This story first appeared in DNA Money edition on Saturday, June 4, 2011.
Travel company Cox and Kings Ltd has registered a decline in net profit after tax (PAT) margins in FY'11 vis-a-vis last fiscal. While its earnings before interest, tax depreciation and mortisation (ebitda) margin for FY'10 and FY'11 has remained constant at 47%, there PAT margin has come down from 26% in FY'10 to 24% in FY'11.
The Cox and Kings management however maintains that growth has not be impacted and the marginal decline is mainly because of an exceptional item on the balance sheet.
Reasoning the same, Anil Khandelwal, CFO, Cox and Kings Ltd, said a slight decline in PAT margings is because of interest and finance charges which is at Rs 54.3 crore in FY'11 as against 26.9 crore last year. “An acquisition in the European market is currently being worked out and interest carry cost has been accounted for in the said period,” he said. The company continues to maintain status quo on the time frame for concluding the European acquistion.
Also, there is a foreign exchange gain of Rs10.29 crore on account of foreign currency loan revaluation in FY2011 as against Rs28.38 crore in FY2010. As a result, the PAT is marginally lower for the year ended 2011 as compared to the previous year, said the company in its analyst presentation.
The company registered consolidated net profit after tax (PAT) - after excluding effect of exceptional gain – at Rs 46.67 crore for the quarter ended March 31, 2011. The PAT figure was 10% higher as compared to Rs 42.60 crore in the corresponding period last fiscal (Q4FY10). On a full year basis, consolidated PAT - after excluding effect of exceptional gain- for grew by 13% to Rs 120.30 crore as compared to Rs 106.43 crore in the corresponding period of last fiscal year (FY10).
“Growth however is slower,” said an analyst from a domestic brokerage firm requesting no to be quoted. “While domestic business has grown considerably, there's pressure on internatonal operations,” the analyst added.
Addressing the concerns, Peter Kerkar, director, Cox and Kings Ltd, said, slight pressure on business was witnessed owing to a few unexpected international events. “Events like the unrest in Egypt and earthquake in Japan did impact overall travel industry. While the Middle East region contributes to the extent of 25% to UK operations we didn't see a very significant impact on overall business.
“We didn't have cancellations as far as Egypt is concerned but the travellers had to be booked into alternate destinations while maintaining the costs. The incident in Japan didn't have any impact because the business season had already ended by the time earthquake hit the destination,” Kerkar said at an analyst call.
Analysts however are of the opinion that the impact of Japan earthquake on the company's international operations will get reflected in the current fiscal. "I think the actual business impact of earthquake in Japan will be seen in the first quarter numbers for FY'12 when it gets announced in the coming months," said another analyst requesting anonymity.
Outlining some of the key challenges faced by travel companies in India, Kerkar said that while demand generation was not a problem at all, it was meeting this demand in the best possible manner that is the key challenge for the industry.
“Just to elucidate, of the 300,000 student visas in UK being requested for last year only 150,000 were issued. There is enough demand for outboud travel in India, but embassies are unable to meet up the demand as a significant proportion of these visa applications either get rejected or take so much time that they do not sync with the travellers' schedule. On an average, the Indian travel industry witnesses over 25% visa rejection rate as a result the sector is unable to optimise business,” said Kerkar.
Travel company Cox and Kings Ltd has registered a decline in net profit after tax (PAT) margins in FY'11 vis-a-vis last fiscal. While its earnings before interest, tax depreciation and mortisation (ebitda) margin for FY'10 and FY'11 has remained constant at 47%, there PAT margin has come down from 26% in FY'10 to 24% in FY'11.
The Cox and Kings management however maintains that growth has not be impacted and the marginal decline is mainly because of an exceptional item on the balance sheet.
Reasoning the same, Anil Khandelwal, CFO, Cox and Kings Ltd, said a slight decline in PAT margings is because of interest and finance charges which is at Rs 54.3 crore in FY'11 as against 26.9 crore last year. “An acquisition in the European market is currently being worked out and interest carry cost has been accounted for in the said period,” he said. The company continues to maintain status quo on the time frame for concluding the European acquistion.
Also, there is a foreign exchange gain of Rs10.29 crore on account of foreign currency loan revaluation in FY2011 as against Rs28.38 crore in FY2010. As a result, the PAT is marginally lower for the year ended 2011 as compared to the previous year, said the company in its analyst presentation.
The company registered consolidated net profit after tax (PAT) - after excluding effect of exceptional gain – at Rs 46.67 crore for the quarter ended March 31, 2011. The PAT figure was 10% higher as compared to Rs 42.60 crore in the corresponding period last fiscal (Q4FY10). On a full year basis, consolidated PAT - after excluding effect of exceptional gain- for grew by 13% to Rs 120.30 crore as compared to Rs 106.43 crore in the corresponding period of last fiscal year (FY10).
“Growth however is slower,” said an analyst from a domestic brokerage firm requesting no to be quoted. “While domestic business has grown considerably, there's pressure on internatonal operations,” the analyst added.
Addressing the concerns, Peter Kerkar, director, Cox and Kings Ltd, said, slight pressure on business was witnessed owing to a few unexpected international events. “Events like the unrest in Egypt and earthquake in Japan did impact overall travel industry. While the Middle East region contributes to the extent of 25% to UK operations we didn't see a very significant impact on overall business.
“We didn't have cancellations as far as Egypt is concerned but the travellers had to be booked into alternate destinations while maintaining the costs. The incident in Japan didn't have any impact because the business season had already ended by the time earthquake hit the destination,” Kerkar said at an analyst call.
Analysts however are of the opinion that the impact of Japan earthquake on the company's international operations will get reflected in the current fiscal. "I think the actual business impact of earthquake in Japan will be seen in the first quarter numbers for FY'12 when it gets announced in the coming months," said another analyst requesting anonymity.
Outlining some of the key challenges faced by travel companies in India, Kerkar said that while demand generation was not a problem at all, it was meeting this demand in the best possible manner that is the key challenge for the industry.
“Just to elucidate, of the 300,000 student visas in UK being requested for last year only 150,000 were issued. There is enough demand for outboud travel in India, but embassies are unable to meet up the demand as a significant proportion of these visa applications either get rejected or take so much time that they do not sync with the travellers' schedule. On an average, the Indian travel industry witnesses over 25% visa rejection rate as a result the sector is unable to optimise business,” said Kerkar.
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