Cox & Kings, the world’s oldest travel company had started in 1758 as a regiment agent to the British Army. The company had arranged the transport of Arthur Wellesly’s troops to the Battle of Waterloo and had even organised Mahatma Gandhi’s trip to London.
Peter Kerkar (53) is now spearheading the company’s growth from the U.K. In 1986, Mr. Kerkar, the son of former Taj Group boss Ajit Kerkar, fresh out of Stanford University, joined Cox & Kings as General Manager. At the time, he had 8 employees and 12 clients. He has led the firm to become a leading player in the leisure, accommodation and education service areas beyond just travel, through a series of mergers, acquisitions and asset disposals. He had the company listed on the stock exchanges in India in 2009 and acquired Holidaybreak through a leveraged buyout for $780 million. Cox & Kings India, which has reached a billion dollars in market capitalisation with more than 6,500 people, now plans to scale up these businesses in key markets in Asia.
Global business accounts for 74 per cent of your revenues. Will this change?
Since India is growing at the fastest rate for all our businesses (other than through the Meininger acqusition), in three years, you will see India contribution at 40 per cent of the revenue. With demonetisation, India will grow much faster. Our plan is to bring the Meininger business into India soon.
Globally, where is your focus?
China and India are the most important markets for us. In China, we are very interested in Chinese students coming into our facilities in Europe and for India we are very interested in expanding the physical base of PGL and Meininger, we believe that the time is ripe and India is ready for a product like ours because our health and safety standards are far superior.
How are the Brexit and Trump factors affecting the travel industry?
For us, America is relatively a small market and our clients will not be affected because they are at the top-end. What Mr. Donand Trump does may have a ripple effect across the world in terms of how people look at travel. He is against illegal immigrants. From a tourism perspective, no one will have an issue. Procedures may become much more tight but no one can say no to tourists.
Brexit is a fantastic opportunity for Indian tourists because the value of pound has become 20 per cent less than last year. The U.K. has become cheap. It was always the most expensive place to travel. Today it is cheaper to go to U.K. rather than going to Paris.
What else can be done to promote tourism?
Tourism is always linked to infrastructure. The regionalisation of airports is a fantastic move. All he (PM) needs to do is to improve infrastructure. The tourism industry will spring around it. The government is very aggressive already in the international arena in terms of marketing. They should be more aggressive overseas because there are 150 countries competing to lure tourists. The Government should do more of what it is doing.
Yours was a British brand and you turned it around. The Tatas had bought JLR, a marquee British brand and turned it around. Is there a comparison lurking here?
To be fair his (Ratan Tata) is more creditable because it is a real turnaround. Ford had failed and sold that company to the Tatas while mine was more like starting from zero base. So it is more like taking nothing and creating something. Yes, I did have a fantastic brand but I did not have any infrastructure around it.
So my challenge was to create a business that actually lived up to the brand rather than taking a brand that was devalued and trying to recreate that. Cox & Kings was an Anglo-Indian company and now it is an Indian-led company. Its roots were in sending people to India and now we are sending Indians across the world. In a way, you can say the empire strikes back. We have actually become the parent company.
What is the roadmap to reduce debt?
At the end of the September quarter, we had ₹3,400 crore worth gross debt and ₹1,900 crores of net debt. You should also look at that in relation with our EBITDA. Our last year’s EBITDA was ₹930 crore and at the peak we had ₹6,200 crore of gross debt. In four years, it has come down substantially. I do not think we are highly leveraged.
We have paid back most of the debt through internal accruals and asset disposals.
Our focus is to continue to generate cash and pay down some of the debt from internal accruals and consolidate our position through organic growth.
We have done what we had stated in our five-year plan which was to focus on three business segments: leisure, both domestic and international; Meininger which is the hostel/hostel business with 7,000 beds; and, the education business which is PGL. We will grow all these businesses organically.
What is the EBITDA break-up for your arms?
As of March 31, 2016 India leisure business contributed 26 per cent, international leisure 17 per cent, education 33 per cent and Meininger 18 per cent.
Investment plans for the future?
Our focus is to consolidate our position. We will continue to invest in organic growth. and in centres in Europe, Australia and India. We will grow them organically. In India, we are at the right place at the right time. For the last 16 years, we have demonstrated cumulative growth of more than 15 per cent. We are growing at double the market rate.
