Mahindra Holidays has said it has made a profit of ₹28.7 crore in the second quarter (Q2) of FY21, compared to a profit of ₹24.3 crore in the corresponding quarter of the previous fiscal. However, the total income of the hospitality firm dipped to ₹510 crore in the quarter ended September 2020 from ₹573 crore in the same time last year.
So, despite the lower income, how did Mahindra Holidays register a higher profit this quarter?
The answer lies in its control of expenses. Club Mahindra has reduced its total expenses by 29 per cent year-on-year (y-o-y).
Sales and marketing expenses dropped by 36 per cent. Rent on operations dropped to 10 per cent from 17 per cent last year, whileemployee benefit expenses dropped by 9 per cent. Along with this, Mahindra Holidays managed to cut down its miscellaneous expenses by 41 per cent.
During the period ended September 30, 2020, the company renegotiated rent reduction/waiver with certain lessors following the Covid-19 squeeze on business; this is a short-term benefit.
“Accordingly, the company has recognised, during the quarter ₹1,237.97 lakh, as opposed to the Q1 at ₹630.80 lakh as part of ‘Other Income’ in the statement of standalone profit and loss, and ₹1,259.41 lakh as opposed to Q1 - ₹1,387.93 lakh as part of the statement of consolidated profit and loss,” it informed the exchanges.
By cutting down these costs, Mahindra Holidays was able to increase its cash in hand to ₹791 crore in the first half of FY21, up marginally from ₹781 crore in the previous fiscal.
Kavinder Singh, Managing Director and Chief Executive Officer, Mahindra Holidays & Resorts India Limited, said he was extremely contented with the way the business had flourished despite testing times. He explained that the achievement was the result of the resilient business model it followed along with effective cost control measures.
The Mahindra and Mahindra-owned travel company said in its report that it is “Continuing with planned capital investments in two ongoing projects at Goa and Ashtamudi, Kerala.”
A dive into its operations
Mahindra
Holidays has been reopening resorts in a phased manner. This has improved the operating inventory to 69 per cent of the total inventory in September and for Q2 at 54 per cent. Currently, it is operating 37 of its 68 resorts, which include properties in India and abroad, besides subsidiaries.
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Inter-state movement and travel restrictions have gradually been eased, resulting in an increase in overall occupancy month-on-month to 41 per cent from 19 per cent.