Thomas Cook India, the country’s largest travel-related service provider, said it slashed about 7 per cent of its workforce in 2008 and shut a few of the retail outlets as part of a plan to cut cost and boost profits.
The Indian unit of Thomas Cook Group Plc disengaged services of 175 employees from a total workforce of 2,500. The company expects to save about Rs 6 crore annually from the measure. The travel company reported 22 per cent decline in annual profit to Rs 40.5 crore for the year ending December 2008.
The company is also shutting down a few of its unviable retail outlets and slowing expansion to save costs as demand for travel and tourism slumps due to the global economic slowdown and job cuts. In 2006, Thomas Cook merged with LKP Forex Ltd and bought Travel Corp (India) Pvt Ltd.
“To maintain our operating profit, we have shut down some of our branches and business units from where these people have been laid off after clearing their dues,” said Madhavan Menon, managing director, Thomas Cook India. He said there would not be any layoff in 2009.
The company shut 32 retail outlets during the year. Currently, the company has 160 retail outlets in 52 cities. “We have slowed expansion keeping in mind high office rentals,” Menon said. However, the company planned to open eight new retail outlets this year, he said.
Thomas Cook, battling higher interest payouts, mainly on account of short-term borrowing to fund expansion, expects interest costs to drop significantly in 2009 because of the additional money it raised through rights shares last month. Interest payout for the full year ending December rose 12 per cent to Rs 35.2 crore because of a surge in short-term debt.
The company had to defer its rights issue plan in 2007 and raise money from preference shares instead. It raised Rs 180 crore through rights shares in January.
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“By using the rights issue money to pay our debt, we have been able to bring our debt to equity ratio below one,” Menon said.
The company expects the leisure travel for the summer season of 2009 to pick up to the level of 2007. “Our advance bookings for the summer season are very good and we have crossed the 2008 number,” Menon added.