Tata Group’s hospitality arm Indian Hotels Company Ltd (IHCL) has become debt-free six months ahead of the earlier announced target of April 2023 . 

Its debt stood at ₹1,905 crore (as of December last year) and at ₹3,100 crore at the start of the year 2021. 

Earlier this year, Puneet Chhatwal, who was handed over the second tenure of five years as the MD and CEO of IHCL, had said that the hospitality company will be debt-free by April 2023. 

Speaking to businessLine, Chhatwal said IHCL is now at zero debt. “When I joined in 2017, we had a huge debt on our books. Our aim was to bring it down entirely. Today, we have only one NCD which is now due in April 2023. That has already been accounted for in the QIP. Besides that, we have now zero debt on our books.”

IHCL had raised around ₹4,000 crore through rights issues and QIP, thereby becoming net cash positive. The floor price fixed for the QIP is ₹203.48, while the issue price could be in the range of ₹200-204.

“We generated ₹383 crore free cash flow in H1 of this year. That is only 40-45 of what we are capable of. If we are able to reach the 100 per cent level, it is a lot of cash on our books,” IHCL’s chief said when asked if the company was in a comfortable cash position.

Adding that, if the company needed more funding, it could always approach Tats Sons. 

On November 10, IHCL informed the exchanges that it posted a record profit of ₹122 crore in Q2 FY23 compared to a loss of ₹121 crore in the previous year. Its revenue grew to ₹1,258 crore, a 67 per growth year-on-year.

Growth trajectory

Chhatwal said that the company believes that in light of the recent trajectory of the growth for the industry and the upcoming events including the G20, the festival season and the wedding season will have give a boost to the Q3. This will also carry forward in the Q4 of FY23. 

IHCL has a portfolio of 247 hotels including 65 under development globally across 4 continents, 11 countries, and in over 100 locations. Around 46 per cent of the company’s hotels are managed while the rest are owned. The company plans to bring it to the 50:50 ratio.

Company’s most expensive properties include multiple Taj properties including the Taj Mahal Palace which is the crown jewel. He explained that today most of the revenues comes from the Taj properties but the growth also comes from new businesses including ama, Qmin, Taj SATs and Ginger. 

“Today, Taj itself has a potential revenue of ₹700 crore, and we are doing upto ₹500 crore. It’s still the highest revenue generator. Our goal is to get 75:25 per cent revenue from traditional businesses that include Taj and the other 25 per cent from our new businesses. Today they generate close to 8-10 per cent. We aim to double that by FY25.”