Sudipta Dev – Mumbai
The recent acquisition of Vacations Exotica by Balmer Lawrie is part of a focused strategy to provide value added services to the clientele of the public sector undertaking, which has primarily been engaged in ticketing services. “We have seen in the last few years the margins in ticketing trading coming down. The price war, etc, has reduced margins for ticketing agencies. Travel agents are finding it difficult to meet their RoI. This has necessitated change in model of business. Balmer Lawrie felt that if they give more value added service to clients, they can evolve and grow into the B2C space. At the moment most of the company’s clients are in B2B space, government agencies, etc,” said Ajoy Lodha, partner with Mumbai-based Singhi Advisors, who were the sole advisors on the Balmer Lawrie deal.
Lodha informed that Balmer Lawrie had started looking at companies like Vacations Exotica that could give value added offerings. “Ticketing is incremental to companies like Vacations Exotica, who are into tours, surface transport and hotel bookings, which allows them to expand their margin. Vacations Exotica also has a pan India presence. This attracted Balmer Lawrie as it fit in their strategy perfectly to provide value added offerings to their clientele,” he stated, pointing out that the entire team from Vacations Exotica has been acquired. Vacations Exotica will be an independent SBU in Balmer Lawrie. “The promoter will be the COO of the SBU and that will help in successful integration,” mentioned Lodha.
Balmer Lawrie will be investing majorly in terms of technology spend and brand enhancement in the immediate future. “At one end you have a public sector company at the other end is a private sector organisation. With the kind of infrastructure and brand image that Balmer Lawrie commands in the market, it is a very significant development. There is no Indian player with a pan India presence in B2C space,” pointed out Lodha.
Responding to the question whether M&As will be a mainstay in the travel industry in the future, Lodha whose company has advised on quite a few acquisitions, remarked that bigger companies might face some consolidation. “Many small players are dying as business will shift away from them,” he stated.