Lock, stock: Kuoni staff quit en masse to form rival co

MUMBAI: Inorganic growth can sometimes be very painful as India’s largest travel and tourism company Kuoni travel group has discovered.

The company, a 100% subsidiary of the Swiss travel group Kuoni, has grown with a series of high-profile acquisitions of companies like SOTC, Sita travels, Tour Club and Business Travel International (BTI), straddling various components of the travel space.

Three years ago, several of Sita’s ex-employees led by the company’s promoter Arjun Sharma had walked out to set up a rival travel company Le Passage. Kuoni India is facing a similar situation again, with 23 employees from Tour Club, an inbound travel company it acquired in ’01, quitting en mass ostensibly to form a rival company.

The employees are understood to have put in their papers late last week and Kuoni has approached the court to stop them, it is learnt. When contacted by ET for his comments, Kuoni CEO Himmat Anand refused to comment on the issue saying the matter was now sub judice.

Tour Club, which specialised in inbound tours was acquired in ’01 for an undisclosed price. Kuoni India had made the acquisition on a three-year earn-out model, with payment to be made over the period, industry sources said. The company had a non-compete clause with Tour Club promoter Mahesh Shirodkar, who had joined Kuoni.

It is still not known whether the 23 who have quit will join Mr Shirodkar. “Acquisitions in the travel business are very difficult because business depends on contacts and customers, who can migrate,” said a travel industry source, who did not wish to be named.

The acquisition model was chosen specially because Tour Club’s business was linked closely to Mr Shirodkar and his team. It, therefore, made sense to have Mr Shirodkar in the company, instead of an outright purchase. Kuoni India has been on a rapid growth path since it was formed in 1996 through the acquisition of SOTC, India’s foremost outbound package tour brand.

In ’00, it acquired the Delhi-based Sita world travel, a leading inbound tourism brand followed a year later by Tour Club, which has strong linkages in the Middle East travel market. It has since, acquired several other businesses in the travel space like BTI and Resnet.

All the brands operate as separate strategic business units in the Kuoni India portfolio. Tour Club, started out as a one-man outfit in 1988 and offers comprehensive travel services within India, from hotel reservations, ground handling and car hire to flight bookings, tours and guides.