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Tata Group-owned Indian Hotels Company Limited’s (IHCL) profits have dropped by over 300 per cent on year on year basis. The hospitality firm has recorded a loss of ₹219 crore in the Q2 of FY21 in comparison to a profit of ₹80.11 crore for the corresponding period.
For the said quarter, IHCL’s income from operations was ₹256 crore compared to ₹1,007.44 crore for the same quarter last year. This comes even as IHCL’s total expenses were lower than Q2 of FY20.
In the said quarter, IHCL’s expenses were ₹606 crore compared to ₹1,033.73 crore in FY20’s second quarter. IHCL’s expenses rose by approximately ₹100 crore from the previous quarter.
During the quarter, - IHCL has sold residential flats which earned them ₹3.11 crore and ₹6.46 crore respectively. It also negotiated its lease agreements for a few properties, which was a benefit for the parent company of Taj hotels for ₹22.18 crore and ₹39.29 crore respectively.
During the quarter, the Group has signed a binding agreement for the acquisition of balance equity stake of 14.28 per cent in ELEL Hotels & Investments Ltd, a step-down subsidiary, from its existing shareholders for consideration of ₹250 crore payable in a phased manner on the achievement of certain agreed milestones but not later than the end of December 2021.
This will make the Group 100 per cent leasehold owner of the landmark Sea rock hotel site by December 31, 2021. Consequent to this acquisition, ELEL will become a wholly-owned step-down subsidiary of the Company.
This is a clear impact of the covid-19 pandemic. Owing to the lockdown restrictions, a significant number of our hotels across the IHCL group have been to be shut down and has been able to reopen them only in a phased manner.
“Hotels have been opened in a gradual manner with close to 90 per cent of hotels re-opened by the end of September 2020 and business is expected to gradually improve across all hotels,” IHCL stated during its results announcement.
“The Management is confident of securing additional financing for the next 12 months, including negotiating certain terms and conditions of the financing agreements, to enable the Group meet its debts and obligations as they fall due,” it said.
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