The Indian Hotels Company (INDHOTEL) Q4 97/98 earnings summary

Executive summary

• FY1997-98 revenue rose 2% to Rs. 623.91 crore, while profit after tax fell ~6% to Rs. 137.96 crore amid a weaker hospitality market and higher operating costs.

• Hotel operations recovered in H2 after cost-control measures; international hotels remained unprofitable, prompting plans to sell the New York and Chicago properties.

Financial highlights

• Total income was Rs. 623.91 crore versus Rs. 613.33 crore; hotel rooms, restaurants, banquets and services contributed Rs. 595.11 crore versus Rs. 576.82 crore.

• Profit before tax was Rs. 163.96 crore versus Rs. 180.48 crore; profit after tax was Rs. 137.96 crore versus Rs. 146.88 crore.

• Operating and general expenses rose to Rs. 403.78 crore from Rs. 363.40 crore; depreciation increased to Rs. 32.42 crore from Rs. 27.18 crore, while interest fell to Rs. 25.19 crore from Rs. 45.55 crore.

• The Board recommended an unchanged 85% dividend, or Rs. 8.50 per ordinary share; proposed distribution Rs. 38.35 crore, plus Rs. 3.83 crore dividend tax.

• Prior-year miscellaneous income included a one-time Rs. 17.17 crore exchange gain; current-year loss on exchange was Rs. 2.01 crore.

Outlook and guidance

• New hotel projects were progressing in Hyderabad, Jodhpur, Chennai, Goa and Bharatpur; technology investment, especially front-office and reservation systems, was planned.

• Sale of the New York and Chicago hotels was progressing on schedule, with completion expected during FY1998-99; London’s St. James Court position remained under review.

• The Sahar-area Mumbai hotel project was to proceed on land already acquired; options for Wellington Mews were under review, while the Bandra-Kurla hotel-convention project was dropped in its current configuration.

• Overseas expansion remained a strategic aim, with a focus on viable, high-quality properties; Sri Lankan operations were under review for improvement.