The economic slowdown in 1996 impacted the company's fortunes; the sales of time-share plummeted, causing huge losses. It was forced to suspend payment to the creditors and bankers, retrench staff and rationalise operations.
Chennai, Feb. 6
STERLING Holiday Resorts (India) Ltd (SHRIL) is in the process of restructuring its debt and is raising $15 million through an issue of foreign currency convertible bonds (FCCB).
Mr R. Subramanian, Chairman and Managing Director, SHRIL, said the company has drawn up a three-year plan to settle all its debts, refurbish its existing resorts and complete all pending projects. At the same time, the company will expand its sales of timeshares and hotel rooms.
Mr Subramanian has bought out the other two co-promoters and shareholders Mr P.N. Mohan and Mr Vivek Pai. Mr Subramanian and his family hold about 37 per cent of the equity currently. About 80 per cent of the payment, at Rs 20 per share, has been made. The entire amount will be paid by next March.
He said the decision to buy out the other promoters was taken after another deal, under which Days Inn was to have bought out all the promoters, did not come through.
In 2003, the company entered into an agreement with Days Inn to take over Sterling Holiday Resorts by September 2004. But this did not work out, as Days Inn was not able to complete the takeover within the time frame.
Sterling had liabilities of Rs 211 crore at one stage. It negotiated with creditors and settled about Rs 98 crore. Subsequently, another Rs 30 crore was settled. Today, it has Rs 25 crore to pay up the current liabilities.
The company is selling surplus assets, about 250 units, to raise Rs 50 crore.
Mr Subramanian said the economic slowdown in 1996 impacted the fortunes. The sales of time-share plummeted, causing huge losses. It was forced to suspend payment to the creditors and bankers, retrench staff and rationalise operations.
By 2001, it was able to break even and it started making payment to some of its small creditors. By 2004, the markets revived and the properties had appreciated in value, he said. There has also been an increase in resort occupancy, which has been beneficial to the bottomline.
The paid-up capital was increased to Rs 24.90 crore in July in 2005 from Rs 18.2 crore in 1995. The preferential issue of shares has brought in Rs 45 crore.
Sterling Holiday Resorts sells about Rs 60 lakh worth of time-share a month. Mr Subramanian said the company plans to sell Rs 100 crore worth of timeshare between April 2006 and March 2007.
To improve the quality at the resorts, it is planned to refurbish 1,437 cottages and upgrade common facilities such as restaurants, conference rooms and gardens.
Talking about the new resorts and projects, Mr Subramanian said construction activities had started in Yelagiri. The cottages in Chail are ready and the company is awaiting licences before commissioning the resort. Construction will start in Lonavala, Mahabaleshwar, Coorg, Shirdi, Beemtal and Thekady in April 2006. An additional apartment in Munnar and a second resort in Goa are also planned.
While leisure will continue to be the company's core business, a presence in the business and religious tourism segment is also planned. Sterling Holiday Resorts plans to build 20 business hotels for which talks are on with a strategic foreign investor. There are also plans for 18 heritage hotels at places of religious, cultural and historical interest all over India in the next five years.
Talking about the other companies, Mr Subramanian said Maxworth Orchards owned about 20,000 acres of which 2,000 acres were in adverse possession. The company has initiated legal proceedings to recover this land.