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With Ebitda positive, IHCL hopes to turn tables in two years time

Company to look at paring debt, currently at Rs 4,300 crore, by planning to offload stake in Belmond's $75 million share repurchase programme if the offer per share is good

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Indian Hotels Company Ltd (IHCL), which runs the Taj Hotels Resorts and Palaces, will take at least two years to get back into profitability mode, said a company's senior official, adding that reducing debt will be taken up on a priority basis.

Rakesh Sarna, managing director and CEO, Indian Hotels, during a media interaction, said, "From an Ebitda standpoint we have been profitable. But, PBT, PAT are entirely different matter. We are at least two years away because we need to make sure that we have taken account of all our liabilities defined and undefined. So I would say we are two years away at PAT level."

With an eye on paring down its debt, which stands at Rs 4,300 crore at a consolidated level, the Tata-group controlled company is looking at exiting Belmond, formerly known as Orient-Express Hotels, where IHCL holds 7.13 million shares translating it into 6.9% stake in the company. In the past, IHCL had made two unsuccessful attempts to acquire Belmond. The company has invested around Rs 1,200 crore by picking up stocks in phases. Sarna said IHCL is open to participate in Belmond's $75 million share repurchase programme if the offer per share is good, without giving out further details.

"We are open to anything that does not result in further diminution of value," Sarna said, indicating that IHCL is open to sell its shares to other investors in Belmond as well.

"When the 14-15 results are published, we will show progression," said Sarna, who had spend 35 years in overlooking the international hotel chain Hyatt Hotels portfolio in America.

For IHCL, according to Sarna, the focus is mainly on improving the balance sheet, operations and operational turnaround over the next two years.

The company is also planning to open 17 new properties in the domestic market with one property in Dubai with an addition of about 3,400 rooms over the next few years. The company currently has a portfolio of 128 hotels globally including 16 international properties.

Meanwhile, IHCL will also soon begin its Sea Rock project at Bandra in Mumbai, and has already secured 23 out of 24 permits required to start work on the project. However, the environmental clearance is yet to come through.

On a possibility to do away with some of its asset-heavy properties, which are not performing well, to reduce its debt burden, Sarna maintained that it could be a possibility. "We can leverage the capabilities of those asset to free up the cash, but maintain the brands and use that cash to fuel growth," he added.

IHCL would also bring in Chinmay Sharma as the chief revenue officer. Sharma, who is based out of Paris, is associated with Starwood Hotels.

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