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Kuoni acquires Sita Travels, eyes more buy-outs

The Zurich-based Kuoni Reisen Holding AG today acquired Sita World Travels, along with its overseas operations, for an undisclosed amount, and announced that the Swiss travel group was eyeing further acquisitions of Indian tour and travel agencies beginning 2001.

Following the take-over of Sita, which is to be completed by the end of September, Kuoni has restructured its operations in India and set up a holding company -- Kuoni India Limited, Max E Katz, Kuoni Travel Holding Limited executive vice-president and chief financial officer, told newspersons here today.

The holding company would operate three divisions -- SOTC Outbound Travel, Sita Inbound Travel and Sita Travel Division for business travel and special interest tours.

The Swiss company is also planning to launch an initial public offering in October to divest around 30 per cent stake in the holding company. "The company would be listed on the Bombay and National stock exchanges. The proceeds would be retained by the parent company and would be used for funding future acquisitions.''

Though the company has decided to begin more acquisitions from 2001, Katz said the targets are yet to be identified. "There are no concrete discussions as of now. But the Indian market is very exciting and we are constantly looking at expanding our presence here.''

He said that India is considered as one of the most promising tourist markets with the Indian government forecasting 8 per cent annual growth in the number of tourists by 2005. Travel abroad by Indians is rising by 40 to 50 per cent a year.

The company would make the public offering at an indicative price of Rs 400-600 per share to raise Rs 1.5 billion, Kuoni Travel India Limited chairman and managing director Ranjit Malkani said.

Following the take-over, the existing board of directors of Sita Travels has resigned and has been replaced by a new five-member board, including a chairman from the Swiss company.

"Sita will continue to exist after the take-over. It is a financial consolidation."

Inder Sharma, current owner and chairman of Sita World Travel, will serve as chairman emeritus with the merged company. The incoming and business travel divisions, headquartered in Delhi, will be headed by chief operating officers Arjun Sharma and Neeraj Ghei, with the outbound division being headed by COO Zubin Karkaria.

The company expects to record a Rs 1 billion growth in turnover to touch Rs 5 billion in 2001 calendar year.

The Kuoni group has been active on the subcontinent since 1966. Its subsidiary SOTC Kuoni Travel India Limited domiciled in Bombay is the country's leading outgoing operator. The new Kuoni subsidiary, Sita World Travel, India's largest travel organisation is active in all three operating sectors -- incoming, business travel and outbound -- and with 29 branches has established a strong nation-wide presence.

Affiliated companies in Nepal and Sri Lanka represent it on the rest of the subcontinent. To this must be added the eight representative offices abroad. In fiscal 1998-99, Sita World Travel generated a turnover of Rs 2.85 billion with some 850 employees and a pre-tax profit of Rs 133 million.

The Kuoni group projects significant to result from the merger of the two companies particularly in the outbound segment where activities will be combined under one management in Bombay.

Substantial synergies are also expected to result from the fact that as from November 1, 2000, Kuoni India will set up a new strategic business unit to take care of all Kuoni clients travelling to India, a significant additional passenger volume.

UNI

Business