The Hindu Business Line : Royal Orchid plans IPO to fund expansion

ROYAL Orchid Hotels Ltd (ROHL), a hospitality chain, will be raising Rs 102-122 crore from the capital market to fund its expansion plans, which include the setting up of two hotels in Pune and Hyderabad.

The initial public offering will be made through a 100-per cent book building process. Post issue, the promoters' holding will come down from 91 per cent to 67.8 per cent (including an eight per cent investment by WestBridge Ventures II Investment Holdings.)

Addressing a press conference here on Tuesday, Mr Chander K. Baljee, Chairman and Managing Director of the company, said the Rs 75-crore expansion would enable Royal Orchid Hotels to promote its brand through organic and inorganic routes.

The company currently operates four hotels through ownership and management contracts, which include its flagship five star Hotel Royal Orchid, Royal Orchid Harsha and Royal Orchid Central in Bangalore and Royal Orchid Metropole in Mysore — a State-owned enterprise.

The company recently acquired a 51 per cent stake in Maruti Comforts and Inns Pvt Ltd, which runs the Dominion Club located near the proposed Bangalore International Airport.

Mr Baljee said the projects at Hyderabad and Pune together would have 172 rooms and would cater to business customers.

He said Royal Orchid will focus on five star and four star business class hotels, as this segment is poised for a high demand.While the Hyderabad project is a joint venture, the Pune hotel will be owned and managed by ROHL.

Apart from the new projects, ROHL also plans to upgrade facilities in its existing hotels, Mr Baljee said (It has total room strength of 435 in its four hotels). The company's net profit during the first six months of this fiscal was Rs 14.3 crore on revenues of Rs 35.9 crore, said Mr Baljee.