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Shri Ram Case Competition - Prelims 1

We consider the option in which Globetrotter Tours and Travels is buying bon-voyage.com. It is the

best option for Globetrotter Tours and Travels to continue to be the leader in the market. For the

acquisition cost, we propose Globetrotter Tours and TravelsIPO.

For this, we propose to issue 4,00,000 shares of face value of Rs. 10 each at Rs 530 per share to raise

Rs. 212 million valuing the company at 530 million.

Offer price is valued by comparing P/E ratio of competitors' firms in the same buisness.

P/E ratio= Share price (52 weeks average)Earnings per share( for year ended 31/3/2013)

Competitor share price EPS ` P/E ratio

Thomas cook India 60.2 1.41 42.29

Cox& King India 113.2 2.71 41.9Mahindra holidays & Resorts 253.3 7.76 32.64

Considering this, company should offer its share at Rs 530 per share. Company's share capital is of 1million shares of Rs 10 each. At this price, company's P/E ratio would be 530/15= 35.33.

In addition to this, company has many qualitative benefits over competitors:

1. exceptional and dynamic leadership under Mr. Tomlycoy. Due to this market sentiments wouldbe high. Also he would bring key reforms at the leadership level.

2. Established brand name and a customer base.3. Tie ups with hotels and airways companies.

Source of funds for 500 million acquisition:

IPO 212 million

Family wealth 110 million

Debt 128 million

Also we would diversify into new markets which need less capital and spreads risk over various

segments:1. Medical tourismIndia is a very affordable medical services provider. Globetrotter can tieup

with leading hospitals in India to attract medical tourists from neighbouring Asian countries and

some african countries.

2. Spiritual tourism- india is a big provider of spiritual services like meditation and yoga. Itattracts millons of foreigners to india. With appropriate tieups globetrotter can emerge as a big

player. Also this would increase its footprint in foreign markets.

3. Also globetrotter would organise specific trips like shopping extravaganza which would covermajor shopping hubs over the world like london, macau, hong kong, dubai and cruise trips

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which are majorly dominated by foreign retailers.

4. Strategic partenerships with IRCTC which is a major tour provider in middle class segment.Also attaching irctc name would provide credibility which is crucial to expand fastly in thissegment.

5. It would tieup with sports associations in india and abroad to provide services to the players andstaffs for domestic and foreign travels.

These reforms would be carried out in steps owing to the profitabilility of company.

New advertsing techniques like launching mobile apps across various OS and utilising social media to

reach young and adventurous people.

Integrating bonvoyage.com is justified because it has a large middle class consumer base whichglobetrotter lacks. Moreover it would help in diversificaton of globetrroter. By this acquisition

globetrroter would become the largest player in the industry and market sentiments would improve

owing to the steadily increasing profits, leading to Shareholders wealth maximisation.

By:

Himanshu MalikAbhyuday Harsh

Anmol Agarwal