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 Rsuture on the back of subsequent developments, information or events.

FY 2017-18 summary and outlook for next year

Cox & Kings has business interests spanning various geographies including India, UK, Europe, UAE, Australia, US and Japan. These diverse businesses across geographies faced various challenges In RsY 2017-18 but we managed to grow all our businesses faster than In RsY 2016-17 in constant currency terms. This is testament to our resilience which is achieved by being dynamic and adaptive to changes.

As the world grapples with issues like protectionism leading to trade and currency battles, alleged use of social media to influence elections and guide policy changes, threat of sanctions by developed countries against developing countries etc. there is one common theme which is dictating policy changes i.e. creating jobs. And tourism being the largest job creator is being given top priority by all countries.

Globally economies including India are seeing GDP growth rates improving but the impact of trade barriers and its effect on commodity prices is uncertain. While the EU is negotiating with the US after the latters announcement of imposing duty on imports, Indias stance has not been spelt out clearly. But tourism is unlikely to get impacted unless the situation escalates with visa restrictions being imposed, impeding travel. Thus, we believe, global macro trends with the exception of currency movements, are unlikely to impact Cox & Kings adversely. Also, given the job creation argument it is likely that government policies would be favourable to the tourism sector which should enable us to cruise along.

Global Travel & Tourism witnessed high levels of activity In RsY 2017-18 with international tourist arrivals growing at 7% as per UNWTO World Tourism Barometer. As per World Travel & Tourism Council (WTTC), Travel & Tourism sector accounts for 10.4% of global GDP and 313 Milion jobs, which is 9.9% of total employment in 2017. Global travel spending was about $1.6 trillion in 2017 as per Phocuswright.

In this backdrop, Cox & Kings consolidated net revenues grew 9.9% yoy In RsY 2017-18 more than double the growth of 4.4% In RsY 2016-17 as nearly all businesses kept up the momentum. The investments in advertising to grow our India retail business and strengthening the leadership team in Meininger contained EBITDA growth at 4%. But the investments we have made should help us execute our plans to grow our revenues faster or enable us to change our business mix favourably in the next few years.

Leisure- India segment had to face the impact of implementation of Indias biggest tax reform, GST. While this didnt slow our efforts in growing our business, it did impact our cash flows to a certain extent. India net revenues grew by 12% y-o-y In RsY 2017-18 faster than the 9.4% growth seen In RsY 2016-17 due to our dominant position in the MICE segment. Our overall international operations continued to remain steady.

Education business being pre-dominantly in UK faced some uncertainty with regard to Brexit. But our team did very well and the business recorded 6.6% y-o-y growth in net revenues in constant currency terms by not only capitalising on the peak season demand but also focusing on occupancy in the off- peak season and during weekends in PGL. We saw a revival in growth in our NST/EST line of business with gross revenues growing at 10.8% y-o-y after two years of decline in constant currency terms.

Meininger continued to expand its footprint by opening 4 new hotels including two in Germany, its first hotel in Italy and a second hotel in Netherlands In RsY 2017-18. It took its bed tally to 10,461 adding 2,110 beds, an increase of 25% in bed capacity. Its gross revenues grew by 26.5% y-o-y In RsY 2017-18 in constant currency terms, the highest growth it has witnessed in the past 5 years. It has undertaken an even more aggressive expansion In RsY 2018-19 with plans of reaching an important milestone of ~15,000 bed capacity.

Our visa processing services business (CKGS) continued its path of improving profitability by optimising costs. It reported an EBITDA of Rs 1,000 Lakhs In RsY 2017-18 compared to a loss of similar amount In RsY 2018-17.

Our gross debt increased by Rs 19,377 Lakhs y-o-y to Rs 3,90,700 Lakhs, primarily on account of an increase in receivables in the India business, which as discussed earlier saw collections getting impacted partly due to the implementation of GST. Net debt to equity stands at a comfortable 0.69x.

We had announced the demerger of the Foreign Exchange division into Cox & Kings Financial Service Limited (CKFSL) in June 2017. The Company has admitted the petition to NCLT and the matter has now been posted for final hearing on August 2, 2018. CKFSL has also received the NBFC license from the Reserve Bank of India (RBI) and is in the process of setting up the entire business to commence holiday financing and overseas education loans In RsY 2018-19 itself.

Cox & Kings will continue to pursue growth aggressively but keeping the theme of Reimagining growth and Realigning value in mind. This implies that we would focus on those segments of growth that would enable us to improve return ratios and which will deliver higher value to shareholders.

Leisure - India

Leisure - FY 2017-18 was a year of a major transformational reform for India as the Goods and Services Tax (GST) came into effect from July 01, 2017. This preceded by the currency replacement programme In RsY 2016-17 led to significant temporary slowdown in the economy with GDP growth slowing down to 5.7% in 1Q FY 2017-18 after growing at 7.1% In RsY 201617. But we executed well and grew net revenues by 12% y-o-y In RsY 2017-18 compared to 9.4% In RsY 2016-17. Since then, Indias GDP growth has bounced back to 7.7% in 4Q FY 2017-18. We continued to remain the most profitable travel company in India. We remain the market leaders in the MICE segment due to our strong long standing relationship with corporates.

Our leadership and strong standing in the B2B segment has given us confidence that we can now pursue market leading growth in the B2C segment. Although, we continue to be tactical and frugal, we increased our sales and advertising expenses by 25% In RsY 2017-18 to Rs 12,500 Lakhs. Our wide distribution network and presence in major towns in India apart from our presence in prominent cities enabled us to accelerate our growth In RsY 2017-18, a trend contrary to that witnessed by the organised industry players. We intend to capitalise on our strong franchisee partner network further to launch new products and further strengthen our value proposition.

Outbound travel

Travel & Tourism is a growth industry globally and India is no exception. Given the emphasis by travellers on experiences, travel operators along with various countries are curating holidays around experiences.

India is becoming a large market with various customer segments going on international holidays. The market is large enough for both organised (reputed brands) as well unorganised players (proprietor run outfits). Also, as the market expands the large brands like Cox & Kings and some of its offline and online peers will coexist along with numerous mom and pop travel operators. The industry would eventually evolve with large brands like Cox & Kings offering a wide bouquet of holiday options, smaller boutique outfits curating holidays with interesting experiences keeping the customers requirements in mind and operating in a niche market while the majority of small entrepreneur run shops will survive on the plain vanilla travel offerings with thin margins.

Technology has disrupted all industries without the exception of travel industry. Mature travellers and millennials use technology quite extensively and smartly as it subsidises their requirements but a large base of customers who are aspirational and not sophisticated (in terms of international exposure) require the assurance and assistance of an offline operator. As per a newspaper article, a local tour operator in Gujarat counts a fourth of his customers from the agriculture sector. There are numerous entrepreneurs in India managing businesses with turnover of less than f1,000 Lakhs who have high disposable incomes and are aspirational but enjoy travelling in groups from their own city or state and choose the services of an established brand like Cox & Kings. They are assured of a well organised itinerary and a holiday without any hiccups when they travel through Cox & Kings.

In India the trend of taking an international holiday is spreading fast into smaller cities and towns due to the following reasons

Improving connectivity - Direct flights to popular international destinations from various cities in India offer the convenience of spending lesser time on travelling to reach a destination

Simpler visa processes - Online applications without spending too much time in queues and visa on arrival have made the process quite simpler and quicker

Flexible payments - Financing options, although limited presently, offer travellers the flexibility to conveniently pay for holidays

According to the Ministry of tourism in India, ~22 Milion Indian nationals travelled from India to international destinations in 2016. As per United Nations World Tourism Organisation (UNWTO) about 50 Milion Indians will travel overseas in 2020.

Indians travelling overseas

India is a top source market for Dubai and Sri Lanka and fourth largest for Singapore. Short haul destinations like Dubai, Thailand, Singapore and Malaysia are popular among Indians. But as affordability is improving, long haul destinations in Europe including France and Switzerland are becoming extremely popular for Indians. The long haul destinations typically would involve visits to multiple cities and hence itineraries get more complex and the role of a tour operator becomes important. As the dynamics evolve and tourist population increases, Cox & Kings will be a natural beneficiary. We endeavour to grow ahead of the market in the outbound segment.

Cheaper air travel - As more airlines including low cost airlines offer international flights from India, competition is leading to reduction in price of air tickets and offers a wider choice to travellers

Wide choice of accommodation - With the advent of online travel websites, travellers have a wider and affordable choice of accommodation including two & three star hotels apart from homestays and upscale hostels

Affordable holidays - Group tours make holiday packages affordable due to economies of scale for the tour operator

MICE

Meetings, Incentives, Conferences and Events (MICE) as a category has become immensely popular across the globe including India. According to the ITB World Travel Trends Report, MICE, as a segment, contributes to 54% of total travel market globally.

The drivers of outbound travel in India hold true for the growth in MICE segment too since there is a significant element of leisure included in MICE tours. Factors such as companies realising the importance of offering work-life balance to employees and channel partners, greater appreciation for being taken on a fun filled holiday with colleagues and counterparts as against cash rewards by the recipient, creating long lasting memories thereby increasing association with the host organisation and building camaraderie are driving the MICE segment, which is probably the fastest growing segment within the travel industry.

Cox & Kings is a leader in the MICE segment as it has the bandwidth to cater to the differential needs of a MICE tour. Unlike, a retail package tour, MICE tours involve high degree of customisation and complexity thereby requiring more one- to-one interaction for planning the itinerary. Thus, a credible brand like Cox & Kings is preferred as execution is of prime importance since it helps in enhancing the reputation of the organisation in the minds of its employees, channel or business partners.

Cox & Kings will strive to remain the leading MICE operator in India and expects to maintain its leadership position and continue to build on its strengths.

Inbound Travel

India, due to multiple factors including poor infrastructure, inadequate security and connectivity has not performed to its true potential in attracting inbound travellers. Although, numerous steps including improved connectivity, direct flights into key tourist places and issuance of e-visas have made travelling into India more convenient but the efforts in developing, restoring and maintaining monuments needs to step up.

As per ministry of tourism India recorded 8.8 Milion foreign tourist arrivals in 2016 and accounted for just 0.7% of international tourist arrivals globally. India earned US$ 22.92 Billion of foreign exchange from tourism. Travel & tourism segment is a major source of job creation in any country. As per World Travel & Tourism Council (WTTC), this sector accounts for 313 Milion jobs or 9.9% of total employment globally in 2017. WTTC estimates that travel & tourism supports 41.6 Milion people in India, which is 8% of total employment in 2017. Thus, this sector helps in creating livelihood and also earns valuable foreign exchange for the country. The government recognises this and is stepping up efforts to attract international tourists.

Cox & Kings is a niche operator in the inbound travel segment catering to the premium segment. But as the thrust on tourism increases by the government, we stand to gain immensely since we have operations in multiple countries.

Domestic travel

Domestic tourism has caught on in India as citizens seek work- life balance and take frequent short duration trips ranging from extended weekends to a week to travel within India. Thus, there are reports that hotels are operating at historically high levels of occupancy even as two and three star hotels are becoming mainstream through online channels.

Cox & Kings is strongly positioned in the domestic market. 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 provide end-to-end solutions including air tickets, rail tickets, bus tickets, transfers, hotels, tours, attractions, sightseeing, entertainment etc.

The Indian airline sector has been carrying an average of over 110 Lakh passengers every month in the past nine months. In RsY 2017-18, 1,240 Lakhs airline passengers reportedly travelled by air within India which was a growth 19% y-o-y. Due to intense competition between airlines and with the advent of online websites and airline Apps, which promise discounts and cash backs, airfares have become affordable. No wonder that India is set to become the third largest aviation market in the world.

According to hotel consultant firm Hotelivate, hotel room occupancy across the country recorded a nine-year high In RsY 2017-18, touching over 67%. Due to availability of wider choice of branded hotels at price points starting from Rs 1,500 - 2,000 per room night and homestays also becoming an acceptable option, domestic tourism can be enjoyed with limited budget.

As per ministry of tourism, India witnessed a total of 18,000 Lakh domestic tourist visits (multiple trips by individuals included) in 2016, which has recorded a 13.4% CAGR in the past seven years.

Domestic Tourist Visits

We remain positive on the long-term growth prospects of the Domestic travel business and plan to curate variety of holiday packages to track the growth of the segment.

Business Travel

Cox & Kings has a prominent B2B presence and caters to the travel requirements of over 200 large corporations in India. 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 allied travel- related services.

Cox & Kings operates out of travel desks at the corporate customers offices to enable us to offer customised and quicker services. These travel desks are also able to generate leads for cross selling services to employees of client organisations. This division is seeing robust demand from corporates as most businesses operate with a hub and spoke structure within India which increases their travel needs. Also, Indian companies with international operations and international clients require employees to travel frequently. Thus, this segment should continue to witness strong traction.

Foreign exchange

Foreign exchange division services 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.

We will be receiving the approval of National Company Law Tribunal (NCLT) for the demerger of the forex division into Cox & Kings Financial Service Limited (CKFSL) and the listing process will be completed after following necessary procedures. CKFSL has already received NBFC license from the RBI and proposes to offer holiday financing and overseas education loans. We believe, the holiday financing market is at a very nascent stage and yet to take off to replicate the trend seen in the consumer durable loan segment. As holiday financing requirements recur almost every year, the potential is immense for scaling this business.

The forex business trends are mirroring that of the travel segment. The demerger would provide it complete freedom to chart its own growth path and introduce products and services to generate additional revenue streams. The forex division would aim to attain leadership position in the next few years.

Under the NBFC license CKFSL would aim to replicate the success of Cox & Kings as Indias leading travel brand and become the financier of choice for holiday loans. We believe, its niche positioning of providing holiday loans combined with the legacy of the Cox & Kings brand, vast distribution network and captive customer base gives it a tremendous head start despite being a startup business. CKFSL would initially focus on building robust systems and processes to lay a strong foundation to manage credit quality.

As announced earlier, Cox & Kings would retain 19% shareholding in CKFSL and the remaining 81% will be distributed to the shareholders of Cox & Kings. Thus, shareholders will stand to gain immensely due to this demerger and listing of CKFSL. This will be the first of a series of steps we expect to take to create value for our esteemed shareholders.

Big leap with launch of Specialist Products in Leisure - India

Cox & Kings Ltd has been constantly innovating to bring new and dynamic travel products for its diverse list of clientele. With the launch its adventure vertical called Trip 360, the enthusiasts in India and from the Inbound sector now have a safe and sustainable operator to go to. With both easy and extreme adventure offerings, Trip 360 has set a benchmark in India in the space of adventure travel, sports and activities.

To cater specifically to the disabled travellers and senior citizens, Cox & Kings launched an Accessible Holiday Specialist brand called Enable Travel. Being Indias first Accessible Holiday Specialist, Enable Travel provides travel solutions to travellers across disabilities including Wheelchair Bound, Vision Impaired, Hearing Impaired and Speech Impaired.

Leisure international

Our Leisure - International operations are spread across Dubai, UK, US, Australia and Japan. Although, aggregate revenues remained more or less stable, we witnessed strong growth in EBITDA.

The ITB World Travel Trend reported a 6% growth in worldwide outbound travel in 2017, 7.5% growth in the USA, and 5.5% in Europe, 5% in Asia-Pac as well as Latin America. For 2018, it expects growth of 5% with stronger growth in Asia- Pac and Latin America.

In the UK, Cox & Kings is a heritage travel brand having been in existence for 260 years. While the depreciation of the British Pound due to Brexit uncertainty has led to a slowdown in outbound travel, we have seen some semblance of stability. Globally, UK is one of the top five spenders on outbound travel. According to the World Travel and Tourism Council (WTTC), the outbound tourism expenditure of UK travellers is expected to increase from US$ 70 Billion in 2016 to US$ 102 Billion by 2024, a CAGR of 4.8%. Thus, due to our legacy position we expect to grow in tandem with the market.

C&K Dubai continued to experience strong growth in revenues and EBITDA. We handle both outbound and inbound travel in Dubai as it is a major tourist destination especially for Chinese and Russian tourists. Overall, Dubai attracted 158 Lakh visitors in 2017, a growth of 6% y-o-y, higher than the growth in previous year. India continued to remain the largest source market for Dubai constituting 12.5% of total visitors and registered a 15% y-o-y growth. China became the fifth largest source market for Dubai with a growth of 41% y-o-y in Chinese visitors into Dubai. Russia was the fastest growing source market with a growth of 121% y-o-y and has now become the eight largest source market for Dubai. We expect this market to continue to attract tourists and register reasonable growth.

In the US, C&K is a niche tour operator catering to celebrity guests. C&K Australia saw double digit growth In RsY 2017-18 while C&K Japan continued to grow.

Awards

British Travel Awards (November 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 & Kings is UKs largest private player in the outdoor learning or experiential learning segment. Given PGLs strong positioning due to its expertise in shaping students personality it continued to gain market share. It operates 28 residential activity centres (RAC) which are sprawling campuses offering a wide variety of activities which enable children to develop communication skills, teaching them to work in groups, develop leadership skills and to think out of the box in a creative manner. Under our NST/EST brands we organise educational tours for older secondary school students. Our brands PGL and NST are more than five decades old and are household names in the UK.

As the Education business derives most of its business from the UK, the uncertainty related with Brexit continued to pose some challenge. But the team executed well and hence the business recorded a growth of 6.3% y-o-y in gross revenues In RsY 2017-18 after declining marginally In RsY 2016-17. The growth was led by both PGL as well NST/EST.

PGL

PGL operates out of 28 RACs including 19 in the UK, 6 In Rsrance and 3 in Australia. We have 10,455 beds across all RACs. It added 577 beds including a new centre with 200 beds in Australia. PGL accounted for 79% of Education segment EBITDA. Whilst the centres run by local educational authority (LEA) command a larger market share, funding constraints are posing a challenge for those centres. We have been gaining market share over the years and continue to do so due to the quality of our infrastructure including the staff and our strong value proposition which is appreciated by the schools.

PGL revenues grew by 6.8% y-o-y in constant currency terms In RsY 2017-18 higher than the 4% growth witnessed In RsY 2016-17. This was largely driven by our ability to take pricing increases, a testament to our strong brand appeal. Since bookings for trips to the RACs happen 6-9 months in advance we have seen robust demand continue for our offerings and remain upbeat on growth prospects. We have undertaken brownfield expansion in a couple of existing campuses which would enable us to increase our free cash flow and return ratios In RsY 2018-19.

NST/EST/StudyLink/TravelWorks

We conduct experiential learning tours under our NST brand. 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.

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.

This segment saw a turnaround In RsY 2017-18 recording a gross revenue growth of 10.8% y-o-y in constant currency terms after declining for two years. This was achieved through a combination of volume and pricing growth. While this segment of the industry is highly fragmented the trend In RsY 201718 gives us confidence that we will be able to maintain the uptrend.

Awards

Following accreditations and/or awards were earned by the divisions during 2017/18

PGL

We were runners up in the School Travel Awards ‘Best Adventure Experience.

(The School Travel Awards recognise the best attractions, destinations, companies and practitioners in the field of educational travel and learning outside the classroom (LOtC)).

NST

Feefo Gold Standard Trusted Service Award 2018. Awarded to companies that consistently score 4.5 and above out of 5 on the customer referral platform.

British Youth Travel Awards - Best Support Service Award winner 2017. The awards recognise the best suppliers in the industry.

We continue to be accredited to Quality Management ISO 9001 - 2008 and Environmental Management ISO 14001-2004.

Meininger

Meininger continued to strengthen its brand appeal in the hybrid hotels segment. It is not only disrupting the traditional hotel industry in Europe with its innovative offerings but is also posing a challenge to the home sharing and the hostels segment. The concept of offering a clean, safe and affordable accommodation is being well appreciated by the market and the demand is quite buoyant for such a product. Thus, In RsY 2017-18, it saw an unprecedented increase in bed capacity of 25% by adding 2,110 beds taking the total to 10,461 beds across 19 hotels in 13 cities. As it expands its footprint and open new hotels the network effect which drives high repeat customers for the new hotels improves the start-up occupancy levels.

Meininger hotels targets families, school groups, affluent backpackers and business people. Our NST/EST division which organises tours for students is one of the source base of customers for Meininger. Guests at our hotels can take advantage of a full-fledged guest kitchen, where they can cook their own meals. We offer laundrettes free of charge to guests who want to wash their clothes.

Meiningers FY 2017-18 net revenues grew by 26% y-o-y in constant currency terms, the highest it has witnessed in the past five years. But it is aiming to increase its bed count to 25,000 by FY 2021-22. Such exponential increase in capacity would require management bandwidth. Hence, it beefed up its leadership team In RsY 2017-18 which led to a significant increase in salary costs. Consequently, EBITDA was stable In RsY 2017-18 at the Company level even though hotel level margins increased substantially. Even as margins will likely remain stable In RsY 2018-19 due to the high proportion of new beds, over the next few years there is tremendous leeway for operating leverage to play out as the new hotels In RsY 2017-18 and FY 2018-19 get mature and reach steady state margins.

Meininger follows a very diligent and elaborate process of evaluating sites for future expansion. The reason Meininger is able to achieve high occupancy even in new hotels within a short time of launching is the process it follows for signing up a site. Thus, while a typical hotel takes 3-5 years to achieve occupancy of 60-65%, Meininger manages to reach those levels in less than half that time. The chart on page 7 gives the comparison of margins between hotels that have come up before and after December 2016. It is important to note that the older hotels operate at over 30% margins while the recent hotels have already started making a positive contribution. Given the project management and execution capabilities we remain optimistic about Meiningers future scalability and profitability.

New initiatives

The outlook for Meininger continues to be robust as it plans to open hotels in Milan, Berlin, Budapest and Munich following a new hotel launch in Rome in April 2018 to reach its target of adding about 4,000 beds to reach a count of ~15,000 beds by FY 2018-19.

Meininger opened its fifth hotel in Berlin on December 01, 2017. The new building with 245 rooms and 833 beds is well located right next to East Side Gallery and Ostbahnhof.

Meininger opened its first hotel in Italy in Milan on December 18, 2017. Meiinger Milano Garibaldi offers 80 rooms and 268 beds and is located in the centre of the city on Strada Privata Calvino 11 close to the Garibaldi train station.

Meininger opened its second hotel in Amsterdam on March 25, 2018. The new building is located directly at Amstel station and offers 186 rooms and 806 beds.

Meininger Hotels and Fonciere des Regions, through its subsidiary Fonciere des Murs, signed an agreement for a hotel in Lyon, located on Rue Zimmermann, near the city centre. The 169-room and about 580-bed hotel is expected to open mid 2019.

Meininger Hotels and project developer Nelson Canal Portugal have signed the agreement for a hotel in Lisbon. The opening of the 121-room and 453-bed hotel is scheduled for the end of 2019.

Meninger and a well-known Swiss developer have signed an agreement for a hotel in Geneva. The hotel, which will be newly constructed, will be located in close proximity to the city center. It will feature 104 rooms and 368 beds and is expected to open in 2020.

Meininger signed an agreement for a hotel in Bordeaux, with the local investor Christian Sagaspe. The property, designed by the French architect Patrick Arotocharen, which will be newly constructed, will be located on Rue du Commerce in close vicinity to the main train station Bordeaux-St-Jean. It will offer 162 rooms and 493 beds and is expected to open in the first quarter of 2020.

• Meininger and investor LGIM Real Assets (Legal & General) have signed an agreement for a hotel in Glasgow. The hotel will be located on West George Street opposite Queen Street Train Station and will offer 160 rooms and 590 beds. The opening is scheduled for 2020.

Meininger and Peter Simmel signed an agreement for a hotel in Dresden. The new building will be located right opposite the central station at Wiener Platz 2. The 165 rooms and 639 beds hotel is scheduled to open in the second quarter of 2021.

Others

This segment comprises primarily our visa processing business under the Cox & Kings Global Services (CKGS) division. We have been able to optimise costs in this division and improve profitability. The net revenues for the division increased by 4% y-o-y to Rs 18,400 Lakhs while EBITDA improved substantially to Rs 1,000 Lakhs In RsY 2017-18 against an operating loss of Rs 1,000 Lakhs In RsY 2016-17. Whilst the bid pipeline is healthy the order wins are unpredictable in this business. But we have gained substantial expertise in bidding for and executing projects and hence remain sanguine about the prospects of this division.

Detailed financials

Fixed assets, Capital work in progress & Goodwill

Rs in Lakhs

Particulars FY 2017-18 FY 2016-17 FY 2015-16
Gross Block
Tangible 230,720 184,358 207,152
Intangible 48,058 26,319 24,046
Total 278,778 210,677 231,198
Less: Depreciation & Amortisation
Tangible 36,585 27,544 30,806
Intangible 15,195 13,585 11,942
Total 51,780 41,129 42,748
Net block 226,999 169,548 188,450
Capital work in progress 4,773 7,026 3,984
Intangible assets under development 8,759 24,042 21,937
Goodwill on consolidation 246,799 220,275 262,488
Total 487,330 420,891 476,859

Net block increased to Rs 226,999 Lakhs from Rs 169,548 Lakhs due to Rs 27,627 Lakhs of capital expenditure and the rest due to translation as the Rupee depreciated against the British Pound (Education business) and the Euro (Meininger). The intangible assets also increased due to currency movements.

Debt profile Rs in Lakhs
Particulars FY 2017-18 FY 2016-17 FY 2015-16
Long-term debt 228,584 255,991 282,582
Short-term debt 162,110 86,400 84,220
Current portion of long-term debt 7,539 24,843 43,251
Current portion of lease finance obligations 97 155 41
Total gross debt 398,329 367,389 410,094
Cash and cash equivalents 163,960 169,260 184,422
Net debt 234,369 198,129 225,673

Gross debt at Rs 3,98,329 Lakhs increased by Rs 30,940 Lakhs due to increase in receivables in the India business which was partly related to GST and also due to depreciation of the Rupee against the British Pound. Consequently, the net debt increased by Rs 36,240 Lakhs.

Shareholders funds Rs in Lakhs
Particulars FY 2017-18 FY 2016-17 FY 2015-16
Share capital 8,828 8,828 8,466
Reserves & surplus 319,442 251,121 237,546
Non controlling interests 100,354 60,637 63,929
Total 428,624 320,586 309,941

Total shareholders funds including minority interests increased by Rs 1,08,038 Lakhs. Non controlling interests increased due to the Rupee depreciation as well as due to growth in net profit of Education and Meininger businesses.

Cox & Kings Limited I 29

Current assets (excluding Cash and cash equivalents)

Particulars FY 2017-18 FY 2016-17 FY 2015-16
Current investments 2,800 2,800 2,801
Inventories 1,550 1,985 2,915
Trade receivables 224,160 182,012 139,861
Short-term loans & advances 99,095 66,476 114,054
Other current assets 81,774 44,566 -
Current tax assets 1,030 939 165
Total 410,410 298,777 259,798

Total current assets (excluding Cash and cash equivalents) increased by f1 GST related process and better credit terms extended to vendors.

Current liabilities (excluding short-term borrowings)

Particulars FY 2017-18 FY 2016-17 FY 2015-16
Trade payables 42,019 31,148 46,001
Other current liabilities 169,123 147,643 137,641
Short-term provisions 10,594 8,849 6,105
Total 221,736 187,639 189,747

The current liabilities increased by Rs 34,097 Lakhs y-o-y to Rs 2,21,736 Lakhs as we managed to extract better credit terms from vendors.

Results of operations

Particulars FY 2017-18 FY 2016-17 FY 2015-16
Revenue from operations 645,054 717,629 750,530
Cost of tours 405,125 499,689 509,762
Income from operations 239,929 217,940 240,768
Other income 5,151 4,645 8,138
Total 245,080 222,585 248,906

Income from operations grew 10% y-o-y to f2,39,929 Lakhs mainly due Education.

Expenditure

Particulars FY 2017-18 FY 2016-17 FY 2015-16
Total employee benefit expenses 80,632 74,551 83,025
Total other expenses 56,870 75,298 76,468
Total expenditure 137,502 149,850 159,493
Total expenditure (excluding forex gain/loss) 151,337 132,793 159,473

Total expenditure (excluding gains/losses on foreign exchange) increased by 14% y-o-y to f 1,51,337 Lakhs partly due to higher sales & advertising expenses and also due to higher expenses in Meininger which was driven by expanding management bandwidth to execute our ambitious plans.

Earnings before interest, tax, depreciation and amortisation (EBITDA), excluding other income and foreign exchange gains/losses, grew by 4% y-o-y to f88,533 Lakhs. EBITDA margins as a percentage of gross revenues increased further to 13.7% In RsY 2017-18 from 11.9% In RsY 2016-17.

Profit before exceptional items and tax

Profit before exceptional items, forex gains or losses, and tax stood at Rs 57,318 down 0.7% y-o-y due to higher interest expenses. As discussed earlier, collection of receivables was impacted partly by GST implementation which led to higher working capital loans. The interest expense also included a one-time finance charge for foreclosing foreign currency denominated loans.

Consolidated net profit after tax, minority interests and share of income/(loss) from associates increased by 156.4% y-o-y to Rs 37,676 Lakhs In RsY 2017-18.

Cash flows

Particulars FY 2018 FY 2017 FY 2016
Net cash flow from operating activities (28,054) 26,265 74,773
Net cash used in investment activities (26,856) (2,327) (44,264)
Net cash flow from financing activities 61,417 (25,996) (9,669)
Net increase/(decrease) in cash & cash equivalents 6,507 (2,058) 20,840
Below is a table providing key information on the Contingent liabilities Contingent liabilities Rs in Lakhs
Particulars FY 2018 FY 2017 FY 2016
Guarantees 35,635 28,818 40,351
Tax demands 17,023 14,374 13,636
Legal claim not acknowledged as debt 13,742 3,099 1,465