Acquisition, education foray boost quarter for Cox & Kings

Peter Kerkar, ED, Cox & Kings (India) explains to CNBC-TV18 that the company's acquisition of Holidaybreak, a company with strong cash flows, and its foray into education has supported efforts to reduce debt and boost income for the quarter. The company also plans to post a topline revenue of Rs 1,000 crore for FY13.

Below is an edited transcript of the interview on CNBC-TV18. Q: Your total income went up by about 22% and margins have improved. What went right in the quarter?
A: It has been a very exciting quarter for us. This is the first quarter that we have fully consolidated our income with Holidaybreak, the company that we acquired in 2011. Our net revenues are up by 230% this year to Rs 532 crore as compared to Rs 197 crore last year.
So, there has been a huge increase in our revenues and our PAT this year is almost up 200% over last year. I think that our acquisition has really proved fruitful because it is a very profitable company with very strong cash flows. Q: The finance costs obviously are still a load on the entire entity. Do you think it will stabilise at Rs 28 crore?  Would that be the finance cost that could be expected every quarter?
A: We have taken some drastic steps to tackle debt. One of them is the inking of a private equity deal which is non-dilutive to Cox & Kings shareholders. This will bring in approximately USD 140 million into the company which will primarily be used to pay off debt. Q: Is there anything else that you are planning to further reduce debt?
A: We have always maintained that the purchase of Holidaybreak was a significant acquisition for us. Holidaybreak's strong and proven cash flow over the last four-to-five years in spite of a challenging economic environment helped us post some exceptional results for this quarter. We believe that the next quarter is also full of promise.
We also believe that with our current structure, the accruals and the cash being thrown out of both the businesses, we should be able to effectively reduce the debt over time. We also have some very good long-term debt. So, there is no pressure on the company in the immediate future because we have created a cash pool and paid down over the next seven years. So, I think we have put ourselves in a very strong position.
_PAGEBREAK_ Q: That would mean an increase in other income as well in the coming quarters?
A: Our source of other income was primarily interest from cash deposits. I don’t believe that interest from other income will be high because we have used the cash deposits to pay for the acquisition of Holidaybreak. So, instead of other income, we have a reduction in our interest  burden coming down Q: Experts indicate that discretionary activities have suffered of late. Have you witnessed any such signs and is your international business performing better than the Indian business?
A: The Indian business continues to post a very robust growth rate. Last quarter, our standalone figures proved that India is continuing to be an extremely positive environment for the travel business, especially the outbound segment which is our primary growth driver.
Domestic tourism is also showing a stupendous increase in growth and we don’t expect it to slow down during this financial year.
Overseas, our Europe operations are posting a flat turnover. But fortunately our foray into education has become a big earner for us and education, like travel has not been affected by the economic slowdown. Overall I am very bullish on the next two-to-three quarters. Q: So do you expect to record revenue of Rs 1,000 crore for FY13?
A: We would be very pleased with that. Q: Is it possible?
A: Yes, I think that in terms of top-line revenue, it is a possibility.