Indian Hotels eyes ₹200 cr from property sales this fiscal; to buy stressed assets under GIC platform

Forum Gandhi Mumbai | Updated on August 30, 2019

Puneet Chhatwal, MD, IHCL

Tata Group’s Indian Hotels Company Ltd (IHCL) is planning to sell assets worth ₹200 crore this fiscal to fund its expansion plan in core areas. Last year, it sold hotels in Thiruvananthapuram and Visakhapatnam as part of its plan to exit non-core properties

“We are looking at selling 4-6 more Ginger properties and the money that we’ll get from that sale will be redeployed in repositioning the Ginger brand. Last year we earned ₹200 crore from the sale of non-core assets. This year we plan to do the same,” Puneet Chhatwal, MD, IHCL, told BusinessLine.

IHCL received ₹125 crore for the Visakhapatnam hotel. However, it retained the management contract for the property. The money from the asset sale will also be used to partially pay off debt or to go into the platform formed in partnership with Singapore’s sovereign fund GIC, to acquire assets.

“We will not take on any new debt. We will never sell any of our trophy hotels. The monetisation will mainly be in secondary and tertiary market or of non-core assets,” Chhatwal added.

While exiting non-core units, IHCL is also looking at acquiring stressed assets under the NCLT-led insolvency process. “The platform with GIC has been set up at the right time because we expect more assets to come into NCLT in 3-6 months’ time,” Chhatwal said.

The Connaught deal

IHCL is sticking to its capex plan of 5 per cent of the total group revenue, which is around ₹8,000 crore this year. “On the growth side, over the last 14 months, we have added 30 new contracts without capital investments. We signed a lease agreement with the Indian government to take over The Connaught in New Delhi. The 84-room property is being redesigned to feature 100 rooms. Through our asset management initiatives, we were able to add 20 more rooms, which means a 25 per cent increase in inventory,” Chhatwal said.

IHCL is following a growth strategy called SMART — Strategic, Margin Enhancing, Asset Management, Relationship building and continuous Tracking. “The Connaught is a perfect example of this SMART strategy. It becomes a part of SeleQtions brand; there is asset management and relationship-building with an existing licence holder like NDMC, creating value for both,” Chhatwal added.

Published on August 30, 2019

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