“The reaffirmation reflects strong parent support from Fairfax Financial Holdings Ltd (Fairfax, rated by S&P at ‘BBB-/Positive’), healthy liquidity in the form of cash & cash equivalents against limited external debt supporting the capital structure. The ratings also factor in the Thomas Cook India group’s dominant position in the forex business and strong brand equity in travel-related services,” company shared CRISIL’s rating rationale in a filing on Saturday.
It further said, the group’s foreign exchange (forex) and travel businesses were significantly impacted by the covid-19 pandemic in fiscal 2021, with TCIL reporting consolidated revenue of Rs946cr in fiscal 2021, about 85% lower than previous fiscal. This resulted in TCIL’s consolidated EBITDA (earnings before interest, tax, depreciation, and amortisation) loss of more than Rs250cr in fiscal 2021 against EBITDA of Rs222cr in fiscal 2020.
However, the business witnessed sequential recovery during the last nine months of fiscal 2021, which along with continued cost reduction measures (total cost savings of more than Rs650cr in fiscal 2021) resulted in sequential reduction in operating losses.
Further, as expected, TCIL received significant fund infusion from its ultimate parent, Fairfax - Rs436cr of optionally convertible cumulative redeemable preference shares (OCCRPS), during March 2021. The said fund infusion mitigated impact of operating losses during the previous fiscal and provided necessary support to TCIL’s liquidity.
TCIL’s limited external debt and healthy liquidity in the form of cash & cash equivalents, results in comfortable cash to total external debt ratio of about 2 times as on March 31, 2021 (2.3 times as on March 31, 2020).
At around 12.18 PM, Thomas Cook (India) Ltd was trading at Rs62.00 per piece down Rs0.25 or 0.40% from its previous closing of Rs62.25 per piece on the BSE.