INDIA BUSINESS WORLD - JULY 2006
THE MONTH THAT WAS...

THOMAS COOK, LKP MERGER TO CREATE BIGGEST INDIAN FOREX CO

INDIA 'S largest money changer Thomas Cook India (TCIL) is set to merge with the number two player LKP Forex in a Rs 200-crore deal. The merged entity will have a 47% share of the Indian money-changing market. The merger was approved by the two company boards on Friday. The share-swap ratio will be decided by July-end after which the scheme of amalgamation has to be approved by the shareholders of both companies and the Bombay High Court.

On the benefits of the merger, TCIL managing director Madhavan Menon told that he `expects huge optimisation o f operations through the synergies between the two companies.'' TCIL is an authorised dealer and can deal in drafts and wires which LKP Forex cannot. TCIL is also allowed to hedge and export currency by itself. The Mumbai-based company presently has 65 branches in 20 cities while LKP, though with a smaller market share, has a larger network with 80 branches covering 26 cities. Mr Menon said Thomas Cook's travel and insurance will also now be sold through the LKP branches. TCIL will have the rights to the LKP brand but the company is yet to decide whether it will use the brand or extinguish it. ``We will take a call on it in a few months,” Mr Menon said.

M e a n - while, about 670 of LKP's workforce will join TCIL after the merger is cleared. TCIL employs about 1,100 people, of which 540 are part of the Forex division.

The TCIL share rose 5% to close at Rs 516 on the Bombay stock exchange on Friday.

Outbound and inbound tourist traffic into India have enjoyed a phenomenal growth over the past two years. Forex demand has also increased despite the increase in international credit card usage.

LKP Forex was planning to open offices abroad, to provide currency and travel insurance-related services. In 2004-05, LKP Forex and LKP Securities, the wholly-owned broking arm of LKP Merchant Finance, recorded a net profit of Rs 2.5 crore and Rs 35 lakh respectively.

TCIL is presently 60% owned by Dubai Financial, a subsidiary of Dubai Investment Group. The company has announced that it is looking at expansion through acquisitions in the country and abroad over the next couple of months. Investment banker Udayan Bose, who is now the TCIL chairman said, ``The acquisitions would be in fields that the company is currently involved in.'' The company would maintain its focus on growing its inbound, outbound and corporate travel businesses, he added.