Indian Hotels' net loss narrows to Rs 130 crore in Q2; board approves increased fundraising plan

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#Indian Hotels, #qualified institutional placement, #Results, #Tata Group

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Tata group hospitality firm Indian Hotels Co Ltd (IHCL) on Thursday reported narrowing of its consolidated net loss at Rs 130.92 crore in the second quarter ended September 30, on the back of recovery of demand, especially in leisure destinations.

The company, which had posted a consolidated net loss of Rs 252.09 crore in the year-ago period, said its board at a meeting held on Thursday has approved increasing plans to raise funds to Rs 4,000 crore from Rs 3,000 crore approved earlier in August this year. The enhanced fund raising plan includes a rights issue to the existing shareholders of the company for an amount of up to Rs 2,000 crore, followed by a qualified institutional placement (QIP) of equity shares for up to Rs 2,000 crore.

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The board has also approved purchase of balance shares aggregating to 39.84 per cent stake from the existing shareholders of Roots Corporation Ltd, which operates the Ginger brand for a consideration not exceeding Rs 500 crore. In a regulatory filing, IHCL said its consolidated revenue from operations in the second quarter stood at Rs 728.37 crore as against Rs 256.67 crore in the corresponding period last fiscal.

Total expenses during the second quarter stood at Rs 871.14 crore as compared with Rs 606.62 crore in the same period last fiscal. In the first half of this financial year (H1), IHCL said its consolidated net loss narrowed to Rs 432.50 crore from Rs 564.69 crore a year ago.

Revenue from operations in H1 was at Rs 1,072.92 crore as compared to Rs 400.28 crore in the same period last fiscal. The business has been impacted during the half-year period on account of COVID-19. During the first three months of the year, the group witnessed softer revenues due to the second wave of COVID-19 and consequent lockdowns in several states in India, where the group predominantly operates, the filing said.

“However, in the beginning of the current quarter, the lockdowns were lifted due to lower active COVID-19 cases and increased vaccinations, and the group witnessed positive recovery of demand, especially in leisure destinations and business is gradually expected to improve,” it added. In a statement, IHCL Managing Director and CEO Puneet Chhatwal said, “Overall recovery has been stronger and quicker after the second wave. IHCL has seen significant improvement in performance quarter-on-quarter and the revenues grew by 132 per cent over Q2 last year.”

During the second quarter, IHCL said it signed five new hotels across brands, including three SeleQtions hotels in Kolkata, Bhubaneswar and Nainital; Vivanta in Ahmedabad, and Ginger in Udaipur. It also opened four new hotels across brands, including Taj Lakefront, Bhopal; Pilibhit House, an IHCL SeleQtions hotel at Haridwar; Vivanta Bhubaneswar and Vivanta Miramar in Goa.

On the matter of fundraising, IHCL said the company’s board at its meeting held on Thursday approved a partial modification to its earlier decision taken on August 23, 2021, to raise funds not exceeding Rs 3,000 crore by way of a rights issue. Accordingly, the board has approved issue of equity shares by way of a rights issue to the existing shareholders of the company for an amount not exceeding Rs 2,000 crore and raising of funds through equity issuance for an amount not exceeding Rs 2,000 crore through Qualified Institutional Placement (QIP) after the conclusion of the rights issue.

Chhatwal said the fund raise is in line with IHCL’s objective of driving growth and market leadership and it will “enable us to be a zero-debt company in the future and help fund the company’s expansion, as well as its capital expenditure plans.” IHCL further said its board has also approved acquiring 39.84 per cent stake in Roots Corporation Ltd from its existing shareholders Omega TC Holdings Pte Ltd, Tata Capital Ltd, Tata Investment Corporation Ltd and Piem Hotels Ltd, for a consideration not exceeding Rs 500 crore. Subsequently, RCL will become a wholly owned subsidiary of the company.

“The acquisition of the balance shares of Roots Corporation Ltd is also in accordance with the company’s strategic objective of consolidating and simplifying its holding structure,” IHCL Executive Vice-President and CFO Giridhar Sanjeevi said. On the outlook, he said,”We remain confident in the continued momentum of growth with very encouraging market indicators. The sustained cost optimisation measures have helped the company improve cash flows and liquidity.”

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