“Cox & Kings Ltd”-

A case to International Finance

Cox & Kings is the longest established travel company in the world. It began in 1758 founded
by Richard Cox. It has its operations all over the world for more than 250 years i.e. USA,
Australia, India, Europe, Africa and many. In India it is headquartered in Mumbai,
Maharashtra. The company’s business is broadly categorised as leisure travel, corporate travel,
Forex and visa processing’s.

It is owned by a Group CEO’s i.e. Peter Kerkar, Urrshila Kerkar, Liz Investement. As the
business was on an acquisition strategy this increased debt as most of them were leveraged
buyouts. They did not pay salaries to its employees and due to defaults of payments towards
existing debt, they also took an additional Short term debt.

Banks, Suppliers stooped giving credit which squeezed the liquidity position of the company.
While being over-leveraged the company used the strategy of “Fly now, Pay Later” campaign
in India affected the cash flow badly. Cox & Kings also generated most of its revenue from its
own subsidiary but India’s business bought more foreign exchange by sale.

Looking at the Current Scenario of the company, it is almost at its closure of business in most
of the countries as it had raised more debt and could not repay back. IATA (International Air
Transport Association) also has its licence cancelled to sell tickets. It raised Commercial Papers
worth Rs. 150cr, 30cr ,10cr & 40cr and defaulted in payment even when there was cash of Rs.
519.45cr (Standalone) & Rs. 1112.37cr (Consolidated).

The strong revenue growth from Meininger and Leisure International Business; contributed
39% and 29% respectively (Consolidated). In Standalone Balance Sheet the
Receivables/Debtors increased on an average of 30%-35% in past 5 years which also increased
the working capital requirement for the company.

In order to overcome the working capital requirement and forecasting a high demand of tourist
in India, it also started a NBFC as a subsidiary to be its own financer which also failed; which
boosted up the short term loan from Rs. 21.79cr to Rs. 757.10cr in 2018. Peter Kerker-Promoter
of Cox & Kings ltd. diverted Rs.4387cr out of which only Rs. 1350cr was used to repay debt
and rest amount was not accounted in the books for that year.
It also pledged promoter’s shares as guarantee to borrow more funds which impacted the share
prices badly and in 6-months there was a drop in share price by 99%. The Board also cancelled
the dividend which was declared and GDR (Global Depository Receipts) also were delisted
from Luxemburg Stock Exchange. Its operations are seized in USA, India, Australia and many
countries.

The company has it operations across various countries and faces numerous international risks
like Political, Currency, Regulatory etc. In India, since it was the largest travel & tourism
company and contributed almost 20% towards the industry’s growth, the amount of forex
capital bought was huge. Due to the Debt crisis, the firm is on its urge to shut down. NCLT
(National Company Law Tribunal) has admitted a plea to insolvency proceedings against the
firm.

This Risks impact international business in a negative way i.e. when this news spread across
its Australia & New Zealand business has to shut down and a luxury travel agency Virtuso also
ended its partnership with Cox & Kings. It also have become a target company for Acquisitions
& Takeovers where EbixCash Mercury plans to acquire the Indian business as IATA also have
terminated their licence to book tickets and also faces a liquidity crunch.

References:

The sources used to complete the project is

 Newspapers: Economic Times, Business Today, Times of India, Business Line

 Websites: Ace Analyser, CNBCTV 18, Bloomberg, The Business Standard, Money
Control

Name: Avdhut Padwalkar

Roll No: 1840