7% and 5.2% respectively, while the mature markets most notably the Americas and Europe are falling below the world average with growth of 2.1% and 2.3% respectively.
India Travel and Tourism Industry India is an attractive and preferred tourist destination. A 5,000 years history, rich cultural heritage, natural beauty, diversity of religion and alternative medicine fascinate budget and luxury travelers alike. Tourism in India has registered significant growth in the recent years. In 1951, international tourist arrivals stood at around 17,000 which has gone up to 4.45 million in 2006 and 5 mn in 2007. Indian tourism is one of the most diverse products on the global tourism scene. India has 26 world heritage sites. It is divided into 25 bio- geographic zones and has wide ranging eco tourism products. Apart from this, India has a 6,000 km coastline and dozens of beaches. India's great ethnic diversity translates into a wide variety of cuisine and culture. India also has a large number of villages, plantations and adventure locations. India is home to a great variety of wildlife and its wildlife reserves are well known throughout the world. It also has one of the world's biggest railway systems opening possibilities for those interested in rail tourism. India also has excellent hospitals offering affordable medicare and traditional healthcare systems like Ayurveda. With rising incomes, growing aspirations and increasing globalization the domestic tourism is also on the rise. More Indians are traveling domestically and aboard, for leisure. A growing airline industry, cheaper fares and improvement in the travel related infrastructure has contributed to this. Tourism sector holds immense potential for Indian economy. It can provide impetus to other industries through backward and forward linkages and can contribute significantly towards the countrys GDP. According to the Tourism Satellite Account of India (TSA), tourism contributes to 6% of the total GDP and its share in employment; both direct as well as indirect is 9%. Tourism employs approximately 24.5 million people across India (both direct as well as indirect), which is 5.6% of the total employed workforce of India. (Source: Euromonitor International, October 2007, Travel and Tourism India)
Competitive Strengths Integrated provider of travel & forex related services Our Company is an integrated provider of travel & forex related services such as travel management, airline ticket and hotel booking, package tours, travel insurance, emergency services and providing forex to domestic and foreign tourists and business travelers and forex services to other forex dealers as well. We provide one stop shop for all the travel requirements from visa to ticketing to holidays to insurance to foreign exchange under one roof. This cross selling of products facilitates our customers, thereby, making it our unique selling proposition. Leadership & highly differentiated presence in forex market We are one of the few non-banking institutions to have been granted Authorized Dealer (AD Category II) license by the RBI. AD license, combined with strong network, helps us offer the widest possible product suite in a cost- efficient manner. Merger of LKP Forex has further strengthened our leadership as a Foreign Exchange service provider. Established institutional customer base Countrys top public and private sector banks are customers of our wholesale forex services Ability to service both institutional and retail customers Provides travel management services for business travel and services to leading corporates including Multi National Companies in India Strong domestic retail presence & growing overseas presence Pan-India footprint for selling all products through a single customer interface presence in around 160 locations in 55 cities in India. Approximately 200 Preferred Sales Agents in India Forex desks at strategic locations such as airport terminals Presence in 13 countries through our subsidiaries Strong brand equity We have a strong corporate image and brand equity Our Company has been recognized as a strong brand both locally and internationally. We enjoy leadership positions in all areas of our operations and believe that we are a benchmark setter for others in the industry.
57 Highly qualified and motivated employee base and proven management team Our Company operates in service industry wherein the biggest asset of the Company is the quality of its human resources. Our Company is managed by Directors who are qualified and are having significant experience in the industry. The Board of Directors is supported by a team of professionals with several years of relevant experience. High integrity and transparency levels Our Company aims at maintaining high level of Corporate Governance - fairness, transparency, accountability and responsibility in the functioning of the Company with the ultimate objective of realizing and enhancing shareholders value. Our Company has in place Anti Money Laundering Policy to ensure that all internal and statutory guidelines are adhered to. Periodic audits are conducted to minimize risks and eliminate areas of concern. Internal control system is in place to continuously monitor transactions. Customer focus Our Company lays great emphasis on customer service and providing quality care to our customers. Our Company works towards providing 100% satisfaction to the customers. Service quality cell has been set up to ensure customer retention and repeat business. Strong information technology infrastructure set-up Our Company has a strong Information Technology infrastructure base with Wide Area Network connectivity covering all locations, to support its operations across the country. All hardwares are installed with anti-virus software to ensure that a virus-free and secured network is maintained. Strategic Alliances / Tie Ups Partnership and collaborations include those with State Bank of India, Citibank, JTB Corp., Cosmos, EuRail, Star Cruises, Cunard and others as also an alliance with Tata-AIG General Insurance Company Limited for underwriting of travel insurance and with ICICI Bank for issuance of co-branded credit cards Our Company has executed an International Money Transfer Agreement with MoneyGram Payment Systems, Inc whereby our Company is authorised by MoneyGram to provide Money Transfer Services. OUR OPERATIONS: A. FOREIGN EXCHANGE & FINANCIAL SERVICES FOREIGN EXCHANGE Our Company is one of the Indias largest foreign exchange dealers in both wholesale and retail segments of the market. It is one of the few non-banking institutions to have been granted an Authorised Dealers license to deal in foreign exchange by the Reserve Bank of India. As Authorised Dealers in foreign exchange we provide foreign exchange and payment solutions for leisure and business travelers, students going abroad for higher studies, people traveling for employment, medical treatment, emigration etc. The merger of LKP Forex with our Company gives us an opportunity to grow our business with expanded product portfolio through enhanced network. This will further consolidate our position in the foreign exchange market.
58 Forex Business Model Our Company has been granted an authorized dealers license (category II) by RBI to deal in foreign exchange through its designated branches. Under this license, we have been, inter-alia , granted permission to undertake the following activities: 1. Retail purchases of foreign currencies and travelers cheques. 2. Bulk purchases/sales of foreign currencies from/to authorized dealers, money changers and franchisees. 3. Release / remittance of foreign exchange for the following activities: a. Private Visits b. Remittance by tour operators/travel agents to overseas agents/principals/hotels c. Business Travel (including for Central and State Government officials) d. Fee for participation in global conferences and specialized training e. Payment of crew wages f. Film Shooting g. Medical Treatment abroad h. Overseas Education i. Remittance under educational tie up arrangements with universities abroad j. Maintenance of close relatives abroad k. Stall rentals and participation fees in connection with participation in overseas exhibitions / fairs 4. Import and export of foreign currency and export of encashed Travelers Cheques 5. Maintenance of foreign currency accounts with banks abroad and undertaking forex cover operations in India and abroad. The activities permitted by RBI are carried out only at the specific locations permitted by RBI. As an Authorized Dealer, we are a member of the Foreign Exchange Dealers Association of India. Our Forex business can be classified into two segments Retail and Bulk (Wholesale) business. Retail business relates to providing foreign exchange services to travelers visiting India or going out of India. Bulk business comprises providing currency buying and selling services to institutions like banks, FFMCs, RMCs etc. Our Company consolidates the offloaded currencies at a central place and then physically exports them to banks in other parts of the World to receive credit for the same in our NOSTRO accounts maintained with them. Our Company earns its revenue from the spread between the buy and sell rate for forex and commissions for its services. We continue to focus on growing business volumes, maintaining revenue yield and management of costs. Our Company provides the foreign exchange and payment solutions for: Individual travelers
Foreign exchange for leisure outbound travelers
Foreign Exchange for migration, employment, medical treatment
Remittances for students studying abroad, gift remittances etc
Encashment services & inward remittances for inbound tourists visiting India, Non Resident / Resident Indians. Corporate
Travel money and remittances for business travelers.
On site support for inbound tour conferences.
Film production houses traveling for shoots abroad.
Remittances of tour proceeds for tour operators. Institutions
Bulk purchases and sales of foreign currencies from Banks, Non Bank Retailers and Money Changers.
59 Our business model revolves around leveraging its position as an Authorized Dealer with systems, ability and experience of handling large volumes of forex transactions for both wholesale and retail customers in a highly cost-efficient manner. Products and Services As an Authorised Dealer, our services includes wholesale and retail purchase and sale of currency notes, Purchase and Sale of Traveler Cheques (TC), pre paid international cards, inbound and outbound remittances and Money Transfers (MT). Some of our products and services are: Purchase and Sale of currency notes in 26 destination currencies Purchase and Sale of foreign currency denominated travelers cheques Thomas Cook Global Money Card and Citibank World Money Card as prepaid cards, which is a convenient way to carry money overseas Foreign Currency Drafts Wire transfer of Funds Remittance of money into India through MoneyGram Cash Advances against International Credit Card Network Our strong network enables us to attract large wholesale clients such as public and private sector banks, FFMCs and RMCs to use our services. We have a strong network of approximately 160 offices in 55 cities and 100 RMCs & Hotel Franchisee. Our Company has foreign exchange counters at the international airports of Mumbai, New Delhi, Kolkata, Chennai, Cochin and Trivandrum which are open 24 hours and 365 days a year to cater to the needs of the international travelers. Our Company also has a round-the clock Foreign Exchange counter at the New Delhi Railway Station. FINANCIAL SERVICES 1. Travel Insurance Insurance business of being carried out through our 100% subsidiary - Thomas Cook Insurance Services (I) Ltd. (TCISL). TCISL is a corporate agent of Tata AIG General Insurance Company Limited. TCISL entered insurance distribution in 2001 and offers the following products and services: 1. TravelCare (Overseas Travel Insurance) - Travel Care offers security for travelers which covers travel insurance, hospitalization, loss of documents, Repatriation of Remains, emergency Cash Advance or any other crises which requires assistance. 2. FamilyCare - An Overseas travel Insurance cover for entire family of 4-5 persons with single overall sum insured. 3. ScholarCare (Overseas Student Insurance) A customized product for all students studying abroad which ensures timely assistance in case of unexpected surprises in a foreign land. 4. CorporateCare (Overseas Corporate Travel Insurance) - For Companies where employees travel abroad frequently on work, we have customized group policies. All foreign trips undertaken by employees in a year are covered under a single policy. TCISL provides all insurance products at all our outlets, leveraging on ability to cross sell insurance products to our Travel and Forex customers.
60 2. Thomas Cook Credit Card Our Company has recently launched the Thomas Cook Credit card in association with ICICI Bank Limited. Our Company and ICICI Bank are marketing and issuing a Co-branded Credit Card to the customers for using the same at various Master Card retail merchant establishments for availing benefits attached to the said card. The card has been devised as part of loyalty program for the products of the company with benefits attached to spend through the card at Thomas Cook outlets. Salient Features: Thomas Cook Titanium MasterCard features in brief: The card has been specially designed for frequent travelers. Attractive 6 reward points for each spend of Rs.100 on the card on Thomas Cook products - Free Delivery of Foreign Exchange within city limits Rs 5000 discount on any Thomas Cook GIT product 1 Free Air ticket to a domestic destination on the issuance of new card Complimentary travel inconvenience insurance policy Access to MasterCard travel lounges at Airports across the world Redemption of reward points for Thomas Cook holiday packages, hotel stays, air tickets, airline upgrades, etc Conversion of Thomas Cook reward points to frequent flyer miles - convert the reward points earned on card to frequent flyer miles on select domestic airlines. Positioned as a comprehensive travel card Assured gifts for the joining fees free air ticket / discount voucher Higher reward points for card swipes at Our Companys outlets Redemption of reward points against Thomas Cook products encouraged
TRAVEL & RELATED SERVICES Our Company offers a wide range of travel and related services directly as well as through our subsidiaries which include: 1. Corporate travel management 2. Leisure Travel inbound 3. Leisure Travel outbound 4. Domestic Travel 1. Corporate Travel Management: Corporate travel management forms a dominant share of overall travel business of our Company. We manage the travel budgets of several large national and multinational companies. Our large scale of operations enables us to effectively manage travel budgets of several Multi National Companies, blue- chip companies and multinational banks to their advantage. Our Company is providing integrated travel management/ advisory services to more than 300 Clients. Our Company provides the customers a complete basket of products for all their travel needs: Air Reservations Hotel Reservations Land arrangements which includes sight seeing, car rental, transfers etc. Passport/Visa Service Conference/Incentive tour arrangements Foreign Exchange Insurance Our branches specialize in offering tailor-made Travel Policies for each corporate, thereby bringing savings on spend.
61 Based on requirements and volumes of business, corporate are serviced either by having a dedicated relationship team visits clients office regularly or having a dedicated & expert travel consultant with Centralised Reservation System located at the clients site as an implant. 2. Leisure Travel Inbound Inbound Tourist refers to tourists/ travelers coming to India. Inbound tour operators promote India as a tourist destination. We organize tours for foreign tourist visiting India. We organize Individual tours, Group tours and Conferences. Various services offered in inbound business are accommodation, ticketing, roundtrip, excursion, land arrangements, airport transfer etc. These services are procured from providers of these services like hotels, airlines, transporters, guides etc. within India . Customers are typically individuals and are sourced by overseas principals, tour operators or travel agents. TCI, one of the subsidiaries is among the leaders in inbound tourism and works closely with tour operators worldwide. TCI has a widely distributed network of travel agents and tour operators worldwide. It has around 20 offices in India and a total of 11 offices in USA, Canada, UK, France, Germany, Spain, China, Korea, Japan and Australia. We also act as a ground handling agent domestically for Charter flights coming from international destinations. We also offer customized individual holidays, group escorted holidays, MICE (Meeting, Incentive, Conference and Exhibition) arrangements and emergency medical assistance. Inbound travelers handled by our Company are primarily from Europe and USA. Our company enters into business arrangements with the foreign tour operators for servicing their customers when they arrive in India. 3. Leisure Travel Outbound Outbound tourist refers to Indian Nationals traveling out of India. Our Company offers outbound tour packages across approximately 50 Countries. Outbound packages include various services like air tickets, visa, travel insurance, airport transfer, hotel accommodation, sight seeing, etc. Outbound is further classified into following categories: 1. Group Escorted Holidays: These are ready made packages where a group of travelers is escorted by a Tour Manger. 2. Customised Individual Holidays: Tailor made packages based on individual requirements 3. MICE: Dealers/Employees are sent on tour by Corporates. 4. Sales agency amongst others for Star Cruise, Rail Europe, Globus, Cosmos Tours, Greyhound, Amtrak, Rocky Mountaineer Vacations, Japan Rail and Costa Cruises 4. Domestic Travel Domestic Travel refers to Indian Nationals (Tourists, Business Travelers, Students, Leisure travelers) traveling within India. Various services offered are accommodation, ticketing, roundtrip, excursions, land arrangements, airport transfer, etc. These services are procured from service providers like hotels, airlines, transporters, guides, etc. TCI, one of our subsidiaries specializes in special interest and incentive tours, conferences and air charter / cruise ship ground operations. It operates its own Taj Mahal Tour and Delhi City Tour and is a General Sales Agent (GSA) for the Palace on Wheels and the Deccan Odyssey. We are active members of various industry and professional organizations. Cross Selling of Services: Our Company is leveraging its strong distribution network and the unique integrated travel and travel related service provider position to cross-sell our varied portfolio. We leverage on footfalls into our offices and
62 accordingly, we have a common front-end to sell all our services. This facilitates servicing all travel requirements of our customers under one roof. Overseas Operations: Our Company has also expanded into key tourist destinations such as Sri Lanka and Mauritius. In Mauritius, our Company has its presence since 2000 through a 100% subsidiary and 3 step down subsidiaries. The Mauritian operations include providing foreign exchange, travel and holiday services. Our Company has one strategic airport counter at SSR International Airport offering foreign exchange services and three other offices (two at Port Louis and one at Grand Baie). In Sri Lanka, our Company is present at the airport offering forex services. Delivery Channels In order to strengthen our delivery capabilities, we have introduced new channels such as web and call centers as additional alternatives for our customers. We have a 24-hour call center in Mumbai to provide full CRM support. We have also set up a one-stop comprehensive internet booking engine to strengthen existing customer relationships and build new ones. These channels operate seamlessly with the existing channels using a common technology platform. IT Infrastructure Our Company has installed SAP based management information and IT system to enable effective management of its multi-location businesses. To enable reporting on a real time basis, all our branches are connected with the head office. Our Companys Wide Area Network (WAN) provides a stable and effective means of giving valuable support to the business. We have also implemented an integrated Front Office System for leveraging on its potential of cross-selling and up-selling its services. Competition Travel and forex services business in India is highly fragmented with presence of many regional, local and unorganized sector players. There is no single player of comparable size, who is able to offer a wide range of services as offered by our Company. However, there are different players that compete with us in various market segments. Collaborations, any performance guarantee or assistance in marketing by the collaborators As of the date of filing of the Draft Letter of Offer, our Company has not entered into any collaborations or agreements for marketing of our products. Export obligations There is no export obligation on the Company. Business Strategy Our strategic objective is to continue to build on our position as a leading integrated provider of forex and travel & related services by leveraging on our existing network which will also enable us to cross sell our products. Leverage expanded network for expanded portfolio Utilise overseas network for newer travel destination Build customer loyalty through focused approach Brand Building
Travel Industry Landscape Indias Tourism & Travel industry is highly fragmented with many independent agents; regional players and only a few organized players Smaller players are restricted to the regional front. Organized segment serves a wider array of custome rs due to its panIndia presence Organized players are able to leverage their brand, penetration and scaleto negotiate better deals with vendors through bulk and advance buying, providing better varietyof packages at much lower costs These players in effect act as a onestop shopfor all travel requirements This advantage enjoyed by organized players has led to an industry wide consolidation, with organized players eating into the market share of unorganized players Package Tours Cannot be Effectively Sold Online Package Tours Cannot be Effectively Sold Online In India, Online Travel Agents (OTAs) started as a single window mechanism for booking domestic fligh ts although the service basket now includes international flights, hotels bookings, international and do mestic holidays, transportation rentals etc. There is a growing realisation among OTAsthat future growthwill occur through offline To this effect, few large OTAshaving high market share have already set up brickand mortar centres under their own brand with plans to expand the same Challenge faced by OTAsis in selling high marginhotel / holiday packages, which customers prefer purc hasing offline as well as the branding opportunityprovided by these stores The reverse is also true for offline player like Thomas Cook to fast expand its online presence Average customer spends 4 to 5 hours with the sales representative before finalizing a tour package