Balmer Lawrie & Co Ltd, the Kolkata-based public sector enterprise that operates one of the biggest travel agencies in the country, has acquired the brand Vacations Exotica along with employees and existing clients from Vacations Exotica Destinations Pvt Ltd for an undisclosed amount, according to a disclosure on Thursday.
Vacations Exotica, which commenced operations in October 2007 and currently has a team with more than 118 people, operates through nine offices and four associates offices that includes one in the US. It is represented by 113 preferred partners.
It has clients in India as also Indians settled in the US and GCC countries and the acquisition will help Balmer Lawrie increase its presence in the international markets as also in outbound tour packages.
Vacations Exotica has been clocking average growth of 25 per cent and its tours and travel business has revenues of around Rs 120 crore with a potential to rise to around Rs 450 crore over the next three to four years, said Ajoy Lodha, partner at investment bank Singhi Advisors. Mumbai-based Singhi Advisors acted as a sole advisor to the transaction.
"Travel business is going through a phase of consolidation as service providers want to add value-added services which can enhance margins. The reduction of credit periods in ticketing business and also price-wars have pushed down margins in air ticketing business significantly. Packaged tours business especially outbound has reasonable entry barriers and also far better margins and therefore attractive to players strong in ticketing space," Lodha said.
Balmer Lawrie is a much larger firm and for the second quarter ended on September 30, 2013, it registered a total income of Rs 649.5 crore and drew almost half of it from the travel and tour segment. However, this unit has low margins compared with its other businesses.
The mini-ratna also offers services in logistics besides industrial packaging and products such as industrial greases & specialty lubricants.
Balmer Lawrie scrip ended the day at Rs 303.80, up 1.4 per cent on the Bombay Stock Exchange.
(Edited by Joby Puthuparampil Johnson)