Thomas Cook (India) Limited (TCIL) announced that its Board has approved a comprehensive Composite Scheme of Arrangement. Key steps include the demerger of the Resorts and Resort Management business into Sterling Holiday Resorts Limited (SHRL), followed by a potential listing of SHRL. The plan also involves a consolidation of share capital (4:1) and a reduction in face value (INR 4 to INR 3), aimed at optimizing capital structure and improving operational efficiencies across the reorganized entities.
Comprehensive Corporate Restructuring Approved
The Board of Directors of Thomas Cook (India) Limited (TCIL) has granted in-principle approval for a Composite Scheme of Arrangement involving TCIL, Sterling Holiday Resorts Limited (SHRL), and three dormant subsidiaries: TC Visa Services (India) Limited (TCVSL), Jardin Travel Solutions Limited (JTSL), and Borderless Travel Services Limited (BTSL). This complex scheme is designed to reorganize and segregate business verticals to focus on core competencies.
Key Components of the Scheme
The scheme is structured around four primary actions:
- Demerger: The Demerged Undertaking, consisting of the resorts and resort management business of TCIL, will be demerged into SHRL (Resulting Company). In consideration, TCIL shareholders will receive 81 equity shares of SHRL for every 100 shares held in TCIL. The turnover of the Demerged Undertaking for the year ended December 31, 2025, was INR 70 Crores (approximately 0.4% of TCIL’s standalone turnover).
- Share Capital Consolidation: Four existing equity shares of TCIL, each with a face value of INR 1, will be consolidated into one equity share of face value INR 4. This aims to improve key financial ratios and better reflect the intrinsic value.
- Share Capital Reduction: The face value of TCIL’s paid-up equity shares will be reduced from INR 4 per share to INR 3 per share, without any cash payment to shareholders. This move is intended to create a more efficient capital structure.
- Merger by Absorption: TCVSL, JTSL, and BTSL (Transferor Companies), which are currently dormant, will be merged into TCIL for streamlining and reducing administrative costs.
Rationale and Objectives
The strategic rationale behind the demerger is to allow the hospitality business (SHRL) to pursue growth independently in the fast-growing hospitality industry, leveraging SHRL’s existing expertise. For TCIL, the goal is to divest the Resorts business to focus on its core travel services. This entire restructuring is expected to lead to improved operational efficiencies and profitability.
Shareholding Implications
For TCIL, the demerger results in no change in the overall shareholding pattern, as TCIL continues to hold its shares in SHRL. However, the consolidation of capital (4:1) will change the number of shares. Based on the indicative post-consolidation structure, the Promoter shareholding in SHRL is expected to be 65.55% (including 7% held by TCIL post-demerger).
The Reduction of Share Capital in TCIL (from INR 4 to INR 3 face value) will result in no change in the proportion of Equity Shares held by existing members and is expected to improve Earnings Per Share.
Implementation Timeline
The entire composite scheme is subject to approvals from the shareholders, creditors, the jurisdictional National Company Law Tribunal (NCLT), and other regulatory authorities. The expected time for the Consolidation of Share Capital component is 15 to 18 months from the date of Board approval.
Entity Profiles
The announcement highlighted the roles of the entities:
- TCIL: A leading omnichannel travel company offering services across Foreign Exchange, Corporate Travel, MICE, and Visas.
- SHRL: Currently a wholly-owned subsidiary, leading leisure hospitality with over 72 resorts, hotels, and retreats across India, catering to varied segments like adventure, weddings, and corporate getaways.
- Transferor Companies (TCVSL, JTSL, BTSL): These are described as dormant or non-operative subsidiaries, making their absorption into TCIL primarily for administrative streamlining.
Source: BSE
