MIRA
INFORM REPORT
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Report Date : |
15.05.2008 |
IDENTIFICATION
DETAILS
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Name : |
EIH LIMITED |
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Formerly Known As : |
EAST INDIA HOTELS LIMITED |
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Registered Office : |
4, Mangoe Lane, Kolkata 700
001, West Bengal |
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Country : |
India |
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Financials (as on) : |
31.03.2007 |
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Date of Incorporation : |
26.05.1949 |
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Com. Reg. No.: |
17981 |
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CIN No.: [Company
Identification No.] |
L55101WB1949PLC017981 |
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TAN No.: [Tax
Deduction & Collection Account No.] |
CALT00271F |
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PAN No.: [Permanent
Account No.] |
AAACE6898B |
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Legal Form : |
Public Limited Liability Company. The company’s shares are listed on the
Stock Exchanges. |
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Line of Business : |
The company is engaged in hotel business. |
RATING &
COMMENTS
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MIRA’s Rating : |
Aa |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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Maximum Credit Limit : |
USD 46966400 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
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Comments : |
Subject is a well
established and reputed company having excellent track. The company is
progressing well. Directors are reported as experienced and respectable businessmen.
Trade relations are reported as fair. Business is active. Payments are
usually correct and as per commitments. Fundamentals are
strong and healthy. The company can
be considered normal for business dealings at usual trade terms and conditions.
The company can be regarded as a promising business partner in a medium to long-run. |
LOCATIONS
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Registered Office / Head Office : |
4, Mangoe Lane, Kolkata 700
001, West Bengal, India |
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Tel. No.: |
91-33-2248 6751 / 55 |
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Fax No.: |
91-33-2248 6785 |
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E-Mail : |
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Website : |
DIRECTORS
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Name : |
Mr. P. R. S. Oberoi |
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Designation : |
Chairman & Chief Executive |
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Name : |
Mr. S. S. Mukherji |
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Designation : |
Vice Chairman & Managing Director |
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Name : |
Mr. Vikram Oberoi |
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Designation : |
Deputy Managing Director (Operations) |
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Name : |
Mr. Arjun Oberoi |
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Designation : |
Deputy Managing Director (Development) |
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Name : |
Mr. S. K. Dasgupta |
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Designation : |
Director |
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Name : |
Mr. Anil Nehru |
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Designation : |
Director |
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Name : |
Mr. Rajan Raheja |
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Designation : |
Director |
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Name : |
Mr. Christopher Reeves |
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Designation : |
Director |
KEY EXECUTIVES
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Name : |
Mr. G. Ganguli |
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Designation : |
Company Secretary |
SHAREHOLDING
PATTERN
As on 27.08.2007
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Names of Shareholders |
No. of Shares |
Percentage of
Holding |
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Promoter Holding |
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Promoters |
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Indian Promoters |
24260000 |
46.30 % |
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Non-Promoter
Holding |
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Institutional Investors |
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Mutual Funds |
1650000 |
3.16 % |
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Banks, Financial Institutions, Insurance Companies (Central/State
Govt. Institutions/ Non-Government Institutions)5.48 |
6820000 |
13.01 % |
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FIIs |
2870000 |
5.48 % |
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Others |
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Private Corporate Bodies |
9020000 |
17.22 % |
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Indian Public |
7590000 |
14.48 % |
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NRIs/OCBs |
100000 |
0.19 % |
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Other than above |
80000 |
0.16 % |
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Total |
52390000 |
100.00 % |
BUSINESS DETAILS
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Line of Business : |
The company is engaged in hotel business. |
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Products : |
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GENERAL
INFORMATION
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No. of Employees : |
6794 |
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Bankers : |
Ø United
Bank of India Ø The
Hongkong and Shanghai Banking Corporation Limited Ø State
Bank of India Ø Housing
Development Finance Corporation Limited Ø UTI Bank Limited Ø CITI Bank |
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Facilities : |
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Banking
Relations : |
Satisfactory |
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Auditors : |
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Name : |
Ray & Ray Chartered Accountants |
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Address : |
6, Church Lane, Kolkata 700 001, West Bengal, India |
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Associates and Joint Venture : |
Ø Indus Hotels
Corporation Limited Ø Mercury Car
Rentals Limited Ø EIH Associated
Hotels Limited Ø Nandi Hills
Hotels and Resorts Limited Ø Balamurie Island
Resort Private Limited Ø Oberoi Hotels
Private Limited Ø Oberoi
Properties Private Limited Ø Oberoi Holdings Private
Limited Ø Oberoi
Investments Private Limited Ø Oberoi Buildings
and Investments Private Limited Ø Oberoi Plaza
Private Limited Ø Bombay Plaza
Private Limited Ø Oberoi Leasing
& Finance Company Private Limited Ø Aravali Polymers
Private Limited Ø CCA Leisure Services
Private Limited |
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Subsidiaries : |
Ø Mercury Travels
Limited Ø Mashobra Resort
Limited Ø Rajgarh Palace
Hotel and Resorts Limited Ø Oberoi Kerala
Hotels and Resorts Limited Ø Mumtaz Hotels
Limited Ø EIH
International Limited |
CAPITAL STRUCTURE
Authorised Capital :
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No. of Shares |
Type |
Value |
Amount |
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100,000,000 |
Equity Shares |
Rs.
10/- each |
Rs.
1000.000 millions |
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20,000,000 |
Cumulative Redeemable
Preference Shares |
Rs.
100/- each |
Rs.
2000.000 millions |
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Total
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Rs. 3000.000 millions |
Issued, Subscribed & Paid-up Capital :
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No. of Shares |
Type |
Value |
Amount |
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78590794 |
Equity Shares |
Rs.
10/- each |
Rs.
705.907 millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
785.900 |
523.900 |
523.900 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
10955.700 |
9928.700 |
8668.200 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
11741.600 |
10452.600 |
9192.100 |
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LOAN FUNDS |
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1] Secured Loans |
6938.200 |
6113.900 |
6399.700 |
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2] Unsecured Loans |
978.100 |
978.800 |
1670.100 |
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TOTAL BORROWING |
7916.300 |
7092.700 |
8069.800 |
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DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
21.600 |
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TOTAL |
19657.900 |
17545.300 |
17283.500 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
11285.300 |
11247.700 |
11336.500 |
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Capital work-in-progress |
3758.300 |
2404.500 |
2103.400 |
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INVESTMENT |
4118.100 |
3043.700 |
3204.700 |
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DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
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CURRENT ASSETS, LOANS & ADVANCES |
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Inventories |
303.400
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433.000
|
372.300 |
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Sundry Debtors |
1012.700
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854.500
|
636.000 |
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Cash & Bank Balances |
505.700
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663.800
|
470.600 |
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Other Current Assets |
0.000
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0.000
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0.000 |
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Loans & Advances |
4202.400
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2833.900
|
2023.900 |
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Total
Current Assets |
6024.200
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4785.200
|
3502.800 |
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
2720.400
|
2629.100
|
2525.700 |
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Provisions |
2893.100
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1456.200
|
551.600 |
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Total
Current Liabilities |
5613.500
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4085.300
|
3077.300 |
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Net Current Assets |
410.700
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699.900
|
425.500 |
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MISCELLANEOUS EXPENSES |
85.500 |
149.500 |
213.400 |
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TOTAL |
19657.900 |
17545.300 |
17283.500 |
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PROFIT & LOSS
ACCOUNT
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PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
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Guest Accommodation, Restaurants, Bars & Banquets, Etc. |
9389.700 |
7563.900 |
5872.300 |
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Other Income |
1034.600 |
1514.600 |
380.200 |
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Total Income |
10424.300 |
9078.500 |
6252.500 |
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Profit/(Loss) Before Tax |
2960.600 |
2605.500 |
587.300 |
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Provision for Taxation |
956.100 |
717.400 |
256.100 |
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Profit/(Loss) After Tax |
2004.500 |
1888.100 |
331.200 |
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Expenditures : |
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Consumption Of Provisions,
Stores, Wines & Smokes |
802.200 |
673.100 |
526.900 |
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Power & Fuel |
532.900 |
555.400 |
542.700 |
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Employees'
Remuneration & Welfare Expenses |
1788.200 |
1512.200 |
1452.800 |
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General Expenses |
2467.000 |
2008.400 |
1756.300 |
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Miscellaneous
Expenses |
465.700 |
447.500 |
245.300 |
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Interest And
Finance Charges |
980.800 |
867.600 |
737.300 |
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Depreciation |
426.900 |
408.800 |
403.900 |
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Total Expenditure |
7463.700 |
6473.000 |
5665.200 |
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QUARTERLY RESULTS
|
PARTICULARS |
30.06.2007 |
30.09.2007 |
31.12.2007 |
|
Type |
1st
Quarter |
2nd
Quarter |
3rd
Quarter |
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Sales
Turnover |
2155.200 |
2158.600 |
3086.100 |
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Other
Income |
187.300 |
301.900 |
182.400 |
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Total
Income |
2342.500 |
2460.500 |
3268.500 |
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Total
Expenditure |
1503.700 |
1588.300 |
1841.600 |
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Operating
Profit |
838.800 |
872.200 |
1426.900 |
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Interest |
155.100 |
168.500 |
205.800 |
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Gross
Profit |
683.700 |
703.700 |
1221.100 |
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Depreciation |
103.500 |
108.600 |
108.000 |
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Tax |
179.000 |
167.600 |
389.100 |
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Reported
PAT |
367.000 |
427.500 |
724.000 |
KEY
RATIO
|
Year |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
0.87 |
1.04 |
1.11 |
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Long Term Debt-Equity Ratio |
0.78 |
0.97 |
1.09 |
|
Current Ratio |
0.96 |
1.01 |
1.07 |
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TURNOVER RATIOS |
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Fixed Assets |
0.76 |
0.62 |
0.49 |
|
Inventory |
25.50 |
18.79 |
17.08 |
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Debtors |
10.06 |
10.15 |
10.55 |
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Interest Cover Ratio |
3.56 |
2.88 |
1.94 |
|
Operating Profit Margin (%) |
41.73 |
38.49 |
31.22 |
|
Profit Before Interest And Tax Margin (%) |
37.19 |
33.08 |
24.34 |
|
Cash Profit Margin (%) |
22.74 |
21.47 |
13.57 |
|
Adjusted Net Profit Margin (%) |
18.19 |
16.07 |
6.69 |
|
Return On Capital Employed (%) |
21.79 |
16.98 |
9.84 |
|
Return On Net Worth (%) |
19.78 |
16.60 |
5.39 |
LOCAL AGENCY
FURTHER INFORMATION
HISTORY
EIH, formerly known as East India Hotels, was incorporated in
1949 and promoted by Oberoi and Oberoi Hotels (India). EIH is part of the
Oberoi Group which operates both, luxury hotels and medium-priced high quality
hotels. EIH has an old and well established presence in India. EIH operates
hotels under the brand name Oberoi and Trident. EIH has a substantial presence
in metropolitan centres, which are more profitable locations.
The subsidiaries of EIH are Mercury Travels Limited, EIH International Limited,
Mashobra Resort Limited, Mumtaz Hotels Limited, Rajgarh Palace Hotel and
Resorts Limited & Oberoi Kerala Hotels and Resorts Limited
The company opened the first luxury resort hotel in the Himalayas, in Shimla
April 1997 which has been well received by the guests. The company also opened
an international luxury resort, The Oberoi Lombok, located in Indonesia in
January 1997. The hotel has a unique situation on a pristine private beach on
the island of Lombok.
A 500-room `Trident Hotel' at the Bandra-Kurla complex in Mumbai was set up at
cost of Rs 4000.000 millions. Work has also commenced on the 175-room Trident
Hotel at Pune. The company will also manage the deluxe Oberoi Hotel under
construction at Chennai, which will have a capacity of 325 rooms. Yet another
hotel at Agra with a room capacity of 104 is also being set up. Land had also
been acquired in the backwaters of Kerala to set up a property jointly with the
Kerala Tourism Development Corporation. The company has launched Motor Vessel
Vrinda, a luxury Cruiser in the backwaters of Kerala on 1st November 2003. The
three new projects set up during the year are Rajvilas, a deluxe Oberoi Hotel
in Jaipur, which has been well received by international tourists, the Trident
Jaipur and the Trident Udaipur, which has helped consolidate the Group's
presence in Rajasthan.
The Oberoi, Bangalore, introduced 30 new Deluxe rooms at an investment of Rs
150.000 millions. The funding was arranged internally. The deluxe rooms
covering 400 square feet each have Burma teak flooring and modern
communications facilities like facsimile machines. Each room has a laser-disk
player with access to an in-house collection of discs.
In the first-ever investment move by India in China, the Oberoi group is
planning to set up a luxury hotel in that country. Despite the political face-off
between the two nations, negotiations are on at present with Chinese
authorities for setting up a deluxe property with around 400 rooms in Beijing.
Since virtually all land in China is owned by the government, talks are on with
a public sector company, which holds a suitable piece of land, for entering
into a joint venture with the Oberois.
The company is setting up three hotels in Morocco for a total investment of
$102 mn (Rs 4740.000 millions). The hotels are being set up in a joint venture
with a conglomerate in Morocco, ONA Group of Industries. The group currently
has 12 hotel properties overseas, spread across Australia, Indonesia,
Mauritius, Egypt, Sri Lanka and Middle-East.
During 2000-2001, the company opened two hotels in India, Amarvilas in Agra and
the Wildflower Hall, Mashobra in the Himalayas.
The company has signed a Strategic Alliance Agreement with Hilton International
to co-brand its Trident hotels in India during March 2004. The Oberoi Towers,
Mumbai has been re-branded Hilton Towers and the Trident Hotels in Jaipur,
Udaipur, Agra, Chennai, Cochin, Bhubaneswar and Gurugaon have been re-branded
Trident Hilton, with effect from 1st April 2004. Further all the 'Vilas' hotels
were re-branded as The Oberoi Rajvilas, The Oberoi Amarvilas, The Oberoi
Udaivilas etc with effect from 1st October 2003.
During 2004-05 the company has opened two new restaurants at The Oberoi, New
Delhi. They are the threesixty, an all day dining restaurant and Travertino- an
Italian fine dining restaurant. Also the company has opened a new restaurant-
'Tiffin' at The Oberoi, Mumbai and 'The Polo Club' at The Oberoi, Bangalore.
bUSINESS
The company is managed by Oberoi Group of companies.
The company has operating contracts for the following hotels
which are owned by Indus Hotels Corporation Limited (IHCL):
·
The Trident, Agra (Opened 1993)
·
The Trident, Jaipur (Opened 1997)
·
The Trident, Udaipur (Opened 1998)
·
The Trident, Cochin (Opened 1998)
Business during the year under report had been disappointing.
Several events have had an adverse effect on the travel and tourism industry.
Recession in the spring and summer of 2001 followed by terrorist attacks on the
World Trade Centre and the Pentagon on 11th September, 2001 and the
attack on the Indian Parliament in December 2001, have severely impacted travel
to India. As there has been a drop in revenue due to adverse conditions, the
company has curtailed costs, wherever possible.
The total revenue dropped by 18% and the profit before tax
was 53% lower than that of the previous year. The net profit after tax was
lower by 62% compared to last year.
During the year under report, the company redeemed the first
installment of 16% non-convertible debentures amounting to Rs. 37.473 millions
and the final installment of 15% partly convertible debentures amounting to Rs.
88.660 millions.
The investors services division of the company has received
the ISO 9002 Certificate from British Standards Institution (BSI) in
recognition of the excellent quality of services provided to the company's
investors.
During the year under report, the foreign exchange earnings
of the company were Rs. 2542.652 millions as compared to Rs. 3320.350 millions
in the previous year. The company has
been accorded the "International Star Service Export House" status by
the Director General of Foreign Trade, Ministry of Commerce and Industry,
Government of India.
The Oberoi, Chennai hotel is opening in the year 2003.
The Oberoi, Jaisalmer, Rajgarh (Madhya Pradesh), Marrakech
(Morocco) hotels are under planning.
Vanyavilas, an Oberoi Resort at Ranthambhore, opened during
the year, Udaivilas, which is also on Oberoi Resort at Udaipur opened on 15th
August, 2002. The trident Hotel located at Bandra-Kurla, Mumbai, is under
construction and progress is satisfactory.
The company is in trade terms with :
Ø New
Broadway Cleaners
Ø Akash
Cleaners
Ø Obeetee
Private Limited
Ø Parag
Copigraph Private Limited
Ø Bindal
Paper Mart
Ø Radhakrishna
Food Land Limited
Ø Aap Ki
Pasand
Ø Gorsia
Architectural Design Private Limited
The company fixed assets of important value include freehold
land, leasehold land, buildings, sanitary installation, plant & machinery,
computer, furniture & fittings, vehicles and aircraft.
Director’s Profile
The amalgamation of the wholly owned subsidiary, Rajgarh Palace Hotel and Resorts Limited, with the Company effective 1st April, 2005, has been sanctioned by the concerned High Courts. Pending receipt of the Certified Copy of the Amalgamation Order from the Madhya Pradesh High Court, no effect has been given in the Accounts to such amalgamation.
MANAGEMENT DISCUSSION AND
ANALYSIS
Industry Structure & Developments
The Travel and Tourism Industry has shown significant growth in the last few years. In the last five years the number of visitors to India has doubled. This trend is expected to continue. India has now become an important destination for business and leisure travellers.
The demand for hotel accommodation has remained buoyant. This is evident not
only in the gateway cities such as New Delhi, Mumbai, Chennai and Kolkata but
also in other destinations i.e., Bangalore, Agra, Jaipur, Udaipur, etc.
Statistics released recently by the Central Statistical Organisation indicate that the economy grew at a rate of 9.4% during the Financial Year 2006-07, the fastest in eighteen years. The growth of the sector comprising services such as trade, hotels, transport and communications is reported to be in the range of 13%. Research Reports indicate that the present growth rate of the Travel and Tourism Industry will continue over the next few years. The Travel and Tourism Industry has traditionally been a major provider of employment in the country. As the sector expands, the contribution of this Industry to employment in the country is set to increase further.
Two new private airports at Bangalore and at Hyderabad will open in the second quarter of 2008. New Delhi and Mumbai airports were privatised last year and new terminal buildings, runways, taxiways, etc. are expected to be ready by 2010. The Travel and Tourism Industry has been lobbying for new airports in all important cities. It is gratifying that the country is, at last, making some progress in this regard.
There is considerable congestion of flights at peak hours at the airports.
The air traffic control systems are outdated. Air congestion is of concern as it causes delays and also results in waste of aviation fuel and air pollution.
Other areas of infrastructure which need immediate attention are highways,
power and water.
As the country becomes an important travel destination, more hotels will be
needed. As international hospitality companies establish themselves,
competition will increase. This will be a challenge for us.
One of the biggest challenges for the Industry will be Human Resources. The
Company recognises this challenge and has already taken steps to select, train
and motivate its employees.
Segment wise Performance
The Company continues to be largely a single segment entity engaged in
hospitality and related services.
Outlook
The outlook for the current Financial Year is positive. The demand for
hotel rooms is expected to remain firm.
The increase in interest rates and the strengthening of the Rupee could affect
profitability. Despite these, the Company expects growth in revenue and
profitability.
Internal Control
Systems and Risk Management:
An internal audit team headed by the Executive Vice President, Internal Audit
carries out in depth audit of the Company's Operating Units. The Audit
Committee closely monitors this process. Audit findings are reviewed by the
Audit Committee. The response of the Management and proposed action plans to
such findings are discussed at Committee Meetings. This detailed process seeks
not only to ensure the reliability of control systems and compliance with
applicable legislation, but also covers proper utilisation of resources and
efficiency of systems.
Risk Management is an integral part of the Company's business process. With the
help of experts in this field, risks, both in the business processes and at the
enterprise level, have been carefully mapped and a risk management framework
evolved. Measures to mitigate such risks are identified and subjected to
periodic review by the Board.
Financial
and Operational Performance
Two of the Company's hotels, viz.,The Oberoi Cecil, Shimla and Trident
Hilton, Bhubaneswar were transferred to EIH Associated Hotels Limited, effective
1st April, 2006.
Despite such transfer, during the Financial Year under review:
* the Company's Total Revenue was Rs. 9967.240 millions as against Rs. 8031.950
millions in the previous year. This
represents an increase of over 24%;
* the Operating Profit at Rs. 3979.260 millions has increased by over 36% as
compared to Rs. 2923.340 millions in the previous year;
* the Profit before Tax and Extraordinary items at Rs. 2571.580 millions shows
an increase of 56% as compared to the previous year;
* the Profit after Tax without considering Extraordinary Income was Rs.
1704.630 millions as against Rs. 1079.830 millions which is an increase of
nearly 58%;
* the Profit after Tax and Extraordinary Income increased to Rs. 2004.520
millions as against Rs. 1888.050 millions in the previous year;
* occupancies, average room rates and the Revenue Per Available Room ('REVPAR')
have grown during the year. The growth in REVPAR was nearly 32%.
Business
consolidation and expansion:
Construction of the 440 key Trident Hilton located at Bandra Kurla, Mumbai is
progressing satisfactorily and the hotel is expected to open in the third
quarter of 2008.
Construction of The Oberoi luxury hotels at Gurgaon and at Manesar, both of
which are located in the National Capital Region, have commenced. These hotels
are expected to open in 2009. The Company will manage both hotels.
The Company has signed Joint Venture Agreements with regard to two hotels,
i.e., a 350 key Trident Hilton at the new Bangalore International Airport and a
250 key Trident Hilton at Cyber City, Hyderabad. A Memorandum of Understanding
for an iconic Service Apartment building in central Mumbai, which will have 90
apartments, has also been signed.
Insofar as international expansion is concerned, Management Contracts have been
signed through a foreign subsidiary Company for the following hotels:
The Oberoi, Dubai, The Oberoi, Maldives and The Oberoi, Siem Reap, Angkor Vat
(Cambodia).
Six additional luxury hotels are planned for which the Company has signed
Memoranda of Understanding. These are:
Two The Oberoi Hotels in Bhutan, two The Oberoi Hotels in Abu Dhabi, one of
which will be a luxury resort. One The Oberoi Hotel in Marrakech and one The
Oberoi Hotel in Sharm El Sheikh in Egypt.
The Company is constantly upgrading and providing better facilities at its
hotels. A new Business Centre has been commissioned at The Oberoi, New Delhi. A
new heated swimming pool is presently under construction.
Three floors of the Hilton Towers, Mumbai were renovated last year. Four
additional floors are currently under renovation.
A new Flight Kitchen has commenced operations at Chennai. The Company is
also planning new Flight Kitchens at the International Airports at Kolkata and
at Mauritius.
Awards:
Mr. P.R.S. Oberoi, Chairman, was conferred the Tata AIG Lifetime Achievement Award in 2006 at the Galileo Express Travel World Awards.
The Oberoi Group has been rated amongst the 10 leading hotel chains in the
world in Zagat Survey, World's Top Hotels, Resorts and Spas 2007-08.
Some major recognitions received by the Oberoi Hotels & Resorts during the
Financial Year have been:
Hotel Award Awarded by
The Oberoi, Ranked amongst the best Travel + Leisure, 500
New Delhi hotels in the world World's Best Hotels 2007
Rated amongst the finest Conde Nast Traveler, in Asia USA, Readers' Choice
Awards 2006
The Oberoi, Rated amongst the best Forbes Traveler 400, Mumbai hotels in the world World's Best Hotel and Resorts 2006
Ranked amongst the 20 best Conde Nast Traveler, Gold List hotels in the USA, 2006 world for location
The Oberoi Rated amongst the 10 best Travel + Leisure, Rajvilas, Jaipur hotels in the world World's Best (Ranked 6th) Awards Readers' Survey 2006
Rated amongst the best Forbes Traveler 400, hotels in the world World's Best
Hotels & Resorts 2006
Rated amongst the best Conde Nast Traveler, hotels in the world for USA, Gold
List 2007 service
Rated amongst the 10 best Travel + Leisure, hotels in the world for World's
Best Service service 2006
The Oberoi Rated amongst the best Conde Nast Traveler, Amarvilas, Agra places
to stay in the world USA, Gold
List 2007
Rated amongst the best Forbes Traveler 400, hotels in the world Best Hotels and
Resorts in the World 2006
Rated amongst the 10 best Conde Nast Traveler, hotels in Asia USA, Readers'
Choice Awards 2006
Rated the best Five Star National Tourism Award Deluxe hotel in India 2006, Ministry of Tourism, Government of
India
The Oberoi Rated amongst the 10 best Travel + Leisure, Udaivilas, Udaipur hotels in the world World's Best
Awards, Readers' Survey 2006
Rated the best hotel in the Conde Nast Traveller, world for service UK, Gold List 2006
Ranked amongst the best Conde Nast Traveler, hotels in the world for USA, Gold List 2007 service, rooms and
design
Rated amongst the 5 leading Zagat Survey, World's hotels in the world for Top
Hotels, Resorts and rooms and
facilities Spas 2007-2008
Ranked amongst the 15 top Conde Nast Traveller, spas in the world UK, Readers' Spa Awards 2006
Wildflower Hall, Rated amongst the best Forbes Traveler 400, Shimla in the hotels in the world Best Hotels and
Resorts Himalayas in the world 2006
Rated the best hotel in Conde Nast Traveler, Asia for location USA, Gold List 2007
Rated amongst the Seven Conde Nast Traveller, Natural Wonders of the world UK, 2006
India's best Spa Resort World Travel Awards 2006
The Oberoi, Indian Ocean's leading hotel World Travel Awards 2006Mauritius
Developments in Human Resources and Industrial Relations:
Industrial relations remained stable during the year. The strength of the
Company lies in its dedicated and
committed work force. The Company pays meticulous attention to its employees' development. In doing so, a
culture of personal growth and organisational excellence is inculcated in all its employees.
Manpower Status:
As on 31st March, 2007, the number of employees in the Group was 8173.
INDUSTRY
Indian Hotels Company Limited (IHCL) operating under the Taj
brand, is the largest hotel chain in the country. EIH operating under the
Oberoi brand is the second largest hotel chain followed by ITC Hotels (ITCH).
Asian Hotels (AHL), Bharat Hotels (BHL), Oriental Hotels as well as Hotel Leela
Venture (HLV) are other major hotels.
While the 5-star and 5-star deluxe and to some extent the
4-star hotels are the domain of renowned hotel companies, an unorganized market
exists for hotels operating below these ratings. Hotel companies such as EIH and
ITCH as well as international hotel chains are aggressively entering into the
mid-budget hotel segment.
Average room rate (ARR) and occupancy are the two most
critical factors that determine the profitability, since most of the marginal
revenue gets added to the bottom-line. ARR in turn depends upon location, brand
image, star rating, quality of facilities and services offered and the seasonal
factor.
Land comprises 45-50% of the total project cost and is
therefore the single largest cost item in the construction of a hotel in India.
It is estimated that the construction cost for a 300 rooms hotel in Delhi works
out to Rs20mn/room. Since fixed costs constitute 60-65% of the total operating
cost, break even levels are very high.
Demand for hotels in cities like Mumbai and Delhi are the
highest. In fact at present, out of the total of 19,000 5-star and 5-star
deluxe rooms in the country, 50% are accounted for by these two cites. These
cities along with Bangalore and Chennai serve as gateway to important tourist
destinations.
Presently, the total 5 & 4-star room capacity in the
four metro cities is close to 13,000rooms. Mumbai and Delhi account for the
bulk of the total room availability. In Mumbai room availability is expected to
increase by another 3,100 rooms in the next 2-3 years.
Chain hotels like IHCL, EIH and ITCH are better placed than
single locations hotels like BHL, AHL. Though the latter have hotels at
strategic location (Delhi) the risk associated with single location hotel is
always higher.
In the short term the outlook for the industry appears bleak
due to a significant oversupply and weak socio-economic conditions. In the
long-term the hotel industry in India has latent potential for growth. This is
because India is an ideal destination for tourists as its is the only country
with the most diverse topography. At present India attracts approximately 2.5mn
tourists every year which is just 0.4% of the world tourist arrivals. Countries
such as Thailand and Malaysia attract thrice as many tourists.
The hotel industry is at present going through one the
toughest periods. Weak economic conditions have lead to a steep decline in
foreign as well as Indian business arrivals. Tourist arrivals have also seen a marginal
decline due to devaluation of the Asian currencies, which have made these
countries cheaper than India.
Substantial additions to room supply especially in metros
like Mumbai will further put pressure on room rentals. The next 2-3 years is
not expected to provide any succor to hotel industry due to the overall
recession in India and Asia.
This has resulted in most of the five star hotels operate at
very low occupancy rates. They have been forced to offer discounts on the rack
rates. Average room rentals have therefore taken a beating. During
April-December 1998 revenue per room declined by 17.2% in Delhi, 9.7% in Mumbai
and 0.3% in Chennai.
As there was hereto not much competition, the big five hotel
majors were able to unabatedly increase their room tariffs. However, with the
major international hotel chains having evinced interest in setting up hotels,
there is bound to be a price war. India will become a normal market like the
South East Asia with demand and the quality of services offered determining the
room rentals
Another trend, which has been witnessed during the economic
slowdown, has been the increasing demand for medium budget hotels due to the
exorbitant rates charged by 5-star hotels. Quality budget hotels are expected
to be the future of India's hotel industry. Companies in future would like to
house their middle level managers in these budget hotels having reasonably good
facilities rather than the expensive 5-star deluxe hotels.
In this regard the Taj group and the Oberoi (through the
Trident brand) have made a strong foray into smaller cities having a strong
industrial base. Earnings from these hotels are likely to be more stable than
the earnings of 5-star hotels.
In the long-term the hotel industry in India has latent
potential for growth. This is because India is an ideal destination for
tourists as its is the only country with the most diverse topography. At
present India attracts approximately 2.5mn tourists every year which is just
0.4% of the world tourist arrivals. Countries such as Thailand and Malaysia,
attract thrice as many tourists.
Globally, leisure and entertainment are seen to be growing
industries. Hence stable socio-political and economic conditions coupled with
an improvement in infrastructure facilities (roads, airports etc) will
improvement the sentiments of the tourists towards India.
If the above conditions are met tourist arrivals can
increase five-fold from the present levels. In such a situation there will be a
surge in demand for rooms in gateway cities like Mumbai and Delhi as well as in
certain tourist destinations.
CMT REPORT
(Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts, India Prisons Service,
Interpol, etc.
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners,
controlling shareholders or senior officers as terrorist or terrorist
organization or whom notice had been received that all financial transactions
involving their assets have been blocked or convicted, found guilty or against
whom a judgement or order had been entered in a proceedings for violating
money-laundering, anti-corruption or bribery or international economic or
anti-terrorism sanction laws or whose assets were seized, blocked, frozen or
ordered forfeited for violation of money laundering or international
anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper
payments to government officials for engaging in prohibited transactions or
with designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No available
information exist that suggest that subject or any of its principals have been
formally charged or convicted by a competent governmental authority for any
financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
The market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE
GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on Corporate
Governance to identify management and governance. These factors often have been
predictive and in some cases have created vulnerabilities to credit
deterioration.
The Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE
RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs. 42.33 |
|
UK Pound |
1 |
Rs. 82.31 |
|
Euro |
1 |
Rs. 65.46 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
9 |
|
PAID-UP CAPITAL |
1~10 |
7 |
|
OPERATING SCALE |
1~10 |
7 |
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
9 |
|
--PROFITABILIRY |
1~10 |
6 |
|
--LIQUIDITY |
1~10 |
9 |
|
--LEVERAGE |
1~10 |
9 |
|
--RESERVES |
1~10 |
9 |
|
--CREDIT LINES |
1~10 |
9 |
|
--MARGINS |
-5~5 |
- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
YES |
|
--LISTED |
YES/NO |
YES |
|
--OTHER MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
74 |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
RATING
EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
NR |
In view of the lack of information, they have no basis upon which to
recommend credit dealings |
No Rating |
|