Oct 19, 2016 11:23 AM IST | Source: CNBC-TV18

MakeMyTrip-Ibibo deal won‘t impact Cox & Kings: CFO

Travel company, Cox & Kings saw a 25 percent passenger growth this festive season. Khandelwal says the travel company will continue to grow at 10-15 percent annually.

MakeMyTrip and Ibibo group, are merging in an all-stock deal. South Africa's Naspers and China's Tencent Holdings are selling Ibibo group to MakeMyTrip in exchange for an issuance of new shares by MakeMyTrip.

A close competitor, Cox & Kings will not be materially impacted by the deal, says company Chief Financial Officer Anil Khandelwal. There is enough room for more players to enter the market, he adds.

The travel company saw a 25 percent passenger growth this festive season. Khandelwal says the travel company will continue to grow at 10-15 percent annually.

Below is the verbatim transcript of Anil Khandelwal’s interview to Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Sonia: It seems like everything is moving online, more and more people are preferring to use the online route to book their tickets. How much does Cox & Kings get from their online business and do you get it from your own portal or do you get revenues from other travel portals as well?

A: Cox & Kings has been present both in the offline business as well as in the online business. As you know that a large part of our business is actually package holidays. We are specialised in package holidays and a very small portion is actually from the commoditised tickets and hotels only. From that perspective, we obviously have been seeing a significant traction both people coming in to our offices to book as well as actually going through the online mechanism.

Now as a point of sales we have a very robust website. It enables the customers to pick and chose and go online as far as availing the package holidays is concerned. So, from our perspective we are present in both the areas - both in online as well as the offline.

Latha: What will be the impact of this Makemytrip - Ibibo merger? That makes it a bigger competition for you, weaning away people from package tours by offering an easy self designed package?

A: As I mentioned earlier we are specialised in package holidays. From a customer perspective package holidays is much more attractive. We definitely have easy off-the-shelf products for the customers to pick up. Nothing really changes as far as yesterday’s news is concerned. All I can say is that despite the fact that the industry is growing at double digits there is enough for more players to come into this market.

If the players work well they will continue to grow at double digits. So, from our perspective despite the fact that the industry is growing at double digits a large part of the Indian population is still under penetrated. Travel industry is under penetrated despite the fact that we are growing at double digits.

Latha: Can you say there is no impact, I buy packaged holidays but the ease with which online allows me to design my own package has also been sometimes a temptation. So, there are several holidays at least a few of them I take without getting into the packaged mode. Can you really say such a big entity will not impact your margins or volumes at all?

A: We are already in the space, so in case of you really do not want to get into the hassles of actually spend more time on devising your package holiday you can go to a Cox & Kings site and just take off-the-shelf product easy to choose package holidays. I think we are already in that space. As I mentioned to you we are dominant players in the package industry with a very small portion coming in from the commoditise business. So, it is too early for me to really comment specifically on the consolidation which is happening in the travel industry but all I can say is that differently there is enough space for many more players to come into this business. We still will be able to manage our growth rates.

Sonia: What kind of growth are you looking at for the industry as a whole in the online travel business? What is it valued at currently and say over the next five years what are we looking at?

A: I don’t really distinguish online and offline travel services. Both are basically point of sales and both enables the customers to select the package holiday as per the convenience. If you see the travel industry it has been growing at double digits and I would say that travel industry has been growing at -industries specifically has been growing at around 10 percent and Cox & Kings growth rate for the last many years has been at a compound annual growth rate (CAGR) around 15-20 percent. As an Industry leader we have been able to better the growth rate simply because of gaining it to more market share as well as reaching out to a large customer base.

This growth rate of 10-15 percent is definitely expected to continue over the next couple of years simply because travel industry is very under penetrated till today.

Latha: More near term question impact of the pound, how much of the revenues are in pound and will that tell on FY17 numbers?

A: From a pound perspective the good part is that our earnings are in pounds for almost around 40 percent of our business. The expenses are also in pounds. Apart from the translation effect which you will see because of the consolidation of the financials into INR I don’t really see, I would say deterioration as far as the earnings profile of our business in pounds is concerned.

Sonia: What about the number of people travelling because everyone is looking to travel to London because of how cheap it has become? Are you seeing more passengers travelling and thereby higher volumes?

A: We are seeing a significant surge specially in people actually wanting to take European Package holiday combining with UK simply because pound has depreciated almost around 15 percent over the last three months. This is making it very attractive for people to go specially to London for package holidays. So, we are seeing a significant surge specially during the Diwali holidays as well as the Durga Puja. Almost the outbound business for this particular holiday has picked up by as high as 25 percent.
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