The Indian Hotels Company (INDHOTEL) Q4 01/02 earnings summary

Executive summary

• FY02 revenue fell 16% to Rs.601.88 crore; PAT declined to Rs.80.70 crore from Rs.116.79 crore, amid a steep post-September 11 travel downturn.

• A Rs.88.99 crore gain from the air-catering business sale supported PBT of Rs.98.14 crore; the consolidated group reported revenue of Rs.826.97 crore and PBT of Rs.30.99 crore.

• Strategy centers on Taj brand investment, asset-light expansion, cost efficiency, and a recovery in domestic and international travel during FY03, subject to geopolitical risks.

Financial highlights

• Standalone total income was Rs.601.88 crore vs Rs.716.34 crore; excluding air-catering revenue in the comparative period, the decline was 9%.

• PBT was Rs.98.14 crore vs Rs.137.29 crore and PAT was Rs.80.70 crore vs Rs.116.79 crore; reported PBT includes the Rs.88.99 crore sale gain and Rs.18.59 crore exceptional items.

• Gross operating profit was Rs.122.88 crore, down 43% YoY; on a common basis excluding air catering for H2, GOP declined 32%.

• Room income fell 17% YoY, while F&B income rose 14%; overall expenditure declined 4.24%, supported by purchasing, waste-control and overhead savings.

Outlook and guidance

• FY03 performance was expected to improve as global economies recover, domestic business and tourist inflows strengthen, and budget measures support tourism and hotel demand.

• Management expected a return to more normal trading in H2 FY03, barring major events; subdued business trends continued amid India-Pakistan border tensions.

• Growth plans prioritize asset-light acquisitions and investments meeting return and EVA criteria; formal EVA use in financial reviews was planned from FY03.