Financial Management Practices Of Indian Hotels Co Ltd

Table of ContentsFinancial Objectives of the Firm..................................................................................................................3

Vision and Mission...................................................................................................................................3

Balanced Scorecard.................................................................................................................................3

Triple Bottom Line Accounting................................................................................................................4

Wealth Maximization vs. Profit Maximization.........................................................................................5

Capital Expenditure.....................................................................................................................................6

Trends in Asset Composition...................................................................................................................6

Total Assets.............................................................................................................................................6

Fixed Assets.............................................................................................................................................7

Investments.............................................................................................................................................7

Changing composition of long term assets (Fixed Assets + Investments)................................................7

Future Capex Plans..................................................................................................................................8

Cash Flow Analysis...................................................................................................................................8

Capital Structure..........................................................................................................................................9

Issuance of FCCBs..................................................................................................................................10

Rights Issue............................................................................................................................................10

Bonus Issue............................................................................................................................................11

Stock Split..............................................................................................................................................11

Cost of Capital.......................................................................................................................................11

Working Capital Management...................................................................................................................12

Trends in Current Assets........................................................................................................................12

Inventory...............................................................................................................................................12

Receivables............................................................................................................................................13

Payables.................................................................................................................................................14

Overall Look at Working Capital............................................................................................................14

Total Current Assets Composition.........................................................................................................15

Working Capital Funding.......................................................................................................................15

Investment of Short Term Surpluses.....................................................................................................15

Dividend Policy..........................................................................................................................................15

Financial Management – II (Indian Hotels Co. Ltd.) Group 8 Section A Page 2 of 18

Overall Impact.......................................................................................................................................17

Financial Objectives of the Firm

Vision and MissionThe company Indian Hotels Company limited also known as Taj Hotels Resorts and Palaces states its vision in the following statement taken from their initiative called EARTH.

“The Taj Group of Hotels commits itself to the overall improvement of the ecological environment, which we are all a part of. We recognize that we are not owners but caretakers of the Planet and owe it to our children and future generations of humankind. It is our endeavor not only to conserve and protect but also to renew and regenerate the environment in which we live and operate. Our commitment encompasses all actions related to our products, services, associates, partners, vendors and communities. We will partner and engage with our environment through EARTH: Environmental Awareness and Renewal at Taj Hotels. For us EARTH is not a program, nor a process; it is a way of life“.

The company expresses its mission “To embrace talent and harness expertise to leverage standards of excellence in the art of hospitality to grow our international presence, increase domestic dominance, and create value for all stakeholders, both present and future”.

From the vision and mission statement of the company, it is evident that the focus of the company is on its sustainability not only in terms of financial performance which would allow it to create wealth for stakeholder but also of environment that we are all a part of. The company wants to ensure that all their actions – related to their products, services, associates, partners, vendors and even communities – are in the direction of this vision. The company places profitability in long term over the profits in short term.

The mission statement suggests the objective is of wealth maximization in long term which it wants to achieve by increased market share. By presence in international markets and higher dominance in domestic market, sustainability for future is ensured. The company wants to be growing into new markets and setup new hotels around the world for all price segments. The company also understands the importance of human resource for its industry and embraces talent and harness expertise in them. With such a long term view of their actions, they want to ensure value creation for all their stakeholders not only for present but for future as well.

Balanced ScorecardIHCL has already taken up a Balanced Scorecard project in order to systematically deploy the organization’s strategic objectives uniformly across all hotels. The project is intended to provide


a complete visibility of company’s strategic objectives for all levels of management. The key strategic objectives are captured in BSC and then cascaded across all units and departments. All the low level scorecards are aligned with corporate scorecard.

From the four perspectives of a Balanced Scorecard, we can figure out how business activities at IHCL are aligned with vision and strategy of the firm.

Learning and Growth: The Company recognizes the importance of human resources in this sort of industry. The company spends almost a quarter of its expenses as staff costs that includes training and development of the employees apart from salaries. The company’s annual report mentions many other initiatives also, such as an Online Learning Management System to groom their frontline associates and a Taj Management Training Programme.

Business Process: IHCL has undertaken many steps to enhance the service levels and make them in line with the world class. It benchmarks itself with key international luxury chains. This service excellence philosophy of IHCL has at its core, delivery through people, processes and culture. Its services such as butler service, concierge, car hire have all been designed to suit the needs of its customers. The centers of excellence have been strengthened to train staff to meet the standards of luxury hotels. Tata Business Excellence Model (TBEM) plays significant role in achieving this. The use of IT to get leverage is also considered important. Initiatives like Orion, a back office system, a revenue management system, interactive TV system, National Call Center and better inventory management are a few.

Customer: Customer is truly a king at Taj. A Customer Feedback System was launched at Taj in November 2003. According to company’s website, the system has till date, received around 12000 customer feedbacks. These feedbacks are recorded, aggregated and analyzed to improve the service quality. These feedbacks include not only complaints but also compliments and suggestions. Attributable to these measures, is the highly loyalty and retention enjoyed by Taj Hotels.

Financial: The Company based on their objectives of growth has a financial objective to retain the profits for their growth strategy in order to capture as much market as possible.

Triple Bottom Line AccountingThe company believes that no company is separate from the environment and communities that sustain it. Pursuing the same principle, the company has added value to the triple bottom lines of People, Planet and Profit.

People: As a result of many initiatives, the company has won a number of awards such as Gallup Great Workplace Award, Employee Satisfaction Scores - Gold Standards under Gallup Survey and Worldwide Hospitality Awards 2009 – Year of the Associate Initiative. Its initiatives


such as Career Architecture, Speed+ and PACE (Performance Alignment and Competency Enhancement) are fetching results in terms of lower attrition and productive staff which has helped the company keep its costs low during the difficult times of economic slowdown in the industry. Apart from various programs for staff, IHCL has also been involved in many community building programs, such as promoting local artisans and craftsmen.

Planet: It recognizes the need to reduce the impact of its daily operations on the environment and takes steps to make a contribution. One of the measures includes preparing a Corporate Sustainability Report based on GRI G3 guidelines for sustainability reporting and adhering to the 10 principles of UNGC. It has also been participating in Carbon Disclosure Project to report its strategy towards performance in climate change mitigation. Also, EARTH vision that was launched in August 2008 continues to remain in focus.

Profit: Though the profits of the company had declined in recent years, it continues to contribute to other two bottom lines of planet and people with a reassurance that this bottom line would also show a rise. Moreover, though revenue had reduced during 2009-10, but Q3 of 2010-11 showed that company is back on its path of increased revenues and profits which it can use in its objective of growth in domestic and international markets.

Wealth Maximization vs. Profit MaximizationAs described earlier the vision and mission statement of the company suggests that the financial management of the company is more concerned about wealth maximization. It ensures that in pursuit of profits, other aspects such as community and environment are not ignored. In fact, the company is involved in many initiatives that ensure protection of environment. One such initiative taken up by the company is EARTH (Environmental Awareness and Renewal at Taj Hotels).

Also, since the company wants to ensure greater value for not only the present stakeholders but also future ones, they are constantly trying to grow into new markets, both domestic and international in order to increase market share. This approach, they believe would be able to sustain them in the long run.


Capital Expenditure

Trends in Asset CompositionParticulars 2006 2007 2008 2009 2010

Fixed Assets 843 1,360.05 1,371.60 1,585.40 1,561.26

Investments 656.57 962.81 977.58 2,026.88 2,445.63

Total Assets 2,260.58 2,742.62 3,170.73 4,814.10 5,343.87

Net Sales 1,084.26 1,544.63 1,764.51 1,619.57 1,473.29

Fixed Assets as a % of Total Assets

37.29 49.59 43.26 32.93 29.22

Investments as a % of Total Assets

29.04 35.11 30.83 42.10 45.77

Sales / Fixed Assets 1.29 1.14 1.29 1.02 0.94

Sales / Total Assets 0.48 0.56 0.56 0.34 0.28

Total AssetsThere has been an increasing trend in the Total Assets in the last decade. They have more than doubled from 2001 to 2010. The increase can be mainly attributed to the expansion and acquisition initiatives in domestic and foreign markets.

20012002

20032004

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01,0002,0003,0004,0005,0006,000

Total Assets


Fixed AssetsFixed assets have consistently formed around 30-45% of the Total Assets. There has been a sharp increase in Fixed Assets in 2007 and thereafter. Much of this can be attributed to the renovations of the Jai Mahal Palace, Jaipur, Taj Holiday Village, Goa, Taj Bengal, Kolkata, Taj West End, Bangalore, and Taj Palace, New Delhi. The company also completed its first phase of expansion in the US market, with the acquisition Ritz Carlton, Boston.An added expenditure was incurred in 2009-10 in the restoration of the Taj Mahal Palace & Tower, Mumbai, after the terror attack in November 2008.

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0.000.100.200.300.400.500.60

Fixed Assets Turnover

The Fixed Asset Turnover has remained more or less the same. It hovers around 1.00. This shows that the performance of the company has been good and consistent.

InvestmentsInvestments have increased considerably in the last two financial years, especially in 2010. They formed about 25-30% of the Total Assets till 2008 but have been over 40% for the last two years. The investments doubled in 2009 as compared to previous year because of huge expenditures on new projects and renovations and investments in international subsidiaries.

Changing composition of long term assets (Fixed Assets + Investments)

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20090%

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InvestmentsFixed Assets


From the above it can be seen that the share of investments has risen in recent times, on account of investment in subsidiaries. In FYo6 it was only 29% of the total long term assets, while in FY09 it became as high as 45.77% of the total assets.

Future Capex Plans(Aug 2010) IHCL has drawn a plan to invest Rs. 959 crores over the next couple of years in new projects. It is considering listing its subsidiary Roots Corporation. They have lined up a robust expansion strategy for the next 5 years which includes nine new projects in the Middle East, North Africa, South America, Abu Dhabi, Egypt, Morocco, Mexico and the British Virgin Islands under various management contracts.

Cash Flow Analysis

Particulars 2006 2007 2008 2009 2010Net Profit Before Tax 272 474.64 580.47 362.3 218.25

Net Cash From Operating Activities 237.89 529.55 474.36 294.31 450.64

Net Cash (used in)/from Investing Activities -43.86 -354.88 -492.97 -1105.74 -1056.43

Net Cash (used in)/from Financing Activities -158.7 -270.1 5.33 1182.59 627.41

Net (decrease)/increase In Cash and Cash

Equivalents 35.33 -95.43 -13.28 371.16 21.62

Operating Activities: Net cash from operating activities was higher at Rs. 450.64 crores as compared to Rs. 294.31 crores in the previous year. While operational profits were lower during the year, a lower tax outflow and better working capital management enabled the company retained higher liquidity.

Investing Activities: Net cash used for investing activities was mainly on account of Rs. 1056.43 Crores spent towards expansion plans, renovation of existing properties and replacement/up-gradation of existing fixed assets.

Rs. 276.45 crores spent towards construction of new properties and restoration of the Taj Mahal Palace & Tower, Mumbai.

Rs. 1232 crores invested in subsidiaries for renovation of the Pierre, New York and repayment of the existing debt in various subsidiary companies. This was partially funded by divestments of certain investments.


Financing Activities: During the year the Company raised Rs. 1030 crores of debt by issue of 2% Secured non-Convertible debentures with a yield to maturity of 9.5% for Rs. 300 crores and two issues of 2% Unsecured Non-Convertible debentures of Rs. 250 crores and Rs. 150 crores with a yield to maturity of 9.85% and 9.25% respectively. In addition, the company has invited fixed deposits from the general public and shareholders through which it raised 330 crores. A term loan from a bank of Rs. 100 crores, which matured during the year, was repaid.

Capital StructureThe following table shows the composition of the long term funds deployed by the company in the business.

Long Term Funds (Rs. Crore) FY10 FY09 FY08 FY07 FY06Total Share Capital 72.35 72.34 80.26 60.29 58.41Reserves 2,620.97 2,975.29 1,956.29 1,738.39 1,657.83Shareholder’s Funds 2,693.32 3,047.63 2,036.55 1,798.68 1,716.24% of total 50.40 63.31 64.23 65.58 75.92% YoY -11.63 49.65 13.22 4.80 51.60Secured Loans 1,752.77 1,598.02 755.58 776.40 423.73Unsecured Loans 897.78 168.45 378.6 167.54 120.61Total Debt 2,650.55 1,766.47 1,134.18 943.94 544.34% of total 49.60 36.69 35.77 34.42 24.08% YoY 50.05 55.75 20.15 73.41 -46.02Total Long term funds 5,343.87 4,814.10 3,170.73 2,742.62 2,260.58% YoY 11.00 51.83 15.61 21.32 5.62Debt Equity ratio 0.98 0.58 0.56 0.52 0.32Interest Coverage 3.43 5.51 8.42 7.41 9.32

It’s apparent from the above table that the proportion of equity in the capital structure has been constantly declining. From as high as 75.92% in FY06, it has come down to 50.40% in FY10. And correspondingly, the proportion of debt has risen to 49.60% in FY 09. The debt equity ratio has changed drastically from a modest 0.32 in FY06 to 0.98 in FY 10. However in absolute terms, both debt and equity have increased significantly.

The coverage ratios depict that the margins are sufficient enough to cover the finance charges and this helps the company’s case for future borrowings.

The changes in the equity capital structure have happened on account of the following events:


Ordinary Shares, of the face value of Re. 1/- each, were issued as fully paid Bonus Shares by capitalization of Reserves and Securities Premium Account

Ordinary Shares, of the face value of Re. 1/- each, were issued as fully paid shares, pursuant to exercise of option for conversion by holders of Foreign Currency Convertible Bonds (FCCBs).

Ordinary Shares, of the face value of Re. 1/- each, were allotted as fully paid shares, pursuant to amalgamation with the Company.

Ordinary Shares, of the face value of Re 1/- each, were allotted as fully paid shares, being Warrants exercised pursuant to Rights Issue of Ordinary Shares by the Company.

The company has net debt of Rs 2650.55 crores of which secured or unsecured non convertible debentures constitute a major portion. We can see that the company is able to issue these debentures at relatively low interest rates.

The coverage ratios depict that the margins are sufficient enough to cover the finance charges and this helps the company’s case for future borrowings.

The current debt/equity stands at 0.98:1. Interest coverage ratio stands at 3.43 times, which is comfortable at current levels and expected EBIT growth rate in future would provide further cushion on interest coverage. While the high growth rate would support more debt, increasing leverage does expose the company to go in for further equity dilution.

The Funding arrangement used by the company was:

Issuance of FCCBsIndian Hotels Company Ltd’s (IHCL) offered USD 150 million (including greenshoe of USD 15 million) foreign currency convertible bonds (FCCB) on February 3, 2004,which was oversubscribed by more than 20 times. The proceeds were to be used to fund the company’s acquisitions, expansion and modernization plans in India and overseas.

The bonds are convertible into ordinary shares or GDS of the company at the option of the bondholders at a conversion price of approximately Rs 502 per share. These bonds carry a coupon rate of one per cent per annum at a yield to maturity (YTM) of 3.15 per cent per annum at the end of five years, if not converted into ordinary shares or GDSs during the period. Thus, the yield to maturity compares with that of five year-treasuries. If all the bonds are converted into shares, the equity base would dilute by 30 per cent.

Rights IssueIndian Hotels made unlinked offers of equity shares (one for every five held) and 6 per cent NCDs (non-convertible debentures) with a detachable warrant (one for every 10 shares held). The equity shares were offered at Rs 70 per share, a steep 35 per cent discount to the current


market price. The warrant can be converted at an exercise price of Rs 150, which is at a 35 per cent premium to the market price at the time of issue. The window to exercise warrants conversion is limited to the month of September 2008.

Indian Hotels is mobilizing close to Rs 1,450 crore through this rights offer of shares and non-convertible debentures. The equity base is likely to expand by 20 per cent, post-offer, and by an additional 10 per cent, post-warrant conversion. The proceeds of the offer will fund Indian Hotels’ massive capacity expansion plans.

The company did Capital Restructuring through following ways.

Bonus Issue Ordinary Shares, of the face value of Re. 1/- each, were issued as fully paid Bonus Shares either by capitalization of Reserves or Securities Premium Account in many of the preceding years.

Stock SplitOrdinary Shares of the company having face value of Re. 10/- each were subdivided into 10 Ordinary Shares of Re. 1/- in 2006.

Cost of CapitalFollowing is the computation of Weighted Average cost of capital for the company.

Cost of Equity India risk-free rate (%) (1) 7.67Risk premium (%) 8.33Market return (2) (%) 16Beta (3) 0.76Cost of equity (%) {1+3*(2-1)) 14.0008 WACC Total Debt (Rs. Crore) 2,650.55Total Equity (Rs. Crore) 2,693.32Cost of debt (%) 6.62Tax rate (%) 30After-tax cost of debt (%) 4.63WACC (%) 9.35

As we can see from the above computation of cost of capital, the cost of equity works out to be 14%, the cost of debt is 4.63% and WACC is 9.35%.


Working Capital Management

Trends in Current Assets

Trends in Current Assets (Rs. Crore)

Year FY06 FY07 FY08 FY09 FY10

Inventories 25.85 29.02 32.85 38.91 31.25

Sundry Debtors 79.64 127.2 138.41 101.7 121.62

Cash and Bank Balance 24.8 50.38 72.87 21.81 54.56

Total Current Assets 130.29 206.6 244.13 162.42 207.43

Loans and Advances 999.44 693.3 935.19 1,486.23 1,653.17

Fixed Deposits 65.33 16.63 1.56 1.63 392.56

Total CA, Loans & Advances1195.06 916.5

31180.88 1650.28 2253.16

Current Liabilities 333.75456.56 579.5 510.89 586.67

Provisions 150.42153.11 46.73 153.4 700.1

Total CL & Provisions484.17 609.6

7626.23 664.29 1286.77

Net Current Assets710.89 306.8

6554.65 985.99 966.39

In the following few sections various components of Current Assets have been analyzed.

InventoryInventory (Rs. Crore)

FY06 FY07 FY08 FY09 FY10


Inventories 25.85 29.02 32.85 38.91 31.25

%YoYN.A.

12.26% 13.20% 18.45% -19.69%

Inventory Turnover Ratio 41.94 53.23 53.71 41.62 47.15

The inventory turnover is almost similar over the past 5 years. The tourism industry was affected directly due to the terror attacks in Mumbai in 11/2008 and global recession. The sales had dropped over the period of time after tourism sector was hit and inventory levels were thus reduced to maintain previous levels.

Receivables

Receivables (Rs. Crore)


Sundry Debtors 79.64 127.2 138.41 101.7 121.62

%YoY N/A 59.72% 8.81% -26.52% 19.59%

Debtors Turnover Ratio 13.61 12.14 12.75 15.92 12.11

Average Debt Collection Period

26.81 30.06 28.63 22.92 30.13

The Debtors turnover ratio has been constant over the period of time in the range of 12-15

The Average Debt collection period is around 30 days over the period of time i.e. company usually gives a credit period of 30 days to its customers

The Company's revenue is seasonal to a certain extent as tourists are part of its major customers. The company had achieved very good debtor collection period of 22 days as per financial data but actually due to the closure of Taj Hotel in Mumbai, the sales had gone down significantly and they were able to collect from its previous debtors

The Company has reopened its Taj Mumbai hotel on 15-Aug-2010 and it tends that sales will improve with it


Payables

Payables (Rs. Crore)


Creditors and acceptances 131.96 189.24 148.58 177.78 245.3

Payables turnover 8.22 8.16 11.88 9.11 6.01

Average payment period 44.42 44.72 30.73 40.07 60.77

The credit period enjoyed by the company is quite high in FY10. It has almost doubled from that of the FY08. It stands higher than the collection period, which reduces the working capital cycle and provides working capital financing.

Overall Look at Working Capital

Liquidity Ratios


Current Ratio 2.47 1.50 1.89 2.48 1.75

Quick Ratio 2.41 1.46 1.83 2.43 1.73


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Fixed DepositsLoan AdvancesCash and Bank BalancesSundry DebtorsInventories


Total Current Assets CompositionThe current ratio has come down from 2.48 in FY09 to 1.75. This is due to the various provisions it received in the restoration of its Taj hotel in Mumbai. The quick ratio has followed the same pattern as that of current ratio over the period of time.

Working Capital FundingThe company has enough cash & bank balances to fund the working capital. The company had issued Commercial papers of Rs. 50 Cr in FY 08 to upgrade its hotels at various locations. It was repaid in 1 year.

Investment of Short Term SurplusesThe Company has invested in Banks in form of Call and short term Deposits after the global recession in 2008. It used to invest in its subsidiary companies or Mutual funds earlier.

Dividend Policy

FY06 FY07 FY08 FY09 FY10PAT 183.78 322.39 377.46 234.03 153.10Dividend 77.95 96.46 114.54 86.81 72.35Market Price (Closing: BSE)

107.37 125.02 109.95 68.80 97.70

Face Value 10.00 1.00 1.00 1.00 1.00No of Shares 58404859 586630920 654330117 713564442 723472787Earnings Per Share 31.47 5.35 6.26 3.28 2.12DDT 10.93 16.40 19.47 14.75 11.11Dividend Rate % 130.00 160.00 190.00 120.00 100.00Dividend per Share 1.30 1.60 1.90 1.20 1.00Dividend Pay-Out Ratio 42.41 29.92 30.34 37.09 47.26Yield 1.21 1.28 1.73 1.74 1.02

As we can see from the data above, IHCL Profit after Tax has been increasing until the end of year 2007-08. Profit after Tax dipped for year 2009 and this could be accounted because of the Mumbai Terror Attack which had an impact on both the expenditure and revenues for IHCL. The aftermath of the terror attack in Mumbai on November 26, 2008 saw a challenging and difficult 2009-10 for the tourism and hospitality industry. The Tourism industry also bore the brunt of the global economic crisis resulting in depressed occupancies, Room rates and therefore turnover and profitability. Due to global slowdown, terrorist activities, H1N1 pandemic, travel advisories, etc., the foreign tourist arrivals in India during 2009 fell by 3.3%. There is trend


between the dividend paid and PAT. As the company makes profit, it rewards it shareholders by giving higher dividend. The dividend payout ratio hovers around 30-47%. The Company is in a growth face and most of the retained earnings are re-invested.

For year 2010, the Company incurred Rs. 276.75 Crores towards capital expenditure. Major expenditure was incurred on the Company’s projects at Falaknuma Palace Hyderabad, Dwarka New Delhi, Yeshwantpur Bangalore and the restoration of Taj Mahal Palace and Tower, Mumbai. The growth rate in earnings in 2009 vis-à-vis 2008 was 8.3The board recommended a dividend of 100% or Re. 1/- per Ordinary.

For year 2009, Profit before Tax at Rs. 362.30 crores was lower than the previous year by 38 %. Profit after Tax at Rs. 234.03 crores was also lower by 38 % over the previous year. The boards recommended a dividend of 120% or Re. 1.20/- per Ordinary Share.

For 2008, PAT at Rs. 377.46 crores increased by 17% over the previous year. During the year under review, all outstanding FCCBs have been converted by the Company. During the year, your Company raised an aggregate of Rs. 1447 crores through a simultaneous but unlinked Rights Issue of Equity Shares in the ratio of 1:5 at a price of Rs. 70/- per Equity Share raising Rs. 844 crores and 6% Non Convertible Debentures (NCDs) with Detachable Warrants in the ratio of 1:10 of the face value of Rs. 100/- each raising Rs. 603 crores. Each Detachable Warrant can be converted into 1 Equity Share at a price of Rs. 150/- in September 2009. Consequently, there are no outstanding FCCBs. The Directors declared an interim dividend of 190% (Rs.1.90/- per Ordinary Share), involving an outflow of Rs. 134.01 crores including dividend tax. The interim dividend was paid in April, 2008. No further dividend was proposed to be paid for the year end.

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FY06 FY07 FY08 FY09 FY100.000.200.400.600.801.001.201.401.601.802.00

Yield


Overall Impact

The hotel industry is one sector which is yet to come out of woods of recession. The industry was struck hard by financial crisis & terrorist attacks in Mumbai. . The travel & tourism growth in 2009 slowed down to just 1%. The global economic downturn impacted the Indian tourism and hospitality industry which saw a decline in the foreign tourist arrivals to India from 5.13 million in FY09 to 5.5 million in FY10, thereby resulting in a increase of 7% YoY. Also, the cut in corporate travel, both domestic and international travel resulted in drop in the occupancy rates. The companies were then forced to reduce the room rates to lure the foreign tourists. Analysts suggest that the condition may improve only when peak season starts from November 09. IHCL, the India’s largest hotel chain, profits declined substantially by 73%. The company attributed overall economic slowdown as the main cause for a drop in hotel occupancies & ARR (Average Room Rates).

Rs in CroresFY 2010

Net Profit Total Assets Net Sales Investments ROI ROAIndian Hotels 153.10 5343.87 1473.29 2445.63 6.26 2.86 Mahindra Holiday

117.84 1254.35 468.75 227.16 51.88 9.39

EIH 57.23 2676.63 774.13 378.24 15.13 2.14 Hotel Leela 41.02 4932.80 430.12 46.19 88.81 0.83 Taj GVK Hotels 36.27 418.00 228.25 0.00 0.00 8.68 Asian Hotels 26.88 321.05 144.96 26.51 101.40 8.37 Mac Charles 25.25 199.34 43.53 90.88 27.78 12.67 Oriental Hotels 23.15 467.21 192.77 122.52 18.89 4.95 Country Club 17.96 872.64 212.44 226.96 7.91 2.06 Asian Hotel 14.28 747.08 144.96 587.32 2.43 1.91

The sector began the year FY10 on a weak note. There was a fall in foreign tourist in the first half of the year as a result of the economic slowdown. However, towards the second half of the year the demand picked up. Moreover, in spite of the economic slowdown, demand from domestic travelers continued to be strong. Rising tourist inflow and higher occupancy kept the hotel companies afloat after the slowdown. The foreign tourist arrivals were higher by 11.5% YoY in FY10 after a fall of 6% in FY09. Existing hotel companies, new foreign players and real estate players continued with their expansion plans. There are several constraints for the industry to grow, prospects are looking good and the potential of hotel industry is great.


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Financial Management Practices Of Indian Hotels Co Ltd