Financial Daily from THE HINDU group of publications
Saturday, Jan 17, 2004
Indian Hotels Q3 net up at Rs 16.60 cr
Mumbai , Jan. 16
BUOYANT sectoral sentiment helped Indian Hotels Company Ltd (IHCL) report today an increase in profit after tax (PAT) to Rs 16.60 crore for the quarter ended December 31, 2003, as against the previous corresponding Rs 11.17 crore.
Rate increases were effected across most hotels. The third quarter average room rate (ARR) was Rs 4,712 (Rs 4,236 for the year-ago period). Occupancy moved up to 72 per cent (67 per cent), despite previous December quarter faring strong on that parameter. According to Mr Zubin Dubash, Executive Director, IHCL, growth ahead would be driven by ARR. You will see more ARR increases coming through,'' he said at a press briefing.
Total income for the just ended quarter was Rs 192.20 crore (Rs 170.50 crore), including sales and operating income of Rs 187.76 crore (Rs 168.91 crore). Total expenditure was up to Rs 153.80 crore (Rs 128.95 crore), ascribed in the main to payroll cost higher by Rs 12.4 crore, of which Rs 5.7 crore was a one-time performance bonus issued for the fiscal. Asked, Mr Dubash said, the rise won't be an annual feature with relief through IHCL's IT investments also expected to kick in.
Interest was down to Rs 5.42 crore (Rs 9.43 crore), while Rs 94 lakh adhered as profit on sale of the company's Chiplun property.
The company's upcoming EGM, linked to funds raising, was described as an exercise to seek approval for enabling resolutions on the subject. Given IHCL's recent failed bid for a New York property and the improving business sentiment, Mr Dubash said in reply to a question that property costs may have risen making acquisitions that much expensive. "But we did a lot of business expansion here through the fiscal. Besides, the improved sentiment is not there in all markets and India is among the best performing ones which puts us at an advantage,'' he said.
Further, even if acquisition costs have risen, the cost of financing has dropped due to lower interest rates. In the failed bid for the New York property, IHCL had quoted $60 million, itself taking full exposure with the hope of divesting at a later stage.
The third quarter occupancy rose steep in IHCL's leisure division to 59 per cent (48 per cent), it was rather steady in business at 73 per cent (71 per cent) and modest in luxury hotels at 75 per cent (71 per cent). Though occupancy level in business was attributed to fewer properties currently in the market, officials said inflow of foreign tourists, particularly for leisure travel, was high. ARR revision seemed to track it, at luxury hotels it being Rs 5218 (Rs 4821); at leisure - Rs 3549 (Rs 3297) and at business hotels - Rs 2601 (Rs 2550).
The third quarter revenue split was: room revenue - 47 per cent (48 per cent); F&B - 43 per cent (42 per cent); management fee - 5 per cent (4 per cent) and others - 5 per cent (6 per cent). SBU-wise, the split was: luxury - 80 per cent (77 per cent); business 6 per cent (12 per cent); leisure - 11 per cent (9 per cent) and corporate - 3 per cent (2 per cent).
For the nine month-period, IHCL posted a PAT of Rs 23.84 crore (Rs 14.84 crore) on total income of Rs 474.07 crore (Rs 414.67 crore). Its EBIDTA for the period dipped by Rs 3.9 crore owing to higher operating expense.
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