While economies are gradually opening up since the last quarter, domestic remains significantly lower than pre-pandemic levels and international travel is yet to resume.
TCIL is undertaking several cash preservation measures including optimisation of payroll cost, reduction in marketing and overhead costs, renegotiation of lease rentals and supplier contracts. These steps are expected to result in savings of more than Rs 550 crore during the fiscal.
Additionally, recent withdrawal of the share buyback offer will further reduce cash outflow by around Rs 180 crore (including tax on share buyback). Further, the company is looking to reengineer the business, focusing on aspects such as contactless customer experience, increased digitisation and process efficiencies, rating agency added.
The forex business, classified as an essential service, resumed operations since mid-April 2020. The gross volume in forex business has been lower than pre-pandemic levels. But, it has picked up on a month-on-month basis and the business has turned cash positive since June 2020. The continued ramp-up in both the travel and forex volume remains a key monitorable.
TCIL's rating factor in expectation of strong support from Fairfax Financial Holdings during the current fiscal, towards revival of business and strengthening of liquidity and financial profile.
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