Sterling shareholders to get 1.2 shares of Thomas Cook

In Feb this year, Thomas Cook India announced that it is merging Bay Capital-backed Sterling Holiday Resorts into it, on a Rs 870 cr cash and stock deal

Sterling Holidays Resorts (I) Ltd, which announced its merger with Canada-based billionaire Prem Watsa-owned Thomas Cook India in February in a Rs 870 crore cash and stock deal, is planning to add 400-450 rooms during the current fiscal, compared to 40 last year. The company, which got Rs 185 crore from Thomas Cook stated that it has become a debt-free company after the fund infusion. For one Sterling share, the shareholders of the company will get 1.2 shares of Thomas Cook.

Speaking to Business Standard on the sidelines of company's annual general meeting in Chennai on Wednesday, Ramesh Ramanathan, managing director, Sterling Holidays Resorts (I) Ltd, said that things are moving well, which could be seen in the first quarter numbers. Occupancy ratio increased to 71 per cent from 63 per cent over the corresponding period last year.

To a question on if it is because of the synergy with Thomas Cook, Ramanathan said that the outcome of the synergy (between Thomas Cook and Sterling Holidays) will be felt only after October. An increase in the first quarter's occupancy ratio was due to the company's efforts. He noted, the company had refurbished some of the existing rooms and improved the systems.

Ramanathan added, Thomas Cook has started referring their corporate customers to Sterling Holidays and the company is also talking to its franchisee customers for referral. The other major area Thomas Cook is helping is with systems.

"Our target is 62-65 per cent occupancy ratio during the current fiscal compared to 49 per cent last year," said Ramanathan, who added the company is planning to add 400-450 rooms during the current fiscal as compared to around 50 last year. As these rooms are leased on a longterm basis, the company is planning to invest only in refurbishment.

The new projects include resorts in Nainital and Corbett in Uttarakhand, Sariskha in Rajasthan, Union Territory of Daman and one on the banks of Godavari in Andhra Pradesh. These five projects alone will add around 250 rooms to the company's inventory of around 1,500 rooms.

"This year we will invest around Rs 80-100 crore to refurbish the rooms. Last year we invested a very very minimal amount," said Ramanathan, who noted the company has become a debt free after the infusion of Rs 185 crore by Thomas Cook.

In February, Thomas Cook India announced that it is merging Bay Capital-backed Sterling Holiday Resorts into it, on a Rs 870 crore cash and stock deal. Ramanathan then said that the acquisition of shares by Thomas Cook will be able to drive non-members it will increase company's credibility further.

A pioneer in Vacation Ownership and Leisure Hospitality company in India, Sterling Holidays,was incorporated in 1986.

Acquisition of the time share and resort business, and holiday activities will help expand TCIL's business presence in travel and related services.

TCIL proposes to consolidate the business operations of SHRIL into TCIL and its subsidiary company in a manner that the value of the shareholders of TCIL and SHRIL can be maximised.

The company has decided to obtain the approval of shareholders for the demerger and transfer of the entire business division and undertaking of Sterling Holiday Resorts (India) Limited to Thomas Cook Insurance Services (India) Limited and the amalgamation of Sterling Holiday Resorts (India) Limited with Its residual business with Thomas Cook (India) Limited.

With a view to consolidate business under TCIL, and at the same time housing the businesses in different entities, it has proposed that the time share and resort business of SHRIL be demerged and transferred to TCI, a wholly-owned subsidiary of TCIL and SHRIL. In consideration of the demerger and the merger, the equity shares of TCIL will be issued to shareholders of SHRIL

Ramanathan said, Sterling Holidays will be delisted and the company's shareholders will get 1.2 shares of Thomas Cook. The process is expected to be completed by February after the necessary approvals from the regulators.

"Sterling Holidays will continue as a separate entity and will continue in the same brand," said Ramanthan.

While the business of TCIL and SHRIL is complimentary in nature, the businesses are distinct from each other. Each of the business has got "tremendous" growth and profitability and will require focused leadership and management attention, the company said in a communication to the shareholders.