Inside the mysterious downfall of India’s Cox & Kings

The townhouse is partway down Mumbai’s seafront promenade. It is typical of the decadent-but-decaying colonial buildings occupied by some of the city’s upper-class families, a renovation decades overdue. Yet the building, with its dim hallways and expansive, marble-floored rooms inside, occupies an enviable location. A few minutes’ walk from the Gateway of India, it overlooks shoreline palm trees and sailboats on the Arabian Sea.

Urrshila Kerkar jokes that her family’s flat does not look like the residence of someone who has allegedly stolen hundreds of millions of dollars. “I wish we had all the money everyone thought we had taken,” the 63-year-old says.

The townhouse is only steps away from the historic Taj Mahal Palace, India’s grandest hotel, which has hosted generations of European royalty and US presidents, and is where the Kerkar family began to make its name and fortune 50 years ago. Urrshila’s father, former Taj head Ajit Baburao Kerkar, and then she and her brother Peter, are credited by many with pioneering India’s modern travel industry.

Today the family is battling to save whatever reputation it has left. Peter is accused of plundering Cox & Kings, the family’s company, in an alleged fraud totalling hundreds of millions of dollars. The flamboyant former chief executive is being held in a Mumbai jail notorious for housing gangsters and terrorists. Three separate Indian investigative agencies are probing at least 10 cases involving Cox & Kings and the Kerkars.

Founded in the mid-18th century to supply British troops as they plundered the subcontinent, Cox & Kings stayed on after independence and, under the Kerkars’ dynastic stewardship, became one of India’s leading travel companies. It embodied the glamour and excess that accompanied the rise of India’s new economic elite. At its peak in 2018, it had offices in 27 countries from Japan to the US, and claimed to have seven million customers for services that included foreign exchange and conference events, as well as holidays and tours.

Yet over the course of several years, millions of dollars disappeared from the company’s balance sheet. Its creditors are seeking nearly $1bn and a Mumbai court last month ordered the company into liquidation. Investigators and lenders believe the true figure could be much higher. A judge who rejected Kerkar’s bail application last year called the events at Cox & Kings an alleged “fraud of epic proportions” and said it posed “a serious threat not only to the financial system of the country, but also to the integrity and sovereignty of a nation”.

In a rare interview, over tea and rounds of vegetable sandwiches, Urrshila pleads poverty. The apartment’s walls are bare and the family, once enthusiastic patrons of the arts, say paintings were seized. Her ageing father sits mostly silently alongside her. “You could call us dumb and dumber,” she says. “We’ve lost everything.” She claims employees and lenders conspired to steal from the historic business without their knowledge. “It was just looted. There’s nothing left . . . They’ve not found even a single rupee with Peter or myself.

“What is sad is, had we taken the money, I’d be happy to fight,” she continues. “Here we have to fight and we haven’t taken the bloody money.”

Peter Kerkar
Peter Kerkar © Youtube

Investigators have little time for the Kerkars’ protestations, with one officer saying that they “tried to give us that bullshit also”. But as the officers work through the lists of allegedly fake customers and shell companies, opaque side deals and missing millions, even they acknowledge that they are yet to unravel what led to the company’s precipitous fall. There is also the open matter of how much of what allegedly happened at Cox & Kings echoes the corruption that has plagued India’s financial system. Saurabh Mukherjea, an investor and author who has written about Cox & Kings, says the suspected fraud at the company exhibits an “ingenuity [that] was very intriguing at many levels.” Most intriguing now is the question of how much the Kerkars knew and who was involved.

The company that would come to be known as Cox & Kings was founded in 1758 by Richard Cox, an assistant to the British Army’s commander-in-chief, to provide everything from military uniforms to banking services for officers. It became an important cog in Britain’s imperial war machine and was well placed to enjoy the colonial spoils in India, managing the finances and supplies of regiments across the subcontinent.

After the ill-fated war of 1857, when Indian troops rebelled unsuccessfully against the East India Company, Cox helped move the loot seized in the reprisals and massacres to Britain. Diamonds, rubies and other “prizes” flowed through the Cox accounts of British officers stationed in the country, according to historian Nicholas Courtney, who has written an unpublished history of the group.

Urrshila Kerkar
Urrshila Kerkar © Youtube

As Britain’s empire waned, Cox diversified into everything from tobacco trading to shipping goods and travellers, while Lloyds bought its banking arm in 1923. The company remained after India’s independence in 1947 as a small shipping house with a nascent tourism business, according to Courtney. Like many British multinationals, it came under growing pressure to sell itself to an Indian buyer in the 1970s as prime minister Indira Gandhi sought to “Indianise” colonial institutions by forcing them into local ownership.

Ajit Baburao Kerkar, a London-trained hotelier who ran the hospitality division of India’s largest conglomerate, the Tata Group, saw an opportunity. Together with Anthony Good, a British PR executive who brought brands such as Marks & Spencer to India, and other investors, he acquired Cox & Kings around 1980, according to Courtney’s manuscript. Ajit was a leading figure of India’s hospitality industry, having opened Tata hotels on Goan beaches and in desert palaces. The Taj Mahal Palace, part of Tata’s holdings, was decorated with valuable artwork picked out by his Swiss interior designer wife, Elizabeth. Kerkar was “adept at finding fantastic locations across the country,” says Pavan Lall, an author who writes about Indian tycoons.

Ajit’s relations with Tata patriarch Ratan ultimately soured. The transaction with Cox & Kings in particular was dogged by controversy, with concerns aired over whether it enabled the Kerkars to profit from business dealings with the Tata hotel chain that Ajit ran. A lawyer for the family rejected the allegations as “baseless” and “malicious”. In 1986, the elder Kerkar installed his 23-year-old son Peter to manage the company. It was Peter who would transform Cox & Kings.

Fresh from an anthropology degree at Stanford, Peter Kerkar’s first task when he arrived at Cox & Kings’ London office was to fire most of its 50-odd staff. It was “the most difficult thing I had ever done”, he told India’s Mint newspaper in 2013. Cox & Kings’ small travel business, which mostly took high-end British tourists to India and elsewhere, had struggled since its takeover by the Kerkars.

Then came the 1990s and India’s economic liberalisation. Economic expansion and the emergence of a new middle-class offered unparalleled opportunities for businessmen as ambitious as Kerkar. Associates from the time remember him as a fun boss who led a tight-knit group of employees. Under him, Cox & Kings grew into a sprawling travel conglomerate aspiring to rival other historic groups such as Thomas Cook.

Interpretations of Cox & Kings’ long history
© Max-o-matic

Beyond carrying wealthy Europeans and Americans on international tours, Cox & Kings entered India’s nascent outbound travel sector, selling packaged holidays that offered many Indians their first overseas trips. It diversified into everything from holiday financing to European budget hotels and ran India’s luxurious Maharajas’ Express train, tracing routes through ancient sites in Rajasthan and Uttar Pradesh.

Revenues surged and, in a 2009 listing on India’s stock exchange, the company raised Rs6.1bn ($130m), financing an overseas acquisition spree. Peter bought companies from the US to Australia, including a deal of about £300m for British educational tour group Holidaybreak in 2011 that multiplied Cox & Kings’ debt about fivefold. In 2018, the company was valued at $1.2bn with 6,000 employees. A third of its revenues came from India, the rest from its international education and other businesses.

Kerkar lived in London, cultivating a jetset image of epicurean tastes. He was a keen socialiser and aesthete, patronising the Asian Music Circuit, a UK charity. His wife Emma is the daughter of Sir Mark Tully, a renowned BBC India correspondent. “On any given month, [Kerkar] might start the week in London and end it in Melbourne, Australia, with visits to Mumbai and Singapore in between,” Cox & Kings’ in-house travel magazine wrote in 2017, before recounting his audience with the Dalai Lama at a Himalayan glamping resort.

Kerkar resided in a white-fronted townhouse in Hampstead. He golfed at his cottage in Kerry, Ireland, which he bought after his assistant invited him on holiday there. “He was very hail-fellow-well-met,” says Sir Rocco Forte, owner of the eponymous luxury hotel group where Kerkar used to host cultural soirées. “You wouldn’t have a boring dinner sitting next to him.”

The Hampstead mortgage was held by Cox & Kings. People familiar with the matter said Kerkar, his wife and children had lived there. The company’s latest set of accounts before it went bust lists an “investment property” with a value of £2.4m among its assets.

Peter was the company’s public face but Urrshila, his older sister, ran operations in India. A graphic designer, she joined the company in the late 1990s to steer day-to-day operations. Peter “couldn’t handle India”, Urrshila says. “I thought I’d help him.” 

Courtney, the historian who spent time with the Kerkars while researching his book, says, “She was incredible. She would be looking at the emails coming constantly. She’d be talking to me and very often she’d have a telephone call as well.” He recalls attending a party that Peter was throwing for employees in Mumbai, while Urrshila stayed at the office. “I just thought that it was Urrshila who was pulling on the strings.” Courtney claims his book, commissioned for the company’s 250th anniversary in 2008, was never published because Urrshila objected that “‘I do all the work and Peter gets all the credit.’”

In June 2019, a 20-year Cox & Kings veteran named Kailas Date received a midnight call. “‘Tomorrow, some news is going to come that Cox & Kings has not paid some commercial paper. Do not get hassled,’” Date recalls being told. “‘You hold your fort, you hold your customers. Tell them things will be all right.’”

Earlier that year Date, an executive in the company’s corporate events department, had been treated to a trip to Amritsar, the northern Indian city home of the Sikh Golden Temple, after winning an internal award. “The royal treatment was provided to us. The pick up at Amritsar airport was in a BMW. The pick up from our houses in Mumbai to the airport was in Mercedes-Benz,” he says. “We were given a dummy gold bar.”

But Date never received the bonus he said he was promised. There was little transparency in the group’s finances and executives had begun to suspect something was amiss. Like many travel companies, Cox & Kings operated on thin margins, running its business on cash from customer deposits for future holidays and paying off suppliers from hotels to guides when full payments came in. Its default on debt worth Rs1.5bn came less than a year after Cox & Kings sold off a chunk of Holidaybreak, the 2011 acquisition, for about Rs44bn. The inability to repay despite showing ample cash on its balance sheets sparked internal panic that this was more than a short-term funding squeeze.

Date and his team met with Urrshila, who assured them the situation was temporary. Their salaries went unpaid for three months. “By mid-September, it was a little different story. We were told ‘We’re facing a problem, we’re trying to recover,’” he says. “We came to know that this is getting out of hand.”

In London, Good, who had worked with Cox & Kings for more than 40 years, and the directors of the company’s UK subsidiary were also struggling to access funds to operate the business. “The parent company was not responding to calls, so they were wondering what the hell they should do,” an adviser at the time says. Then, in November the company’s UK subsidiary was slapped with demands from the State Bank of India and Yes Bank for repayment of loans worth about £200m. The Indian parent had been admitted to India’s bankruptcy court in October, prompting a domino effect as its subsidiaries also went into administration including Cox & Kings UK.

The sale of the UK business was fiercely resisted by Kerkar, according to those with knowledge of the administration. One involved in the process described it as a “car crash”, while another claimed that Kerkar tried to interfere with the sale in order to hold on to the Cox & Kings brand. The UK subsidiary was eventually bought by the luxury travel group Abercrombie & Kent. It paid only £710,267, taking on the £10m cost of fulfilling customer holidays and additional creditor fees. Good, whose shares according to someone who knew him were once worth about £10m, was left with nothing. He declined to comment for this story.

“Cox & Kings was an extreme case study in dealing with a troubled travel company,” says David Pike, who oversaw the administration as part of the restructuring team at KPMG.

Another UK-based corporate entity handed to the judicial insolvency service, Prometheon Enterprise, had £158m invested in seven other parts of the Cox & Kings group, according to the directors’ accounts detailed in the administrators’ report. But the administrators, the US-headquartered Duff & Phelps, could not find any record of its shareholdings in these businesses. There were no share certificates at the company’s office, nor did the company’s auditors or remaining employees know where they were. Letters sent out to various parties to establish the financial state of Prometheon were for the most part returned “as the address details held were incorrect”, the report says.

Prometheon, which owed about £231m to its lenders including Indian banks, had only £1,900 in its bank account.

As investigators probed Cox & Kings, it appeared the 260-year-old company’s rapid collapse was the culmination of a years-long fraud. Police in India began summoning employees for questioning, including Cox & Kings’ finance manager, Sagar Deshpande.

One day in October 2020, they questioned him for three hours. He promised to return with more documents. “Then he vanished,” one officer says.

Days later, Deshpande’s body was found run over by a train on the tracks near his parked car in a Mumbai suburb. His uncle told local press at the time that his family suspected foul play. A three-month investigation by the railway police determined it an accidental death, probably suicide. Deshpande’s father declined to comment.

The police never got the documents they were promised but Deshpande’s death only darkened the mystery surrounding the company’s finances.

Interpretations of Cox & Kings’ long history © Max-o-matic

It is unclear how the proceeds from the Holidaybreak sale, which Kerkar had said in a TV interview would be used to pay debt, were used, according to a complaint by creditor Yes Bank referenced in Kerkar’s April bail order. India’s Enforcement Directorate, which probes economic crimes, alleges that Kerkar and some company executives used Cox & Kings and other entities to siphon more than $500m, according to the order. Many of these entities were associated with the company’s owners or executives.

In one case Rs11bn was allegedly lent by Cox & Kings to a failing industrial group, whose only apparent connection to the travel company was that its chief financial officer seemed to be related to Anil Khandelwal, Cox & Kings’ CFO at the time, according to Kerkar’s bail order. More loans were allegedly given by Cox & Kings to V Hotels, a struggling beachfront property bought by Peter and Urrshila’s father, Ajit, in 2001. A lawyer for the family says Ajit Kerkar is “totally separate from Cox & Kings” and that transactions within the family were “purely commercial”.

Between 2014 and 2019, about Rs260bn (more than $3bn) was transferred between Cox & Kings and Ezeego, an online hotel-and-flight booking platform owned by the Kerkar family, PwC found in a review of the accounts on behalf of Cox & Kings’ creditors, despite the latter’s modest revenues. The scale of the transfers prompted PwC to suggest the possibility that Cox & Kings might have been used by someone as “a conduit in arranging funds for Ezeego and/or . . . unknown ultimate beneficiary(ies) cannot be excluded”. A lawyer for Kerkar responded that the report’s “credibility . . . is highly doubtful”.

The Enforcement Directorate has alleged money was siphoned from Ezeego to Redkite, a financial company owned by the families of Cox & Kings’ Khandelwal and internal auditor Naresh Jain, according to Kerkar’s bail order. Khandelwal and Jain, who have both been arrested, could not be reached for comment. Their lawyers have previously argued that Kerkar was responsible for the suspected offences.

Before his arrest, Peter told Indian website Newsclick that Cox & Kings executives were siphoning money without his knowledge. “I may be stupid,” he said, “but I’m not a criminal.” The Enforcement Directorate said, however, it considers Kerkar the “mastermind” with accusations against others made with the “ulterior motive to escape himself”. A lawyer for Kerkar called this “a baseless allegation” with “no proof . . . except hearsay”.

Kerkar’s upper-crust charm, Cox & Kings’ storied legacy and the mouth-watering growth opportunities meant “creative accounting tricks and questionable corporate governance practices [were] ignored by both lenders and equity investors,” according to Mukherjea’s book, Diamonds in the Dust. Several have since been caught up in the fallout.

One example was SSG, an Asia-focused fund set up by former Lehman Brothers executives, now owned by the US-based asset manager Ares. SSG built a portfolio that included investments in Cox & Kings and Holidaybreak, while the Pandora Papers leak of offshore entities showed that Peter Kerkar and SSG founder Shyam Maheshwari set up several offshore companies, according to the Indian Express newspaper. Maheshwari’s family has also previously held shares in Redkite.

After SSG demanded repayment on debts in the UK, Kerkar sought to block it, alleging that Maheshwari, who has since left SSG, conspired to steal his assets. But an English High Court judge last month dismissed Kerkar’s “far-reaching but vague” allegations, citing “no evidence”. Mumbai police have also called Kerkar’s allegations against SSG and others “false and frivolous”.

Ares SSG said those findings “vindicate our position that Kerkar’s allegations against SSG are false”, adding it “will continue to pursue enforcement and recovery of its funds from Kerkar”. It said Maheshwari left SSG to spend more time with his family and pursue other interests, and has said any offshore entities were for legitimate business purposes.

In late 2020, Peter Kerkar was summoned to an Enforcement Directorate office in Mumbai for questioning. He was arrested and is being held in the city’s Arthur Road jail. The Hampstead home has been reclaimed by the State Bank of India.

One year after leaving his job at the bankrupt Cox & Kings, one of its former ticketing officers Keshav Rane was selling fish. Rane had been earning about Rs50,000 ($674) a month, a respectable middle-class salary, before the company’s collapse. Now he was flogging kingfish and crabs in Mumbai, still owed months of back wages. “My friends were literally giving me more money than what I was charging for the fish, just to help me,” he says. “I need to survive.”

What happened to the money that was allegedly siphoned from Cox & Kings, in events that left thousands of employees jobless and holidaymakers stranded, is still a mystery. But it is emblematic of a pattern of fraud repeated with alarming regularity across Indian industry. The money lost may never return to India, burdening banks with bad debts. Analysts say that at a national level this can weigh on growth for years. “This is a tip of [the] iceberg in this ocean of money laundering, which may sink the entire financial system,” the judge at Kerkar’s bail hearing said.

Prime Minister Narendra Modi’s efforts to clean up India’s corporate and financial system have had limited success. A bankruptcy code allowed creditors to start recovering their debts, but courts and police remain overburdened. There are “common denominators” running through these scams, says Lall, the author. “There’s always an international angle. Always a layer of shell companies. Always a huge real estate angle to it.”

Peter Kerkar has been in jail for more than a year and denied bail. His legal team are trying to get him out, while the police continue following the money trail. As they do, cases have piled up against the tycoon. Urrshila says he has had multiple bypass surgeries and is at risk, though the judge decided he was receiving adequate medical attention in prison. The family continues to protest its innocence.

At a conference in 2016, Urrshila assessed Cox & Kings’ past and future. “We’ve gone through a couple of world wars, we’ve gone through the industrial revolution, and now, I gather, digitisation,” she said at the time. “We’ll probably be there for virtual reality . . . and then I may not be around. But I’m sure C&K will be.”

Benjamin Parkin is the FT’s South Asia correspondent. Alice Hancock is the FT’s leisure industries reporter. Additional reporting by Andrea Rodrigues in Mumbai

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