Cox & Kings board approves demerger of foreign exchange business
New Delhi [India], May 30 (ANI): Leading leisure and education travel group Cox & Kings on Tuesday announced its board's approval on the demerger of its foreign exchange division into a separate financial services company to be named Cox & Kings Financial Service Ltd. (CKFSL).
Effective from April 1, 2017, the demerger is a subject to High Court and other regulatory approvals.
Whilst the Tours and Travels and Foreign Exchange ('Forex') businesses are complementary in nature, the businesses operate quite distinctly from each other. The Forex business has 125 licenses across India to provide foreign exchange to captive customers as well as to third-party customers.
"Strong macro drivers coupled with a strategic brand presence will enable CKFSL to flourish. There are abundant, large-sized avenues for natural product diversification and the timing of this demerger is most opportune," said chief executive officer Cox & Kings, Peter Kerkar.
The working capital needs of the Forex Business are quite different from those of the Tours and Travels business.
With a view to enable the Forex business to capitalize on growth opportunities in an independent manner it has been decided to demerge the business into a separate company.
The demerged entity has the potential to grow substantially as a standalone business with separate financing and operations and focused leadership and management attention.
The opportunities as well as risks and competitive environment within the Forex Business are distinct and the said business is capable of attracting its own set of investors and strategic partners, lenders and other stakeholders.
It is proposed that the Forex Business of the Company be demerged and transferred to the Resulting Company, a wholly owned subsidiary company of the Company, so as to maximize value for all the stakeholders of the Company.
In consideration of the demerger, equity shares of the resulting company shall be issued to the equity shareholders of the company, on the agreed terms and conditions as set out in the draft scheme.
CKFSL is also in the process of applying for a license to operate as a non-banking finance company (NBFC) and will add multiple product lines to its suite of offerings over time, including holiday finance, overseas student finance etc. aimed primarily at the travel and tourism sector.
With the number of outbound travellers from India due to touch 50 million by 2020 (as per UNWTO) from approximately 21 million currently, there is a substantial and unique opportunity for the newly minted company to grow rapidly at high rates of profitability. (ANI)