Friday, 11 October 2019

CRISIL assigns Thomas Cook India corporate credit rating of CCR AA

Reaffirms its ratings on the debt programmes and bank facilities of TCIL at ‘CRISIL AA-/Stable/CRISIL A1+’


 The CRISIL credit rating rationale, dated October 9, 2019, communicated to Thomas Cook (India) Ltd., and uploaded on its portal, has assigned its corporate credit rating of ‘CCR AA-’ to Thomas Cook (India) Ltd. (TCIL). Additionally, CRISIL has reaffirmed its ratings on the debt programmes and bank facilities of TCIL at ‘CRISIL AA-/Stable/CRISIL A1+’. This announcement further reflects that the ratings of Thomas Cook (India) Ltd. remain unaffected as the bankruptcy of Thomas Cook PLC in United Kingdom has no linkage with Thomas Cook (India) Ltd.
                                                                                                                     
The ratings continue to reflect Thomas Cook India group’s healthy business risk profile, driven by a dominant position in the forex business and strong brand equity in travel-related services; comfortable capital structure; and strong liquidity.

CRISIL CCR is a globally recognised rating of an issuer, indicating its degree of strength and ability to honour its debt obligations. Previously, on September 26, 2019, CRISIL’s credit bulletin, which was communicated to TCIL and uploaded on its portal, had presented a stable outlook for the debt programmes and bank facilities of TCIL, with its ratings remaining unaffected by the bankruptcy of Thomas Cook PLC in the UK.


The October 9 rating rationale, further clarifies this, assigning the corporate credit rating of ‘CCR AA-’ to Thomas Cook (India) Ltd., and the rating of ‘CRISIL AA-/Stable/CRISIL A1+’ for its debt programmes and bank facilities. The credit rating is assigned taking into account the business and financial risk profiles of TCIL and its subsidiaries, including Sterling Holiday Resorts Ltd (Sterling), TCI, SOTC Travel Ltd (‘CRISIL AA-/Stable’), Travel Circle International Ltd, Horizon Travel Services LLC, Travel Circle International (Mauritius) Ltd, and DEI, all of which, are together referred to as the Thomas Cook India group, and are strategically important to, and have considerable operational integration with, TCIL. While earlier, the business and financial risk profiles of Quess were also considered, following the company’s announcement of restructuring, Quess has not been considered a part of the group, to arrive at the ratings.

CRISIL further believes that Thomas Cook India Ltd. (TCIL) will continue to improve its cash accrual over the medium term, supported by a healthy business risk profile in the travel and forex segments. Moreover, recent investments in technology and synergic benefits of past acquisitions should result in improved profitability.


The bulletin further elaborates that Thomas Cook (India) Ltd. (TCIL) is a completely separate entity from Thomas Cook UK, post-acquisition of 77% stake by Canada based Fairfax Financial Holdings in 2012. While TCIL is a brand licensee of ‘Thomas Cook’ brand in India, there exists no shareholding or business linkage between the two companies.

Furthermore, while the brand has been licenced to TCIL until November 2024, TCIL is evaluating various options including transitioning to a new brand.

Mr. Madhavan Menon, Chairman & Managing Director, Thomas Cook (India) Ltd., said, “CRISIL’s assigned and reaffirmed ratings for Thomas Cook India Ltd. continue to reiterate the strong leadership and financial position of the independent Thomas Cook India Group since its acquisition by Fairfax Financial Holdings in 2012.The report further highlights key strengths including its dominant position in the forex business and strong brand equity in travel-related services along with its comfortable capital structure.”

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