The Hindu Business Line : Indian Hotels net up 17% on lower operating costs

Occupancy rates have been “buoyant” and outlook is strong for the year ahead. Occupancies have been around 73 per cent for the Taj hotels. – Mr Raymond Bickson

Mr Raymond Bickson

Our Bureau

Mumbai, June 23 Lower operating costs have enabled Indian Hotels Company that operate the Taj Hotels, to report a net profit growth of 17 per cent at Rs 377.46 crore for the financial year ended March 31, 2008 against Rs 322.39 crore last year.

The total income for the year also grew by 12.6 per cent to Rs 1,823.13 crore (Rs 1,618.71 crore).

The company did not declare the fourth quarter results.

The Tata Group hotel company has a total of 10,300 rooms in 86 hotels and plans to add around 2,100 rooms in FY09 through addition of 16 more properties.

The company has earmarked Rs 400 crore for expansions, the funds for which will come from the recent rights issue, said Mr Anil P. Goel, Chief Financial Officer.

Commenting on the industry trend, Mr Raymond Bickson, Managing Director, said that occupancy rates have been “buoyant” and outlook is strong for the year ahead. Occupancies have been in the range of 70 per cent across the industry and around 73 per cent for the Taj hotels, he said.

On the average room rates, Mr Ajoy Mishra, Senior Vice-President, Sales and Marketing, said, “The rate of growth in ARRs is expected to slow down in FY09 because the rates have reached such a level where there is no room for further increase.”

For the year ended March 31, 2008 the ARRs increased by only 15 per cent, he added. The ARRs increased only marginally in Bangalore and Hyderabad, not showing much change in the rest of the country.

Rights issue

On the rights issue, the company said that in view of the postponement of the warrant exercise period to September 2009, the closing date of the issue was extended to April 24, 2008, to enable shareholders to avail themselves of the entitlement under the modified terms.

The equity shares portion subscribed by 1.22 times, while the NCDs were under subscribed. The promoters Tata Sons Ltd, pursuant to its undertaking, subscribed to the unsubscribed portion of the NCD issue.

An aggregate amount of Rs 1,447 crore was raised by the company, of which Rs 844 crore was raised through rights issue of equity shares and Rs 603 crore from the NCDs.