The Hindu Business Line : Indian Hotels posts 87 pc growth in Q4 net profit

Growth trends in the hospitality industry and sustained cost control helped Indian Hotels Company Ltd (IHCL) report strong profit for fourth quarter ended March 2006, and the whole year.

The fourth-quarter profit after tax (PAT) was up 86.94 per cent at Rs 78.85 crore (Rs 42.18 crore), while sales and other operating income rose 33.64 per cent to Rs 355.93 crore (Rs 266.33 crore).

For 2005-06, IHCL clocked 73.61 per cent rise in PAT to Rs 183.78 crore (Rs 105.86 crore).

Sales and other operating income for the year moved up 27.92 per cent to Rs 1,084.26 crore (Rs 847.63 crore). The board has recommended dividend of 130 per cent (100 per cent).

"It has been purely a year of hotel operations," Mr Raymond Bickson, Managing Director, told newspersons today.

There were no exceptional items during the year, compared to the previous year, when they accounted for Rs 22.99 crore, including Rs 6.38 crore in the final quarter as profit on sale of hotel property.

Overall trends in the sector boosted dividend inflows from subsidiaries and associates, visible in other income for the fourth quarter rising to Rs 12.80 crore (Rs 5.02 crore) and to Rs 43.31 crore (Rs 25.61 crore) for the fiscal.

Though full-year expenditure was up 15.52 per cent at Rs 769.31 crore (Rs 665.94 crore), it accounted for 68.23 per cent (76.26 per cent) of total income.

Constituents of expense were all steady to lower as percentage of total income.

ARR (average room rate) was up 31.36 per cent at Rs 7,187 (Rs 5,471) and Revpar (revenue per available room) was up 28.72 per cent at Rs 5,060 (Rs 3,931). Average occupancy dipped marginally to 70 per cent (72 per cent), attributed to the floods in Mumbai last July, impact of price correction, and companies deciding not to have executives staying through weekends. EBITDA margin touched 31.8 per cent (23.7 per cent).

Mr Anil Goel, Senior Vice-President (Finance), said that room sales had done well, courtesy industry-wide rate revision amid sizable demand. "We expect that to continue," he added.

Further, the F&B business returned good performance, overseas properties did well, and costs were managed.

Interest outflow fell 36.05 per cent to Rs 20.36 crore (Rs 31.84 crore), as much of IHCL's foreign currency convertible bonds were converted to equity; there was also interest income from surplus funds.

Debt-equity was 0.32 (0.89) and ongoing investments could be largely met from internal accruals, Mr Goel said.

According to him, high room rates should prevail because demand was strong and supply not of a proportion to upset any market.

"The good thing about this business is that competition can't sneak up behind you," Mr Goel said, citing the usual three-year period for completing a hotel project.

At a consolidated level, IHCL posted 93.55 per cent increase in annual PAT to Rs 248.71 crore (Rs 128.50 crore) on 40.16 per cent gain in total income to Rs 1,914.18 crore (Rs 1,365.70 crore). At a still broader level, spanning all 76 Taj hotels, the Group's turnover was Rs 2,981 crore (Rs 2,219 crore).

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