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<p>Thomas Cook (India) Limited</p> <p>Directors ReportTo the Members: Your Directors have pleasure in presenting the Thirty-fourth Annual Report, together with the Balance Sheet and Profit and Loss Account for the year ended 31st December, 2010. Rupees in Million Year ended 31st December, 2010 2792 532 100 632 209 8 415 15 42 79 1.96 1.91 Year ended 31st December, 2009 2247 341 341 114 4 1 222 15 22 80 1.06 1.03</p> <p>Revenues Profit before Taxation and Exceptional Items Exceptional Items Profit after Exceptional item and before Tax Provision for Taxation Provision for Deferred Taxation Provision for Fringe Benefit Tax Profit after Taxation Transferred from Reserve U/sec. 80 HHD of the Income Tax Act, 1961 Transferred to General Reserve Proposed Dividend * EPS (Basic) after exceptional items EPS (Diluted) after exceptional items * Includes preference share dividend Operations and Results</p> <p>The year 2010 saw a revival in the general economy as well as the tourism industry. A strong GDP growth and the rising stock indices, coupled with positive outlook and the resurgence of suppressed demand, helped boost travel and tourism sector in 2010. The demand for leisure holidays increased due to receding recessionary pressures, economic revival and return of confidence in Indian consumers. Despite the challenges faced last year in terms of a slow economy, sluggish demand and security concerns, the country was fighting back and tourism developments were taking place. Although there could be some short- to medium-term setbacks, the longterm outlook remains positive. With Indian economy growing at around 8% per annum and rise in disposable incomes of Indians, an increasing number of people are going on holiday trips within the country and abroad resulting in the tourism industry growing wings. 2010 saw a revival in foreign tourist arrivals after the slump last year on account of the slowdown with a growth rate of 8% as compared to a de-growth of 2.2 % in 2009. The year 2010 witnessed rupee appreciation against major currencies. The buoyant market conditions helped financial services of the Company grow by 8% in volumes over 2009 despite the fact that rupee appreciation created a challenging trading environment for the wholesale forex volumes. Despite the constraints faced such as the volcanic eruption in Iceland and consequential ash cloud formation over UK &amp; Europe, and heavy snowfall in the USA and UK, which disrupted air traffic, your Company overcame the difficult situation to report an increase in revenues by ` 539 million to ` 2792 million. Profit before Taxation and exceptional items increased to ` 532 million from ` 341 million. Your Company recorded turnover of ` 2792 million and profit before tax and exceptional item of ` 532 million with profit after tax being ` 415 million for the year ended 31st December, 2010. The basic earning per share of the Company is ` 1.96. Thomas Cook Presence As of December 2010 end, Thomas Cook (India) Limited, alongwith its subsidiaries, continues to be the largest integrated travel group in India with over 180 locations by way of its own branches, and additional presence by way of Preferred Sales Agents (PSAs) and Franchisee Offices. We have 180 branches located in 72 cities, 184 PSAs in India, 14 in overseas market and around 72 Franchisee Offices across India to have a wider spread and network across the country. We also have presence in 6 countries outside of India through our representative offices in USA (New York), Spain (Barcelona and Madrid), UK (London), Japan (Tokyo), Germany (Frankfurt) and Nepal (Kathmandu), apart from our subsidiaries in Mauritius and Branch offices in Sri Lanka.</p> <p>1</p> <p>Thomas Cook (India) Limited</p> <p>Share Capital Structure The share capital structure as of 17th February, 2011 is as follows: Authorised Capital: Equity: 34,58,27,060 Equity Shares of ` 1/- each Preference: (i) 11,47,60,000 Class A, 4.65% Cumulative Non-Convertible Redeemable Preference Shares of ` 10/- each (ii) 3,55,294 Class B 0.001% Cumulative Convertible / Redeemable Preference Shares of ` 10/- each (iii) 3,02,000 Class C 0.001% Cumulative Convertible / Redeemable Preference Shares of ` 10/- each (iv) 12,50,00,000 1% Cumulative Non-Convertible Redeemable Preference Shares of ` 10/- each Issued, Subscribed and Paid-up Capital: Equity: 211,816,799 Equity Shares of ` 1/- each Preference: (i) 3,19,765 Class B 0.001% Cumulative Convertible / Redeemable Preference Shares of ` 10/- each (ii) 2,71,800 Class C 0.001% Cumulative Convertible / Redeemable Preference Shares of ` 10/- each Rupees 345,827,060 Rupees</p> <p>1,147,600,000 3,552,940 3,020,000 1,250,000,000 2,750,000,000</p> <p>211,816,799</p> <p>3,197,650 2,718,000 217,732,449</p> <p>Employees Stock Option Plans (ESOPs) With the objective of motivating and retaining key talent in the organisation and fostering ownership, your Company has framed the Thomas Cook Employees Stock Option Plan 2007 and pursuant to the same, has granted stock options to its employees over the years. The Company has also introduced the Thomas Cook Save As You Earn Scheme 2010 (SAYE Scheme 2010) with similar objectives with the approval of the shareholders in December 2010 by means of a Postal Ballot. SAYE Scheme 2010 allows employees to save a part of their net pay every month which gets deposited with a bank in a recurring deposit account carrying fixed rate of interest. At the end of 3 years, employees have the option to either purchase specific number of equity shares of the Company at the predetermined Exercise Price or withdraw the Monthly Savings Contributions alongwith Interest accrued. The Recruitment and Remuneration Committee administers and monitors the schemes. The applicable disclosures under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the Guidelines) are mentioned in the Annexure to the Directors Report. Except for senior managerial personnel and two other employees, none of the other employees have received options exceeding 5% of the value of the options issued during the year ending December 2010. Likewise, during the year, no employee has been granted stock options equal to or exceeding 1% of the issued capital of the Company at the time of grant. Dividend Your Directors recommend dividend on the Class B and Class C Preference shares as per their terms, i.e. 0.001% (` 0.0001 per share of ` 10/- each) on the preference shares respectively. The Directors are also pleased to recommend a dividend of 37.5% (` 0.375 per share of ` 1/- each) on the equity share capital.</p> <p>2</p> <p>Thomas Cook (India) Limited</p> <p>The proposed dividend on the equity capital and preference capital absorbs ` 79 million for dividend and ` 13 million for Dividend Tax. The Board seeks the approval of the shareholders to the dividend recommended on the preference and equity share capital as is outstanding on the date of book closure/ record date. General Reserve Your Directors have resolved to transfer ` 42 million to General Reserve out of the profits of the Company. With the transfer, the total reserves stand at ` 2846 million as at 31st December, 2010. Directors Responsibility Statement The Directors would like to assure the Members that the financial statements for the year under review conform in their entirety to the requirements of the Companies Act, 1956 pursuant to Section 217 (2AA) and that: 1. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; the Directors have selected such accounting policies and applied them consistently except where otherwise stated in the notes to the accounts and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for that period; the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. The internal auditors have conducted periodic audits to provide reasonable assurances that established policies and procedures of the Company have been followed. However, it must be recognised that there are inherent limitations in weighing the assurances provided by any system on internal controls; the Directors have prepared the annual accounts on a going concern basis.</p> <p>company, incorporated under the laws of England and Wales having its Registered Office at Peterborough, England, U.K. and holding 55.77% of the post ESOP Issue paid-up equity share capital of the Company. Thomas Cook UK Limited (TCUK) apart from holding 21.41% of the post ESOP Issue paid-up equity share capital of the Company, also holds 100% holding in TCIM Limited. Thus, TCUK indirectly holds 77.18% of the present paid-up equity share capital of the Company. Promoter Group Pursuant to intimation from the promoters, the name of the Promoters and entities comprising the group are disclosed hereinbelow for the purpose of Regulation 3(1)(e)(i) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, and they include the following: Group Airtours the Holidaymakers Limited Thomas Cook Group UK Limited (erstwhile Blue Sea Investments Limited) Blue Sea Overseas Investments Limited MyTravel Group plc MyTravel UK Limited Sandbrook Overseas Investments Limited Sandbrook UK Investments Limited TCIM Limited Thomas Cook Continental Holdings Limited Thomas Cook Group plc Thomas Cook Investments (1) Limited Thomas Cook Investments (2) Limited Thomas Cook Overseas Limited Thomas Cook Scheduled Tour Operations Limited Thomas Cook Tour Operations Limited Thomas Cook UK Limited Thomas Cook (India) Limited Operations in India [including subsidiaries] The businesses have shown a recovery due to economic revival and return of confidence in Indian consumers. During the year, new products targeted at new destinations and new customer segments were launched. The Company launched television commercials and was one of the sponsors of Mumbai Indians, a cricket team which is part of the Indian Premier League. During the year, the Company also launched Readymade Holidays, a holiday package box available through any of our network and channel partners. These are</p> <p>2.</p> <p>3.</p> <p>4.</p> <p>Promoters Thomas Cook Group plc Thomas Cook Group plc is a leading international leisure travel group, created by the merger of MyTravel Group plc and Thomas Cook AG in June 2007. Thomas Cook Group plc is a fully listed company on the London Stock Exchange. Thomas Cook (India) Limited is a part of Thomas Cook Group. It remains as a subsidiary of TCIM Limited, an unlisted private</p> <p>3</p> <p>Thomas Cook (India) Limited</p> <p>pre-packaged holidays for both domestic and international selected destinations. The Company expanded its Gold Circle Partners (GCPs) across India. The Company continued to build on the success of the media plan launched under the new Holidaywallas campaign in 2009. The improved demand for foreign exchange coupled with the initiatives that were taken by your Company such as new branches opened, new counters at Delhi and Mumbai airport, post office tie-up, etc. enabled your Company to improve the retail volumes over 2009. With over 1.2 million transactions handled in 2010, your Company is one of the largest exporters in the world for bank notes. It handles majority of Indias foreign currency bank notes. Your Company is in the process of tie-up with various principal agents worldwide for the remittance business. In this direction, it has signed Sub Agency agreement with UAE Exchange, Second largest inward remittance service in India and largest service provider in the Gulf Markets. The new look of the Thomas Cook portal was also launched during the year. All Thomas Cook products are available through the portal with more user-friendly applications. Your Company is focusing on building the product range on the portal to capitalize on the growing e-business. Operations in Mauritius Mauritius has been facing a situation of appreciating currency which is impacting the foreign exchange business volumes. Inflation rate being at 2%, the Mauritian economy has seen major consequences of the global financial crisis, especially in its tourism sector and export oriented industries. With the support of Government funded stimulus packages, the loss of jobs effect has been contained and all indicators are pointing towards a further difficult year ahead. In spite of the exchange rate impact to an estimated 18%, the customer base has increased and the company has gained further improved visibility in the market and has become a reference. With Mauritius seen as a major tourist destination and the Governments inclination to diversify its tourism base from a traditionally European base to include the Asian markets, Thomas Cook Mauritius will be focussing on seizing this opportunity and enhance the contribution from the holidays and leisure segment. In Thomas Cook (Mauritius) Operations Company Limited (TCMOCL), a step-down subsidiary of the Company, a new integrated software Maraekat was identified for implementation for foreign exchange and accounting transactions. The usage of the new system helped identify certain Accounting and Reconciliation Issues. The management has resolved and corrected these issues in the books after an independent enquiry and investigation. Operations in Sri Lanka Branch The Sri Lanka branch of your Company offers foreign exchange services from the arrival and departure lounge of the Bandaranaike International Airport, Colombo, Sri Lanka and also from a branch office in Colombo city.</p> <p>The focus of your Company is to expand its operations by opening more branches in Colombo city and also various other cities across the Island as and when the approvals are received from the regulatory authorities. Your Company is also seeking to enhance its scope of license to enable it to play a more constructive role in the financial system of the country. Post the end of insurgency in Sri Lanka, the inflow of tourists has started to increase. With a safe and stable environment, conducive to travel, the outlook seems positive for the countrys economy and your Company would look to capitalize on it. Accolades and Awards Thomas Cook (India) Limited has been the recipient of the following highly prestigious awards/ accolades in 2010: CNBC AWAAZ - Best FOREX Company in India for the second year in a row Indias Most Preferred Foreign Exchange Company by Indian Hospitality Excellence Awards Special Commendation for the Golden Peacock National Training Award for the year 2010</p> <p>Directors In accordance with Article 131 of the Articles of Association of the...</p>