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Carlson, Indtravels venture launched

Our Bureau

MUMBAI, March 30

THE $11-billion Carlson Wagonlit Travel today announced a 50:50 joint venture with erstwhile AFL division, Indtravels, focussed on servicing the market for corporate travel.

``We intend to be single mindedly a company in the corporate travel segment. We believe corporate travel will grow explosively in the next five years,'' Mr. Cyrus Guzder, Chairman and Managing Director, AFL Ltd, said at a press conference here today.

``India was long overdue. So, we are happy to be here. It is a very important step,'' Mr. Geoffrey Marshall, President (Asia-Pacific) Carlson Wagonlit Travel, said. Neither the equity base of the joint venture nor investment figures involved were disclos ed.

Indtravels has been the exclusive representative of Carlson Wagonlit Travels in India, for the last five years and is already an integrated part of the network.

The new company - also called Carlson Wagonlit Travel - has Mr. Vijay Chadda as its CEO. The top management of Indtravels has been retained and for day-to-day operations, the CEO will seek directions from AFL directors on the board. Indtravels was recent ly made a wholly-owned subsidiary of AFL to facilitate acquisition of 50 per cent equity by Carlson Wagonlit.

Deutsche Bank, which has 10 per cent equity in AFL (the stake was originally held by Bankers Trust), will correspondingly enjoy a 10 per cent share in AFL's 50 per cent stake in the new joint venture, Mr. Guzder said.

AFL, which leads the international express and integrated logistics industry in India, has corporate partners in DHL Worldwide Express, F.X. Coughlin and Western Union. Only Indtravel was recast as a subsidiary company, Mr. Guzder said.

Asked about AFL's restructuring plans and whether the group was likely to adopt a holding company pattern, Mr. Guzder said the picture would be clearer towards AFL's proposed IPO (three years from now, by July 2003) and DHL's investment approach. DHL has to decide whether its equity partnership here should be with AFL or its express division spun off into a subsidiary (as done to Indtravels) for the purpose.

While the Western Union-affiliated money transfer business has been growing at a fast pace (against 100 outlets added in 1999-2000, 200 are proposed for 2000-2001), AFL's earlier reported plan for a 50:50 logistics joint venture with F.X. Coughlin is in abeyance, Mr. Guzder said.

It is understood that a contributing factor for delay was the failure of a big automobile logistics contract in India to move in favour of the two parties. AFL and F.X. Coughlin, however, continue to be technical partners.

Mr. Guzder said Deutsche Bank's equity stake in AFL would continue through the present and into the IPO.

Asked if Carlson Wagonlit's was a late move, since the main international travel majors have already entered India, Mr. Marshall said that need not be the case as the joint venture partner - the Rs. 185-crore Indtravels - is the leading domestic player i n corporate travel. Despite the corporate travel segment growing by 3-4 per cent over the last three years, Indtravels grew at about 50 per cent.

Mr. Guzder ascribed the decision on joint venture primarily to the technology-intensive emergent face of the global travel industry, which was clearly threatening survival of traditional agencies.

``It wasn't possible for Indian travel agencies to catch up with the enormous advances in management and technology that agencies abroad had undergone,'' he said, explaining the rationale for the joint venture.

Mr. Geoffrey Marshall, President, Asia-Pacific, Carlson Wagonlit Travel, and Mr. Cyrus Guzder, Chairman and Managing Director, AFL Ltd, at a press conference in Mumbai on Thursday announcing the start of commercial operations of Carlson Wagonlit Travel i n India.

Paul Noronha