Travel and tour operator Thomas Cook India (TCIL) has begun talks with British foreign exchange and financial services company Travelex to sell its foreign exchange business in India, two people familiar with the development said.

Travelex is now conducting a due diligence on TCIL?s financial services business, one of the two people said. The financial services business contributed 17.1% or R20.73 crore to TCIL?s R119.02 crore net profit in 2010-11. It contributed 12.75% or R34.10 crore to the company?s total sales.

?I am not allowed to speak on market speculation,? TCIL managing director Madhavan Menon said. ?The financial services business is doing perfectly fine.?

Thomas Cook has been present in India since 1881.

Lawyers for the two sides are working out a structure to help Travelex buy the financial services business as the British company operates through unlisted companies in any country. TCIL is listed in India with a market value of R1,075 crore. On Wednesday, the TCIL share rose marginally to close at R49.90 on the BSE.

?Either it may be a slump sale which means selling off a division or making it a subsidiary and later selling it off,? the first person said. ?TCIL is finding a way to retain the listed travel business in India.? Travelex is a pure financial services company which operates on its own in 24 countries with corporate relationships in 100 countries.

TCIL is India’s largest forex company after it purchased rival LKP Forex in June 2006. In 1999, Thomas Cook AG had sold off its forex business to Travelex. ?Forex is an intrinsic part of the business for travel companies and is quite important,? said PR Srinivas, leader, travel hospitality and tourism, at consulting and audit firm Deloitte India. ?Margins in forex are also quite good for travel companies to remain in the forex business.?

?Moreover, a customer will expect a complete product from outbound travel companies and hence, forex is an important part of the business,? he added. Travelex’s head of corporate communication Daniela Filer did not respond to an email query.

?Forex is a tricky business,? says Ashwini Kakkar, executive chairman, Mercury Travels, a travel and tour operator with interest in forex business. ?Companies could suffer 8-10% losses if they do not have the correct business model.? According to him, the outbound travel market has risen by 15% in the first half of the fiscal 2012.

Travelex is cash-rich after it sold its Travelex Global Business Payments to Western Union in July 2011 for 606 million pounds. In May 2011, Travelex acquired Grupo Confidence, Brazil?s largest independent foreign exchange business for an undisclosed amount.

Thomas Cook Group appointed Frank Meysman as chairman this month. The group had 8,890 million pounds in revenues and 391 million pounds in net profit in 2010 calendar year.