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Indian Hotels Company Limited’s (IHCL) Q1 FY21 shows a clear impact of the Covid-19 pandemic. The company has further warned its stakeholders of the impact of the pandemic in the future as well.
The Tata-owned hospitality company posted a loss of ₹312.6 crore for the said quarter against a profit of ₹4.98 crore the same time last year. IHCL’s revenues dropped by 85 per cent on a year-on-year basis.
For the quarter that ended on June 30, 2020, IHCL’s expenses were at ₹597.63 crore against ₹1,031.61 crore.
Speaking to BusinessLine earlier, IHCL’s officials had said the company is adopting multiple cost-cutting measures and had put all renovations on hold unless necessary.
In its announcements of results to the exchanges, it notified that the Group held 50 per cent stake in IHMS Hotels (SA) Pty Ltd (IHMS (SA)), a joint venture of the Company, held through IHOCO BV, an overseas wholly-owned subsidiary (WOS). IHMS (SA) owns the Taj Cape Town Hotel in Cape Town, South Africa.
On June 30, 2020, IHOCO BV has executed a definitive agreement for acquiring the balance 50 per cent holding in IHMS (SA) from Tata Africa Holdings (SA) Pty Ltd (“TAH”), the joint venture Partner along with the shareholders loans advanced by TAH to IHMS (SA) at a transaction price of US$ 1 million. As a consequence, IHMS (SA) is now a WOS of the Company.
“As a result of the transaction, a gain of ₹8,203 lakh has been recognised in the statement of Profit and Loss on the date of acquisition and shown under ‘Exceptional items’”.
IHCL in its results stated that the Group has assessed the possible impact of COVID-19 in preparation of the consolidated interim financial results, including but not limited to its assessment of liquidity and going concern assumption, recoverable values of its financial and non-financial assets and impact on revenues and costs.
“The business of the Group in India and international markets has been severely impacted during the current quarter on account of Covid-19 and softer revenues due to the lockdown,” the Taj Group’s parent company said in its statement.
“There could be an additional exposure on account of further extension of lockdown, and phased opening of hotels in cities where we operate.”
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