Kamat Hotels India Ltd to divest four sites

Kamat Hotels India Ltd (KHIL) is looking to divest land parcels earmarked for hotel developments. The money raised will be utilised to reduce the company’s debt.

Speaking to DNA, Kurian Chandy, chief financial officer, said the KHIL was in talks with a host of hotel companies and realtors for the land parcels.

“We have decided to divest the hotel sites in Coimbatore, Amravati, Raipur and Nagpur. The land parcels are of sizes ranging from 2-40 acres. The real estate has been sitting on the company’s balance sheet for about 4-5 years now,” Chandy said. He did not disclose either the acquisition cost, or the realisation expected from the sale of the sites.

KHIL has also deferred its plans for a hotel in Baddi (Himachal Pradesh), citing regulatory issues.

Also to reduce debt, KHIL has mooted a proposal to convert FCCBs of $18 million raised in 2007. An extraordinary general meeting is scheduled on June 10, for resetting the conversion price.

“Converting the FCCBs will help us reduce debt by around Rs 85 crore, thereby increasing net worth. Currently we have a net worth of Rs 165 crore as against a debt of Rs 407 crore. Once the FCCB is converted, the net worth will increase to Rs 250 crore against a debt of Rs 320-odd crore. The debt burden will be further reduced by using the sales proceeds from divestment of the land parcels,” said Chandy.

This fiscal, KHIL will focus largely on expanding its hotel portfolio in Mumbai and Pune, which are owned properties. The company’s brands include The Orchid, VITS, Lotus Resorts and a heritage property in Pune christened Fort Jadhavgadh.

In Mumbai, the company is adding 120-odd rooms to its existing 245-room five-star The Orchid.

“The capital expenditure is pegged around Rs 135 crore, of which Rs 45 crore is yet to be invested. Phase I of the expansion — restaurants, banquet and 40-rooms — will get operational by October,” said Chandy.

In Pune, the company is putting up 400 rooms between its two brands The Orchid (200 rooms) and VITS (200 rooms) at Balewadi. A 120-key VITS hotel is already operational, with the balance rooms to be opened in a phased manner.

In time for the Commonwealth Games in Delhi, KHIL has signed a management contract under its VITS brand for a 151-room property at Sahibabad. The four-star luxury business hotel is expected to get operational by July 2010.