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Home > Business > Special


He has big dreams for Thomas Cook

Shyamal Majumdar & Kausik Dutta | December 21, 2006

There are 150 Indian companies with an annual travel budget of over Rs 10 crore (Rs 100 million). So when a friend asked Udayan Bose to guess how many of these were Thomas Cook India Limited's clients, Bose said "minimum 50" - a number which turned out to be grossly off the mark.

The correct number was just five. Bose says it came as a huge surprise to him as he thought Thomas Cook was India's largest travel services company.

A few days later, the ruler of Dubai, a close friend, invited him to join Thomas Cook as non-executive chairman, and Bose readily agreed - 60 per cent of TCIL is owned by Dubai Financial, a subsidiary of Dubai Investment Group.

"The company's share in the corporate travel market wasn't great and that was a huge challenge for me. Besides, I had mentally pressed the pause button on investment banking after 36 years of doing the same job," Bose says, as we settle down at Shanghai Club, the tony Chinese restaurant at the ITC Grand Central at Lower Parel.

Though he had an appointment in the other side of the town, Bose had insisted that we meet at a place closer to our office to avoid any "inconvenience" to us.

Bose, who joined TCIL formally in January, says he doesn't really understand the travel services business but is doing what he is best at: picking up companies at a furious pace to make Thomas Cook a one-stop shop for travellers, and building up scale which will come handy in negotiating better deals from service providers like airlines, hotels and transport rental agencies.

In the last one year, TCIL has made a string of acquisitions: Travel Corporation of India, the second largest forex player LKP Forex and visa facilitation company TT Services that provides about 350,000 visas annually.

While Travel Corporation will increase the company's travel services revenues by nearly 25 per cent, LKP Forex will increase TCIL's share in the money-changing market to 47 per cent.

The list doesn't end here. TCIL also acquired Thomas Cook (Thailand) and Thomas Cook (Lebanon) and bought the licence to use the Thomas Cook brand in west Asia. Not a bad show for somebody who says he spends just one day a week in Thomas Cook offices.

Bose wears another hat too, as chairman of Tamara Capital Advisors, a private equity fund floated by him. Tamara is looking for buyouts in the financial services and foods space and will tie up funds worth $400 million soon.

"It feels good when people are willing to trust you with that kind of money," Bose says. One of the "highs" in his life was when a prospective employer offered him - then a 30-year-old investment banker working in London - a lucrative job.

Bose declined the offer and said he would prefer to work on his own but didn't have the money. The prospective employer immediately offered to put in $50 million if Bose was indeed serious.

"For a middle class boy from Kolkata who came to Mumbai with nothing but a first class graduate degree from Presidency College, the thought of somebody willing to trust you with over Rs 200 crore (Rs 2 billion) took time to sink in," Bose says.

The waiter looks impatient as we haven't yet ordered anything but Bose doesn't take time to decide on what he's going to eat - chicken clear soup, "a little bit" of chow mein and a light vegetable dish. He is just back from Thailand and isn't in a great mood to eat.

Travelling is something that gets to him now, except for his trips to London once in three weeks to spend time with his family.

We get back to his plans for Thomas Cook and Bose says his game plan is simple: demand is growing fast now and there is enough room for everyone. But if and when the tide changes, Thomas Cook's integrated business model will help spread risks.

For instance, the margins from the financial services business is nearly 53 per cent compared to 37 per cent from the travel services business. Despite its meagre 1 per cent margin, Bose wants to get more aggressive on the corporate travel business because of the lucrative volume-linked performance incentive bonus given by airlines.

Bose is elated about the acquisition of Travel Corporation, which has a strong presence in the domestic travel market. It's easy to see why: rural households account for three-fourths of the total domestic tourism traffic.

And the potential is enormous as leisure and holiday travel - Thomas Cook's focus area - now accounts for less than one-tenth of the total domestic traffic. In the inbound travel market also, the growth prospect is huge as India now manages to attract only 4 million tourists per annum compared with 6 million in Tunisia!

Bose's concern is the pressure on margins (the company's operating margins have declined from 42.5 per cent in 2005 to 30 per cent in 2006). The airline industry, he says, has seen new airlines and also lower fares. So while volumes may have gone up, commissions have reduced for travel agents. What can help is increased scale leading to better negotiating power, which is precisely what Bose is seeking to do.

The food is over quite fast with Bose just nibbling at it. He prefers to skip the dessert too, but thankfully for us, still has a strong appetite for talking about himself. The former partner of Lazard India says he is "dead tired" of investment banking now as he was more into relationship banking and today's "cut-price" culture is just not up his street.

He was more comfortable with working with "characters" like Lalit Thapar, R P Goenka, B K Birla and so on, who treated him more as a family member rather than just a banker.

Bose tells us how Goenka once spotted him on a flight to Kolkata, fished out HMV's balance sheet from his briefcase and asked him to get back fast on whether he should buy the company.

Bose started listing out the problems - there were too many of them anyway - but Goenka cut him short to say, "just tell me whether the company still has some jaan  (life) left." A nod from Bose was enough for Goenka to take a flight to London within a week to sew up the HMV deal.

Bose orders Chinese tea and talks about many more such "characters" he met as an investment banker. He talks about how B V Raju, the grand old man of Raasi Cements, refused to believe Bose when he told him about India Cements' plan to make a hostile bid for Raasi.

The shareholding of Raasi was with many family members, making it a potential takeover target but Raju was convinced that no one in his family would sell without his permission.

A couple of days later, India Cements announced its intention to buy out Raasi after the family members decided to sell out. Bose stayed on in Hyderabad for four days trying to get the best price for Raasi and remembers how Raju broke down when he heard that one of his grandsons whom he trusted the most also decided to sell his stake without taking him into confidence.

As we wait at the hotel portico for his white Merc to roll in, Bose talks excitedly about his plans for Tamara and how he is studying the balance sheets of several small firms for possible buyouts. Did he say he was "dead tired" of investment banking and buyouts deals?



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