The Indian Hotels Company (INDHOTEL) Q4 98/99 earnings summary

Executive summary

• FY98/99 revenue was Rs. 623.34 crore, broadly level with Rs. 623.91 crore; profit after tax fell to Rs. 119.14 crore from Rs. 137.96 crore, including Rs. 10 crore of additional tax for prior years.

• Despite a soft hospitality market, air catering improved significantly in turnover and profitability; Business and Leisure Hotels also increased income and profit.

• Operations were regrouped into five strategic business units from 1 September 1998, with efficiency, productivity, service standards and cost reduction identified as priorities.

Financial highlights

• Total income Rs. 623.34 crore vs Rs. 623.91 crore; profit before tax Rs. 154.14 crore vs Rs. 163.96 crore.

• Profit after tax was Rs. 129.14 crore before Rs. 10 crore additional prior-year tax provision; reported PAT was Rs. 119.14 crore vs Rs. 137.96 crore.

• Food and beverage sales were Rs. 238.59 crore vs Rs. 224.39 crore; total income from rooms, restaurants, banquets and other services was Rs. 589.30 crore vs Rs. 595.65 crore.

• Operating and general expenses rose to Rs. 413.70 crore from Rs. 403.78 crore; depreciation was Rs. 33.84 crore vs Rs. 32.42 crore.

• Recommended dividend was Rs. 8.50/share, or 85%, unchanged YoY; proposed payout Rs. 38.35 crore plus Rs. 4.22 crore dividend tax.

Outlook and guidance

• Management expected the new SBU structure to improve customer focus and profitability, supported by initiatives to raise efficiency and productivity and reduce costs.

• Jodhpur hotel was nearing completion and expected to open in FY99/00 Q4; Taj Exotica in Goa was scheduled to open in October 1999.

• Taj West End London refurbishment and repositioning were expected to improve operating results; new outlets, service standards and systems were planned by the final quarter of 1999.

• Y2K compliance work across more than 44 hotels, four flight kitchens and sales offices was progressing to schedule, with an October 1999 internal deadline.