The Board of Thomas Cook (India) Limited (TCIL) has approved a composite scheme involving the demerger of its Resorts and Resort Management business into Sterling Holiday Resorts Limited (SHRL). The plan includes a share consolidation for TCIL, a reduction in the paid-up equity share capital of TCIL, and the merger of three dormant subsidiaries. The scheme aims to unlock value, streamline capital structure, and pave the way for a future listing of SHRL.
Approval of Composite Scheme of Arrangement
The Board of Directors of Thomas Cook (India) Limited (TCIL), based on recommendations from the Independent Directors Committee and the Audit Committee, has approved a comprehensive Composite Scheme of Arrangement. This scheme involves multiple steps concerning TCIL, Sterling Holiday Resorts Limited (SHRL), TC Visa Services (India) Limited (TCVSL), Jardin Travel Solutions Limited (JTSL), and Borderless Travel Services Limited (BTSL).
Key Components of the Scheme
The approved Scheme is set out in the following sequence:
- Demerger: The Demerged Undertaking of TCIL, comprising its resorts and resort management business, will be demerged into SHRL (the Resulting Company). In consideration, SHRL equity shares will be issued to TCIL shareholders based on the Share Entitlement Ratio.
- Consolidation of Share Capital: Four equity shares of TCIL, each with a face value of INR 1, will be consolidated into one equity share of TCIL with a face value of INR 4.
- Merger by Absorption: TCVSL, JTSL, and BTSL will be merged by absorption into TCIL, leading to their dissolution without winding up.
- Reduction of Share Capital: The paid-up equity share capital of TCIL will be reduced, lowering the face value of its shares from INR 4 to INR 3 per share, with no cash payment to shareholders.
Demerger Details and Rationale
The Demerged Undertaking pertains to the operation and management of resorts, hotels, and related activities. The turnover of this undertaking for the year ended 31st December 2025 was INR 70 Crores, representing approximately 0.4% of TCIL’s total standalone turnover for that year.
The primary rationale is to unlock value for shareholders by separating the resort business, allowing SHRL to operate as a focused, separate listed entity in the hospitality industry. This restructuring is also intended to streamline TCIL’s capital structure and improve its operational efficiencies.
Share Exchange and Capital Structure Changes (Indicative)
For the demerger, TCIL shareholders will receive 81 equity shares of SHRL (face value Rs. 10 each) for every 100 equity shares of TCIL (pre-consolidation face value Re. 1 each) held.
The indicative post-Scheme shareholding pattern for SHRL is projected as follows:
- Promoters: 65.55% (including 7% held by TCIL).
- ESOP Trust: 2.16% (due to accelerated options).
- Public: 32.30%.
The consolidation of TCIL’s share capital (4:1) is expected to enhance key financial ratios and better reflect the intrinsic value of the shares. The entire composite scheme is anticipated to be completed within 15 to 18 months from the date of Board approval, subject to regulatory clearances, including the Hon’ble National Company Law Tribunal.
Merger of Dormant Subsidiaries
The merger of TCVSL, JTSL, and BTSL into TCIL is primarily aimed at streamlining the corporate structure by eliminating unnecessary compliance and administrative costs associated with these dormant, non-operative entities.
Benefits of Capital Reduction
The reduction in TCIL’s equity share face value from Rs. 4 to Rs. 3 is intended to right-size the balance sheet and capital structure. This is expected to lead to a more efficient capital structure and improved earnings per share for TCIL shareholders, though it results in no change in the number of equity shares outstanding or the proportion of holdings by existing members.
Source: BSE
