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Last Updated : Jul 31, 2013 03:47 PM IST | Source: CNBC-TV18

Eye double-digit growth despite slowdown: Thomas Cook

The company reported a consolidated net profit of Rs 32.49 crore for the quarter ended June 30, 2013.


Travel firm Thomas Cook expects to maintain double-digit growth despite slowdown in the second half of the year, says MD Madhavan Menon. The company is looking at its different products and is adjusting them to exchange rates to yield profits, he adds.


“We recognised that on the holiday segment people were looking at shorter holidays and cheaper holidays so we drove that,” he says in an interview to CNBC-TV18.


Further, the company will continue with its hedging policy to protect margins in the second half of the year. Thomas Cook reported a consolidated net profit of Rs 32.49 crore for the quarter ended June 30, 2013.


Below is the verbatim transcript of Madhavan Menon's interview on CNBC-TV18


Q: A look at your numbers would reflect that rupee depreciation is beginning to pinch a bit specially in terms of international travel. Would that be right because the rest of the world operations have shown decline of 6 percent this quarter?


A: Normally we would all look at the small figure in the exchange rate, now it is difficult to keep track even of the big figure in the exchange rates the way they are moving around.


Exchange rates impact our business functions but we have made every effort to at least protect ourselves against these movements. So on the foreign exchange side, the movement of the rupee is primarily driven by the impact on our customer segments because we hedge ourselves 100 percent transaction on transaction. We do not expose ourselves to any risk on the foreign exchange end.


In the foreign exchange business, our retail customers shied away when the rupee started weakening in the hope that the rupee would retrace some of its steps. These are primarily parents who are remitting money to their children for fees or financial support and that will come back in some form or the other.


The inward remittance business on the money transfer side has shown growth. It had slackened over the first few months of this year but has found its way back to the normal numbers.


On the bulk side which is the bank note business we have seen an increase in volumes where bank notes that are coming in from overseas are getting enchased as well as there is some amount of speculation around it. So the foreign exchange business has been steady and despite the volatility we have kept it growing marginally.


On the holiday business, during the first half we didn’t see much impact because you book your holidays early in the year, it takes 60 days before your visas are done and you are financially committed to the whole process. So by the time this volatility started, most people had paid either half or more for their holidays and therefore, we grew comfortably during the first half of the year.


Looking at the second half of the year we started reacting very early. We started looking at our different products and adjusting them to exchange rates. We recognized that on the holiday segment people were looking at shorter holidays and cheaper holidays so we drove that. We will see some slow down but will still grow in double digits in the second half of the year.


Q: Does double digits means high teens or low teens?


A: That is difficult to predict but it will be low teens.


Q: Your employee cost has gone up, is this because of the merger?


A: No. We have done some restructuring in the first half of the year and have taken some of those costs in the first half of the year, the benefit of which we will see in the second half of the year. So it is very marginal, even if you look at inflation rates our employee cost have gone up marginally.


Q: For the full year do you expect a low teens growth in terms of volume? Will margins also be under pressure because you have to hedge more?


A: No. Our margins have been very steady through the first half of the year. We will continue hedging policy and will protect our margins in the second half of the year. It is yet to be seen how the forward books for the leisure business are looking like. Right now, we are running double digit growth. We will grow reasonably and overall both at profit before tax level we will grow double digit in the lower teens.



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First Published on Jul 31, 2013 02:45 pm
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