Cox & Kings Ltd Management Discussions.

Cautionary statement

Statements in the Management Discussion & Analysis describing the Companys objectives, projections, estimates and expectations may be considered as “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. The factors that might influence the operations of the Company are economic conditions, government regulations and natural calamities over which the Company has no control.

The Company assumes no responsibility in respect of the forward looking statements herein which may undergo changes in future on the back of subsequent developments, information or events.

FY17 summary and outlook

Cox and Kings is a growing, diversified multinational travel enterprise with operations across 22 countries, including India, UK, US, Japan, Australia, Europe and the Middle East. The company caters to millions of travellers across varying age groups, including school children, college students, young couples, families and seniors.

FY17 can best be characterized as the year in which we built upon our core strengths, focused on quality of growth and continued on our journey of unlocking value. We focused on businesses in which we are dominant and further increased our market-leading position across divisions. The year presented several challenges, such as Brexit, terrorist attacks in some key geographies such as Brussels and London, and political rumblings in Europe and the US. Back home, the government of Indias demonetization programme and the finalization of the Goods and Services Tax (GST) led to significant volatility in the business environment. Cox & Kings successfully steered through all of these challenges and has emerged with higher margins and a leaner balance sheet.

Cox & Kings net revenues and EBITDA from continuing operations grew by 4% and 5% respectively in FY17, despite the translationary impact of the 9% depreciation of the pound sterling versus the rupee year over year (a substantial proportion of the companys net revenues and EBITDA are denominated in pound sterling).

Leisure – India faced multiple challenges in FY17, including demonetization, heightened competitive activity, introduction of biometrics for Schengen countries prior to peak season, depreciation of the rupee prior to peak season, and finalization of GST. Despite all these factors, Leisure - Indias net revenues grew by 9% and EBITDA grew by 11% y-o-y in FY17, much above peers.

Education was faced with multiple challenges in FY17, including Brexit and the consequent decline in consumer confidence, the impact of higher minimum National-Living-Wage costs which could not be passed on immediately, numerous terrorist incidents in Europe which impacted travel sentiment, and adverse geopolitical rumblings in Europe and the UK through the year. Despite all these factors, Education division EBITDA in pound sterling terms rose by 2% y-o-y in FY17 on rising bed capacity and higher occupancy.

Meininger was faced with a challenging geopolitical environment in Europe along with stagnant growth across the continent and numerous terrorist incidents, including the Brussels airport attack (Meiningers Brussels property accounted for about 10% of bed capacity in FY17). In the face of significant odds, Meininger overall recorded 5% growth y-o-y in EBITDA in euro terms in FY17 on rising bed occupancy and operating leverage. Meininger Brussels itself saw a sharp bounce-back in bed occupancy over the year, which is testimony to the core strength of the Meininger business model. Meininger added 1,700 beds, or 25% additional bed capacity, within a three-month period, which boosted total bed capacity to 8,553 as of March 31, 2017.

Our visa processing services business (CKGS) recorded a better operational performance in FY17 on the back of better fixed-cost absorption owing to higher revenues as well as tight cost control.

Our continued efforts to reduce debt were visible with gross debt reducing by Rs.42,705 lakhs y-o-y to Rs.3,67,389 lakhs as of March 31, 2017. Net debt to equity ratio now stands at a low 0.6x.

As part of the companys value unlocking focus, the board of Cox & Kings approved the demerger of the Foreign Exchange division (which falls under Leisure - India) in June 2017. Cox & Kings will retain a 19% stake in the demerged entity. The balance 81% will be distributed to Cox & Kings shareholders pro-rata. The foreign exchange division will act as a springboard for CKFSL to pursue its own, independent high-growth strategy. CKFSL will be applying for an NBFC license and will commence new financial product lines related to the travel sector. The scale of the lending opportunity within the travel sphere is outsized and fast-growing and CKFSL will be in pole position to tap into that growth.

Cox & Kings has spent the last four years consolidating and improving the quality of its businesses, strengthening its platform for growth, reducing debt and unlocking value. FY17 marked a new high in that journey.

Leisure - India

Leisure - India faced multiple challenges in FY17, including demonetization, heightened competitive activity, introduction of biometrics for Schengen countries prior to peak season, depreciation of the rupee prior to peak season and finalization of GST. Despite all these factors, Leisure - Indias net revenues grew by 9% and EBITDA grew by 11% y-o-y in FY17, well above peers. EBITDA margins expanded despite an environment of severe price competition.

Our robust positioning in the corporate segment enabled us to grow profitably, while our Retail business continues to forge ahead. Our distribution network is deep and wide, which provides us an edge in terms of service quality over online and offline competitors. We currently maintain a high-quality network of 13 own stores, 156 franchisees and 89 preferred sales agents. In addition, we have Business Travel impants at client companies across the country and Foreign Exchange specialists across all of our operating locations. Our franchisees and agents are indispensable partners who take the Cox & Kings brand deep into the heart of the country to cater to the buoyant demand in those cities and towns.

Outbound travel

Indias outbound travel market is growing at a rapid rate. The trend of spending on experiences and the urge to go on vacations around the world is on an upswing. Being a part of the worlds fastest-growing economy, the Indian traveller is travelling more frequently and to newer places. As per Indias ministry of tourism 20.4 million Indians booked overseas trips in 2015. As per UNWTO, the number of outbound travellers from India will likely grow to 50.0 million by 2020. According to Forbes, the average Indian traveller is a heavy spender, splurging about US$1,200 per visit, as compared with Americans who spend US$700 and Britons who spend US$500. While overseas vacations are very popular among those living in the metropolitan cities, the advent of social media (Facebook, Instagram etc.) has helped spread the impulse to travel to tier-II and tier-III cities and towns over the last few years.

Outbound travel from India is experiencing rapid growth. We observe that people across generations are increasingly confident about travelling outside India. Group overseas travel packages are popular for a variety of reasons; viz time-and-cost efficiency, a sense of security, language barriers, food preferences and of course the pleasure of shared experiences among family and friends.

Packaged holidays remain the popular choice of Outbound travellers. Our Duniya Dekho brand, which offers escorted International package tours to Indian travellers, has strong brand recall. Given our large volumes and power of aggregation, we are able to design best-value packages and offer attractive deals to customers. Our expertise enables us to ensure that our customers have a hassle-free holiday, which drives repeat business and positive word-of-mouth references. Our FlexiHol brand which offers customized International holiday packages is strongly positioned to cater to the increasingly discerning traveller, who likes to enjoy flexibility in itinerary and a more eclectic choice of places to visit.

Greater connectivity, better affordability, change in lifestyle habits and easy financing will continue to drive growth of the outbound travel segment in India. The government of India implemented the Goods and Services Tax (GST) on July 01, 2017, and this is expected to help shift demand to the tax-compliant segment within various categories of products and services in the country. We estimate the market share of tax-compliant players within the travel & tourism industry is less than 30%. We expect an increase in tax compliance under the GST regime, which would enable us to further widen our leadership in Indias Outbound travel sector.

MICE

Cox and Kings formidable positioning in the corporate segment enables us to cater to the huge opportunity presented by Meetings, Incentives, Conferences and Events (MICE) as a category. According to the ITB World Travel Trends Report, MICE, as a segment, contributes to 54% of total travel market globally.

The MICE market is growing fast as requirements are increasing for different sectors. The past convention of having a formal conference is giving way to informal interactions at exotic locations, workshops and team-building activities. The MICE market has evolved substantially over the years, offering multiple options now in terms of product, price and duration. Different businesses are using MICE to serve different purposes. For e.g., FMCG and Agro sectors are offering overseas incentive trips to dealers in towns and rural areas. Banking and Financial institutions are organising training seminars and sales meets in overseas locations.

Corporates see MICE as part and parcel of business operations rather than as an item of discretionary spending reserved for the “good times”. According to the US-based Incentive Research Foundation, properly designed and executed incentive travel programs can increase sales productivity by 18% and produce an ROI of 112%. Organisations that provide non-cash rewards such as incentive travel have three times higher revenue increases. 100% of Best-in-Class companies (those with the highest customer retention and sales growth) offer group travel to recognize year-end sales success. Of companies that run awards programs, 53% use incentive travel to recognize sales, 43% to recognize employees, 33% to recognize channel partners and 27% to recognize customer loyalty.

Cox and Kings remains the preferred choice for MICE for corporates in India due to our undying commitment to quality and our ability to serve their needs offering the best-possible value. As this segment enjoys traction throughout the year, it cushions us from the impact of seasonality in our non-corporate businesses.

We are confident that this segment will continue to grow robustly over the medium to long term and we look to further entrench our dominance.

Inbound Travel

Cox & Kings operates at the premium end of the Inbound travel market. Inbound business witnessed robust growth in FY17. Yet, the Inbound sector as a whole is plagued by legacy factors such as weak infrastructure, security, connectivity, etc. as well as sub-par maintenance of heritage sites relative to other countries. While India ranks sixth with a tally of 36 of the 1,073 World Heritage Sites, they are poorly maintained.

In the medium to long term more concrete steps towards boosting Indias soft and hard infrastructure will be needed in order to deliver the kind of tourist volumes that are befitting of a country of our size and potential. In terms of soft infrastructure, we believe that security, sanitation, hygiene and cleanliness are some of the key focus areas which require work. In terms of hard infrastructure, roads, railways, airports, ports and non-premium hotels need to be brought up to global standards.

However, recent initiatives of the Government of India like the UDAN (Ude Desh Ka Aam Nagrik) scheme, primarily aimed at enabling better Regional Connectivity and making air travel affordable, is aiding network expansion by airlines. Various airlines have announced flights to 43 cities connecting them by air to major cities like Delhi, Mumbai, Hyderabad and Chennai. Also, the e-Visa facility has been extended to the citizens of 161 countries arriving at 16 international airports in India. During January-December 2016, a total of 10,79,696 tourists arrived on e-Visa, a growth of 143% compared to the same period in 2015. Whilst some progress has been made to encourage tourism into India, we believe that the need for further improvement is substantial in order for India to establish itself as a major global tourist destination.

Domestic Travel

Domestic travel business relates to Indians travelling on holiday within India to their favourite destinations in groups, as individuals, or as part of MICE. We provide end-to-end solutions including holiday packages, air tickets, rail tickets, bus tickets, transfers, hotels, tours, attractions, sightseeing, entertainment etc.

India became the worlds third largest aviation market in 2016 after the US and China, overtaking Japan, with domestic passenger traffic touching 100 million. Air travel penetration is expected to deepen further as the Government of India has awarded a further 43 licenses to five airlines (winning bidders) to ply 70 regional routes. Under the Regional Connectivity Scheme (RCS) these routes will connect 43 unserved and under-served airports to major cities. Under this scheme, 50% of the air tickets will be capped at Rs.2,500 per seat per hour and the rest will be sold based on demand. In the second phase, another 27 airports are expected to be connected and 58 new routes will be added. This improved connectivity and affordability will drive domestic travel even higher.

The domestic packaged holidays market is growing significantly as large segments of Indians prefer to travel in groups with families and friends. Indians are also travelling more frequently and prefer to indulge in myriad group activities while on location such as sightseeing, safaris, trekking etc. The concept of holidaying has changed from having only one long vacation in a year to taking many additional short trips for one week or over long weekends.

Our Bharat Deko brand is a market leader and holds significant brand equity among the mid to mass market. In the luxury segment, our Deccan Odyssey luxury train experience is an exploration of Indias most vibrant locales, timeless traditions and unmatched wildlife and cultural diversity. We remain positive on the long-term growth prospects of the Domestic travel business.

Business Travel

Our Business Travel division provides customized and flexible travel services to corporates given the always-changing, never-ceasing nature of corporate travel. We provide services related to domestic and international flight tickets, rail tickets, bus tickets, hotels, meals, private car-hire or taxi services, as well as travel insurance and other travel-related services. This business is growing rapidly along with the growth in corporate travel in India - especially international travel. According to a recent study, India is the worlds 10th largest Business Travel market, amounting to US$29.6 billion per annum. The Indian business travel market is poised to be the worlds fastest-growing at a 12% CAGR over 2015-2020, according to the study.

We have a well-entrenched position within the Business Travel industry. Our corporate customers like us for our efficient service; implants on location make it easier to interface and execute complex business itineraries in a customized and flexible manner. We have robust technology platforms to ensure maximum efficiency of service. Our Business travel division is also a significant lead generator for our other travel divisions such as holidays, MICE and forex.

Foreign Exchange

The Foreign exchange division has seen a 50% CAGR in total transaction value over the last two years. Some of the key services provided by Foreign exchange division include retail exchange of rupees for foreign currency for travellers, multi-currency foreign exchange cards for retail and corporate travellers, corporate forex for business travel, and inward and outward remittances. We have 125 licenses across India to provide foreign exchange to captive customers as well as to third-party customers.

As part of the companys value unlocking focus, the board of Cox & Kings approved the demerger of the Foreign Exchange division in June 2017. Cox & Kings will retain a 19% stake in the demerged entity. The balance 81% will be distributed to Cox & Kings shareholders pro-rata. The debt attributable to the Foreign exchange division as of the record date of demerger will also be hived off to the new entity. The foreign exchange division will act as a springboard for the new entity to pursue its own, independent high-growth strategy. The new entity will be applying for an NBFC license and on receipt will commence new financial product lines related to the travel sector. The scale of the lending opportunity within the travel sphere is outsized and fast-growing. Holiday finance is an estimated Rs.61,000 crore p.a. market which is untapped. Overseas student loans market is an estimated Rs.22,500 crore p.a. which is under-served. The new entity is in pole position to capture a significant chunk of such markets.

CKFSL will have several business strengths at the very outset viz.

• Cox & Kings branding for a minimum of five years

• Access to Cox & Kings distribution network and natural customer base

• Ability to quickly leverage third-party distribution networks

• Deep and wide knowledge of customer base with well-established relationships

• Potential to introduce unique lending products idiosyncratic to Indias travel & tourism sector

• Strong remittances business which provides a vital link in Overseas student loans

New Initiatives under Leisure - India

• Accessible Tourism: Cox and Kings believes in Equity for all. Enable Travel, powered by Cox and Kings, launched Indias first Accessible Holiday initiative to cater to the travel aspirations of people with disabilities. As part of this initiative, all itineraries are planned accordingly and quality transportation in the form of wheel chair accessible vehicles, aids and accessories like ramps will be made available. Specially trained man power such as caregivers, sign language interpreters, expert guides and escorts will also be available as part of support services.

• Trip 360: Cox and Kings redefined Outdoor Adventure Tourism in India. Trip 360 has crafted high-quality expeditions involving activities such as cycling, scuba diving, Biking and Trekking for Adventure enthusiasts. Trip 360 powered by Cox and Kings aims to provide ‘experience-oriented vacations without compromising on safety and sustainability standards.

Leisure - International

Our Leisure - International business comprises of a plethora of award-winning services. Although this business has historically grown at a slower rate than our other businesses, it occupies a niche position in several markets and produces a steady stream of cash flow. It also enjoys a substantial amount of repeat business.

The outlook for global travel remains robust. ITB World Travel Trend reported a 3.9% growth in worldwide outbound travel in 2016, led by 11% growth in Asia, 7% in the USA, and 2.5% in Europe. For 2017, WTTC expects higher growth of 4-5% with stronger growth from Europe and continued growth in Asia and USA.

Our Leisure International operations are spread across Dubai, UK, US, Australia and Japan. Leisure - International net revenues from continuing operations grew by 2% y-o-y in FY17 to Rs.361 crores, while EBITDA declined by 9% to 168 crores. Profitability was mainly impacted by declining consumer confidence in the UK due to Brexit and the impact of the weak pound sterling against other currencies, which curtailed consumers travel budgets there.

C&K UK revenues and EBITDA were lower y-o-y in FY17; moreover, the translationary impact of the decline in the value of the pound sterling versus the rupee impacted earnings. Yet, we believe the UK business has a strong value proposition for its customers, and UK citizens remain avid travelers. We expect this business to recover over time.

C&K Dubai performed very strongly in FY17 and now constitutes nearly half of Leisure - Internationals EBITDA. We are an Outbound tour operator as well as an Inbound destination management company in Dubai; both divisions have been growing strongly over the last five years.

Dubai as a city attracted 14.9 million overnight visitors in 2016, a growth of 5% over 2015 and became the fourth-most-visited city in the world. Dubais strong growth as a tourist destination has been a strong driver of growth in our Inbound business here. Conveniently, India is one of the biggest source markets of tourism in Dubai, which gives Cox & Kings an added advantage. The easing advance visa requirement rules for Chinese and Russian nationals in late 2016 is expected to boost tourist inflow into Dubai from these two countries as well, which also augurs well.

In the US, C&K is a luxury travel consultancy, providing custom-built tours and itineraries at the top end of the travel market. We have a niche set of customers, including CEOs and Hollywood stars. The US witnessed robust growth of 8% in Outbound tourism in 2016 as per UNWTO.

In Australia, C&K is a mid-market Outbound specialist tour operator.

In 2017 Japan has seen nearly 7% growth in outbound traffic which augurs well for C&K Japan, which is essentially a white-label wholesaler to tour operators.

Awards

British Travel Awards (Nov 2016):

- Silver Award for the Best Luxury Holiday Company

- Silver Award for the Best Escorted Tours Holiday Company

- Silver Award for the Best Holiday Company to Southern Asia

- Silver Award for the Best Holiday Company to East & Southeast Europe

- Silver Award for the Best Holiday Company to Central & South America

Education business

Cox and Kings is a world leader in experiential learning or outdoor learning. We are market leaders in the UK which has among the most developed education systems in the world. We cater to both primary school students as well as secondary school students. Our brands PGL and NST are more than five decades old and are household names in the UK.

Our Education business was faced with multiple challenges in FY17, including Brexit and the consequent decline in consumer confidence, the impact of higher minimum National-Living-Wage costs which could not be passed on immediately, numerous terrorist incidents in Europe which impacted travel sentiment, and adverse geopolitical rumblings in Europe and the UK through the year. Despite all these factors, the Education division saw its EBITDA in pound sterling terms rise by 2% y-o-y in FY17 on rising bed capacity and higher bed occupancy at PGL.

PGL

PGL accounts for about 81% of the EBITDA of the Education division. PGL provides residential outdoor learning programs which are linked to the students curriculum in the age group of 6-18 years. PGL delivered EBITDA growth of 11% y-o-y in FY17 and the division added 357 beds during the year, boosting year-end bed capacity to 10,255 beds. PGL has working relationships with the teachers and staff of more than 5,000 schools in the U.K. The business runs on negative working capital, i.e. activities are paid for before the children arrive and therefore the unit enjoys a high rate of return on capital employed.

PGL has an outstanding health and safety record owing to which teachers and parents continue to repose their faith in us. We hosted a staggering 369,278 children at our campuses worldwide in FY17. Bookings typically happen 6-9 months in advance and are mostly front loaded i.e. 85-90% bookings happen in the first half of the year, which gives us strong visibility for the future.

The outlook is robust over the medium term in the U.K. with the Department of Education forecasting 8.7% growth in pupil population over the period 2016-2025. PGL is gaining market share at the expense of the campuses run by local educational authorities (LEAs), which have been facing budgetary constraints. PGL is targeting more schools to gain market share and enhance capacity utilisation at its campuses. We are also boosting occupancy by encouraging foreign students to come to our campuses to learn English as a foreign language. We are also hosting indoor programs during shoulder seasons to increase fills. We also host the British governments National Citizenship Service program for young adults at our centres across the UK.

Bed capacity utilization at PGL (UK and Europe) increased to 33.6% in FY17 from 32.9% last year and we continue to aim to increase utilization over time. This was achieved despite the Paris attacks in November 2015 affecting demand in our seven centres in France. We managed to redirect some of the affected demand to our UK centres and mitigated the impact to some extent.

Whilst boosting capacity utilization is a focus area, we also continue to expand our overall bed capacity aggressively. We will be adding a further 330 beds at our new site Bawdsy Manor, and another 300 beds at another new site, Newby Wiske, in FY18.

PGL Australia saw 7% growth y-o-y in occupied bed nights in FY17 and the division made a small profit during the year. We are very encouraged by the track record of our Australia division, which constituted an expansion into a totally new geography 30 months ago. We are further expanding our presence there by adding 200 beds in FY18 at a new leased site near Brisbane. We continue to look for more opportunities to expand our presence down under.

We believe we have a strong head start in this business and expect to expand our presence aggressively. This business is capital intensive as it not only requires wide land parcels but also requires substantial build-up of rooms, dorms, commercial kitchens and activity infrastructure. Given our experience in Australia, which has achieved profitability within two years of commencing operations, we are encouraged to expand in other geographies in future.

NST/EST/StudyLink /TravelWorks

NST is a 50-year-old brand which conducts experiential learning tours mainly for secondary school children in the UK (average group size of 36 students). We conduct more than 60 types of tours with detailed itineraries, decided in consultation with the teachers, for students in the age group of 13-18 years. The tours may be within the country or international, and may include air fare, bus fare, rail fare, accommodation, tickets to museums/attractions, sightseeing, lab fees, lectures etc. The gross average billing per student works out to >GBP400.

EST and StudyLink take UK higher-secondary school students and university students, respectively, on study visits and excursions (both within-country as well as outside) with the aim of enhancing their understanding of their core subject matter. The tours may include conferences, trade fairs, speeches from renowned experts etc.

Our TravelWorks brand is involved with work, volunteer and internship placements abroad targeted mainly at German youth, including gap-year placements.

The tour operations division as a whole reported some softness in gross margins in FY17 due to the deleterious impact of the depreciation of the pound sterling versus the euro and other destination currencies. However, we increased our market leadership position here in FY17 and we do expect this division to return to its strong, steady-state margin performance over the medium term.

Meininger

Meininger was faced with a challenging geopolitical environment in Europe in FY17 along with stagnant economic growth across the continent and numerous terrorist incidents, including the Brussels airport attack; Meiningers Brussels property accounted for 10% of bed capacity in FY17. In the face of significant odds, Meininger overall recorded 5% growth y-o-y in EBITDA in euro terms in FY17 on rising bed occupancy and operating leverage. Meininger Brussels itself saw a sharp bounce-back in occupancy over the year, which is testimony to the core strength of the Meininger business model. In spite of the above-mentioned odds, Meiningers full-year bed occupancy touched an all-time high of 76.8% in FY17.

Meininger added 1,700 beds, or 25% additional bed capacity, within a mere three-month period to boost total bed capacity to 8,553 as of March 31, 2017. The expansion also marked our entry into two new cities, Copenhagen and Leipzig.

Meininger enjoys unique branding as the Urban Travellers Home. We offer affordable stay options with clean facilities across our network of 17 hotels in 11 cities across Europe. Our hotels are centrally located, reasonably priced and offer a modern atmosphere. We specifically appeal to families, student groups, business travellers and backpackers. Meininger typically takes up a property on a long-term lease, sometimes up to 20 years, in the heart of the city, and offers accommodation options in two-bed, three-bed, four-bed, six-bed, eight-bed, and/or dorm-style rooms.

Guests at our hotels have the unique advantage of a full-fledged guest kitchen, where they can cook their own meals or warm up food brought from outside. They even have access to laundry facilities on the premises. Since we target younger guests, wi-fi is given free during their stay. Breakfast is outsourced and is charged to guests at a competitive rate. Families that stay at our Meininger hotels enjoy the four-bed-with-bathroom-en-suite configuration. Businessmen like our central locations and our clean, no-fuss offering. Individual travellers also enjoy our convivial atmosphere and easy access to tourist hotspots.

Meiningers low capital intensity and high occupancy make it a business that is uniquely high on parameters such as return on capital invested. The unit delivered an average EBITDA per bed of more than EUR 2,700 in FY17, which is unparalleled in the hoteliering sector. Many of our properties are erstwhile hotels or office buildings which have been renovated, refurbished, re-fitted and converted into a Meininger hotel. Our main capital investment responsibility is in the soft furnishings at the hotel, including the beds and the public areas.

The company is targeting a bed capacity of 15,000 by the end of FY19. Meininger operates at low capital intensity and high operational efficiency and constitutes a core lever of Cox & Kings overall growth. With the European economy in the midst of a cyclical uptick and geopolitical rumblings dissipating following the decisive French election, the outlook for Meiningers growth and profitability has strengthened further.

New initiatives

• Meininger took over the lease and operation from Pandox AB of the Urban House Hostel in Copenhagen effective January 1, 2017. The hostel has 1,000 beds and is situated in the hip and vibrant district of Vesterbro.

• Meininger completed the second expansion phase of its Amsterdam City West Hotel in December 2016, increasing its bed capacity by 296 beds to 1,177 beds.

• Meininger opened its first hotel in Leipzig on April 1, 2017, featuring 404 beds located in close proximity to the main train station.

• Meininger signed an agreement with BeniStabili SIIQ for a new hotel featuring 491 beds in Milan, situated at Piazza Monte Titano in front of the Lambrate railway station.

• Meininger signed an agreement with Losinger Marazzi AG for a new hotel featuring 600 beds in Zurich, situated at the south end of the city in the new Greencity district.

• Meininger signed an agreement with Fondazione Fratelli di S. Francesco DAssisi ONLUS for a hotel in Milan featuring 268 beds, situated on Strada Privata Calvino 11 close to the Garibaldi train station.

• Meininger signed an agreement for the third expansion phase of its Amsterdam City West Hotel, increasing its bed capacity from 1,177 beds to 1,585 beds.

• Meininger signed an agreement with Fonciere des Regions, through its subsidiary Fonciere des Murs, for a hotel in Lyon featuring 580 beds situated in the vicinity of the city centre in the 7th Arrondissement of Lyon near Gare de Lyon Perrache, the second-largest railway station in the city.

• Meininger signed an agreement with Hirotani ProjektgesellschaftmbH for a new hotel featuring 336 beds in Heidelberg, situated at Carl Benz Street 4-6 close to the central station.

Others

The segment comprises primarily our visa processing business under the Cox & Kings Global Services (CKGS) brand. The division has substantially improved performance with EBITDA loss swinging from Rs.47 crores in FY16 to only 10 crores in FY17 on the back of better fixed-cost absorption due to higher revenues we well as targeted cost-control initiatives.

Detailed financials

Fixed assets, Capital work in progress & Goodwill

in lakhs
Particulars FY 2017 FY 2016 FY 2015
Gross Block
Tangible 184,358 207,152 197,834
Intangible 26,319 24,046 27,410
Total 210,677 231,198 225,244
Less: Depreciation & Amortisation
Tangible 27,544 30,806 28,528
Intangible 13,585 11,942 11,801
Total 41,129 42,748 40,329
Net block 169,548 188,450 184,915
Capital work-in-progress 7,026 3,984 1,562
Intangible assets under development 24,042 21,937 15,678
Goodwill on consolidation 220,275 262,488 327,258
Total 420,892 476,859 529,415

Net block reduced to 169,547 lakhs from 188,449 lakhs, due to depreciation of the pound sterling against the rupee year-on-year, which reduced the value in rupee terms of the Tangible assets (mainly Land & Building) of our UK-based businesses (mainly within the Education division). The year-end rupee value of Goodwill too reduced to Rs.220,275 lakhs from Rs.262,488 lakhs for the same reason as it is accounted for in a UK-domiciled subsidiary.

Debt profile
in lakhs
Particulars FY 2017 FY 2016 FY 2015
Long-term debt 255,991 282,582 330,579
Short-term debt 86,400 84,220 15,000
Current portion of long-term debt 24,843 43,251 32,384
Current portion of lease finance obligations 155 41 15
Total gross debt 367,389 410,094 377,978
Cash and cash equivalents 169,260 184,422 140,567
Net debt 198,129 225,672 237,411

Gross debt reduced to Rs.367,389 lakhs from Rs.410,094 lakhs as the cash proceeds from the stake sale in Superbreak and Laterooms were used to pay down debt. Net debt reduced to 198,129 lakhs from Rs.225,672 lakhs due to healthy cash flow from operations. Net debt to equity ratio stood at 0.6x as of March 31, 2017.

Shareholders funds
in lakhs
Particulars FY 2017 FY 2016 FY 2015
Share capital 8,828 8,466 8,466
Reserves & surplus 251,121 237,546 253,546
Non controling interests 60,637 63,929 75,412
Total 320,585 309,941 337,424

Total shareholders funds including minority interests increased by 10,644 lakhs to Rs.320,584 lakhs. In June 2016, the promoters invested 16,846 lakhs as balance money due on conversion of 72.5 lakh warrants into an equivalent number of fully paid-up equity shares (of Rs.5 face value) at a price of Rs.309.85 per share. Minority interests reduced due to the impact of the depreciation of the pound sterling against the rupee year-on-year, since these are attributable to a UK-based subsidiary.

Current assets (excluding Cash & cash equivalents)
in lakhs
Particulars FY 2017 FY 2016 FY 2015
Current investments 2,800 2,801 2,801
Inventories 1,985 2,915 2,363
Trade receivables 182,012 139,830 117,986
Short-term loans & advances 54,558 5,380 6,662
Other current assets 56,484 108,675 90,799
Current tax assets 939 2,022 2,854
Total 298,777 261,622 223,465

Total current assets (excluding cash and cash equivalents) increased by Rs.37,155 lakhs y-o-y to Rs.298,777 lakhs on account of extension of higher working capital credit to customers, especially in India.

Current liabilities (excluding short-term borrowings)
in lakhs
Particulars FY 2017 FY 2016 FY 2015
Trade payables 31,148 46,001 39,661
Other current liabilities 147,643 137,641 130,932
Short-term provisions 8,849 6,105 6,360
Total 187,640 189,748 176,953

Total current liabilities (excluding short-term borrowings) reduced by Rs.3,589 lakhs y-o-y to 1,86,159 lakhs on the back of lesser credit days from vendors.

Results of operations
in lakhs
Particulars FY 2017 FY 2016 FY 2015
Revenue from operations 717,629 750,530

N.A.

Cost of tours 499,689 509,762

N.A.

Income from operations 217,940 240,768 256,909
Other income 4,645 8,138 5,346
Total 222,585 248,906 262,255
Camping business Income from operations - - 35,130
Total (ex-Camping business) 222,585 248,906 227,125

Revenue from operations declined by Rs.32,901 lakhs to Rs.717,629 lakhs in FY17, mainly as a result of the sale of businesses in FY16.

Income from operations fell by Rs.22,828 lakhs to Rs.217,940 lakhs in FY17, mainly as a result of the sale of businesses in FY16. Like-to-like Income from continuing operations rose by 4% y-o-y to Rs.217,940 lakhs in FY17, mainly led by robust growth in Leisure-India, Meininger and visa processing businesses.

Expenditure
in lakhs
Particulars FY 2017 FY 2016 FY 2015
Total employee benefit expenses 74,551 83,025 91,400
Total other expenses 75,299 76,468 64,358
Total expenditure 149,850 159,493 155,758
Total expenditure (excl forex gain/loss) 132,794 159,473 155,826
Total expenditure (excl Camping & forex gain/loss) 132,794 159,473 140,691

Total expenditure (excluding gains/losses on foreign exchange) reduced by 17% y-o-y to 132,794 lakhs, mainly as a result of the sale of businesses in FY16.

Earnings before interest, tax, depreciation and amortization (EBITDA), excluding Other Income and gains/losses from foreign exchange, rose by 5% y-o-y to Rs.85,147 lakhs in FY17. EBITDA from continuing operations too grew by 5% y-o-y to Rs.85,147 lakhs in FY17.

EBITDA margins as a percentage of gross revenues increased to 11.9% in FY17 from 10.8% in FY16. EBITDA margins as a percentage of net revenues (Income from Operations) increased to 39.1% in FY17 from 33.8% in FY16, on the back of a strong margin performance across retained business divisions.

Profit before exceptional items and tax

Profit before exceptional items, forex gains or losses, and tax stood at Rs.57,706 lakhs in FY17, up 31% y-o-y from 44,029 lakhs in FY16, on the back of strong margins across retained business divisions.

Finance costs were lower by 12% y-o-y at Rs.22,551 lakhs in FY17 on lower average indebtedness during the financial year pursuant to the substantial deleveraging initiatives undertaken in FY16. Depreciation and amortization expenses also came in lower at Rs.9,534 lakhs in FY17 as compared to 14,851 lakhs in FY16, mainly due to sale of businesses that had higher amortization costs.

Consolidated net profit after tax, minority interests and share of income/(loss) from associates

Consolidated net profit after tax, minority interests and share of income/(loss) from associates increased by 190% y-o-y to 14,696 lakhs in FY17. Core profitability from continuing operations remained robust as explained hereinbefore.

Cash flows
in lakhs
Particulars FY 2017 FY 2016 FY 2015
Net cash flow from operating activities 26,265 74,772 49,804
Net cash used in investment activities (2,327) (44,265) 101,337
Net cash flow from financing activities (25,996) (9,669) (121,664)
Net increase/(decrease) in cash & cash equivalents (2,058) 20,838 29,477

Net cash flow from operating activities for FY17 was Rs.26,265 lakhs. This comprised of operating profit before working capital changes of Rs.83,537 lakhs, increase in working capital of Rs.44,050 lakhs and income tax of 13,222 lakhs.

Net cash used in investment activities for FY17 was Rs.2,327 lakhs, mainly owing to fixed asset purchases of Rs.20,720 lakhs. Net cash flow from financing activities for FY17 was Rs.25,996 lakhs. Key components included cash received from exercise of warrants of 16,846 lakhs, repayment of long-term borrowings of Rs.28,429 lakhs and Interest pay-out of Rs.22,551 lakhs.

Below is a table providing key information on the Contingent liabilities.

Contingent Liabilities
in lakhs
Particulars FY 2017 FY 2016 FY 2015
Guarantees 28,818 40,351 43,867
Tax demands 14,374 13,636 13,670
Legal claims not acknowledged as debt 3,099 1,465 1,126