MIRA
INFORM REPORT
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Report Date : |
23.10.2008 |
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, |
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Country : |
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Financials (as on) : |
31.03.2008 |
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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 65261400 |
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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 records. 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 : |
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Corporate Office : |
Hotel Oberoi Towers, Nariman Point, Mumbai – 400021, Maharashtra,
India |
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Tel. No. : |
91-22-2029527 / 841 |
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Fax No. : |
91-22-2041517 |
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 31.03.2008
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Names of Shareholders |
No. of Shares
(In Million) |
Percentage of
Holding |
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Promoter Holding |
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Promoters |
182.10 |
46.34 |
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Indian Promoters |
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Non-Promoter
Holding |
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Institutional Investors |
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Mutual Funds |
8.27 |
2.10 |
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Banks, Financial Institutions, Insurance Companies (Central/State
Govt. Institutions/ Non-Government Institutions)5.48 |
52.25 |
13.29 |
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FIIs |
13.90 |
3.54 |
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Others |
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Private Corporate Bodies |
79.98 |
20.35 |
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Indian Public |
55.06 |
14.02 |
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NRIs/OCBs |
0.89 |
0.23 |
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Other than above |
0.50 |
0.13 |
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Total |
392.95 |
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 : |
Ř
United Bank of India Ř
The Hongkong and Shanghai Banking
Corporation Limited Ř
State Bank of India Ř
Housing Development Finance Corporation Limited Ř
Axis Bank Limited Ř
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 : |
Ř
Indus Hotels Corporation Limited Ř
Mercury Car Rentals Limited Ř
EIH Associated Hotels Limited Ř
Nandi Hills Hotels and Resorts Limited Ř
Balamurie Island Resort Private Limited Ř
Oberoi Hotels Private Limited Ř
Oberoi Properties Private Limited Ř
Oberoi Holdings Private Limited Ř
Oberoi Investments Private Limited Ř
Oberoi Buildings and Investments Private Limited Ř
Oberoi Plaza Private Limited Ř
Bombay Plaza Private Limited Ř
Oberoi Leasing & Finance Company Private
Limited Ř
Aravali Polymers Private Limited Ř
CCA Leisure Services Private Limited |
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Subsidiaries : |
Ř
Mercury Travels Limited Ř
Mashobra Resort Limited Ř
Rajgarh Palace Hotel and Resorts Limited Ř
Oberoi Kerala Hotels and Resorts Limited Ř
Mumtaz Hotels Limited Ř
EIH International Limited |
CAPITAL STRUCTURE
AS ON 31.03.2008
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
1500000000 |
Equity Share |
Rs.2/-
Each |
Rs.3000.000
Millions |
(2007 - 1500000000)
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
392953972 |
Equity Shares |
Rs.2/-
Each |
Rs. 785.907
millions |
(2007 - 392953972)
NOTES:
Out of the above
the following were allotted :
(a) as fully paid
up shares -
(i) 3,219,125
(2007 - 3,219,125) of Rs. 2 each in 1965-66 as fully paid up pursuant to a contract
without payments being received in cash.
(ii) 181,720 (2007
-181,720) of Rs. 2 each in 1968-69 in terms of the Order of the Calcutta High
Court dated 9th September, 1968
under the Scheme
of Compromise/Arrangement without payments being received in cash.
(b) as fully paid
up Bonus Shares –
(i) 6,688,725
(2007 - 6,688,725) of Rs. 2 each in 1979-80 by capitalisation of General
Reserve.
(ii) 24,765,655
(2007 - 24,765,655) of Rs. 2 each in 1984-85 by capitalisation of General
Reserve.
(iii) 23,603,520 (2007
- 23,603,520) of Rs. 2 each in 1992-93 by capitalisation of Share Premium
Account.
(iv) 87,321,495
(2007 - 87,321,495) of Rs. 2 each in 1996-97 by capitalisation of Share Premium
Account.
(v) 130,984,657 (2007 -130,984,657) of Rs. 2 each in 2006-07 by
capitalisation of Share Premium Account.
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
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SOURCES OF FUNDS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
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SHAREHOLDERS FUNDS |
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1] Share Capital |
785.910 |
785.900 |
523.900 |
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2] Share Application Money |
0.000 |
0.000 |
0.000 |
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3] Reserves & Surplus |
12266.370 |
10955.700 |
9928.700 |
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4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
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NETWORTH |
13052.280 |
11741.600 |
10452.600 |
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LOAN FUNDS |
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1] Secured Loans |
8008.710 |
6938.200 |
6113.900 |
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2] Unsecured Loans |
120.000 |
978.100 |
978.800 |
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TOTAL BORROWING |
8128.710 |
7916.300 |
7092.700 |
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DEFERRED TAX LIABILITIES |
1116.660 |
0.000 |
0.000 |
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TOTAL |
22297.650 |
19657.900 |
17545.300 |
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APPLICATION OF FUNDS |
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FIXED ASSETS [Net Block] |
13362.420 |
11285.300 |
11247.700 |
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Capital work-in-progress |
4251.620 |
3758.300 |
2404.500 |
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INVESTMENT |
3588.060 |
4118.100 |
3043.700 |
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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 |
332.570
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303.400
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433.000
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Sundry Debtors |
1143.690
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1012.700
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854.500
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Cash & Bank Balances |
264.240
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505.700
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663.800
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Other Current Assets |
3.640
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0.000
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0.000
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Loans & Advances |
2177.650
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4202.400
|
2833.900
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Total
Current Assets |
3921.790
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6024.200
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4785.200
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Less : CURRENT
LIABILITIES & PROVISIONS |
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Current Liabilities |
1906.720
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2720.400
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2629.100
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Provisions |
936.770
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2893.100
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1456.200
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Total
Current Liabilities |
2843.490
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5613.500
|
4085.300
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Net Current Assets |
1078.300
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410.700
|
699.900
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MISCELLANEOUS EXPENSES |
17.250 |
85.500 |
149.500 |
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TOTAL |
22297.650 |
19657.900 |
17545.300 |
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PROFIT & LOSS
ACCOUNT
|
PARTICULARS |
31.03.2008 |
31.03.2007 |
31.03.2006 |
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Guest Accommodation, Restaurants, Bars & Banquets, Etc. |
10798.730 |
9389.700 |
7563.900 |
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Other Income |
712.440 |
1034.600 |
1514.600 |
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Total Income |
11511.170 |
10424.300 |
9078.500 |
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Profit/(Loss) Before Tax |
3498.440 |
2960.600 |
2605.500 |
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Provision for Taxation |
1326.190 |
956.100 |
717.400 |
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Profit/(Loss) After Tax |
2172.250 |
2004.500 |
1888.100 |
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Earnings in Foreign Currency : |
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On Sales (as per return submitted to DGFT) |
5917.520 |
5194.240 |
NA |
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Consultation Fees |
49.930 |
51.580 |
NA |
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Others |
5.760 |
12.740 |
NA |
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Total Earnings |
5973.210 |
5258.560 |
NA |
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Imports : |
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Provisions, Wines and Smokes |
78.540 |
105.370 |
NA |
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Stores & Spares |
37.470 |
43.20 |
NA |
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Capital Goods |
1654.020 |
779.340 |
NA |
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Total Imports |
1770.03 |
927.91 |
NA |
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Expenditures : |
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Consumption Of
Provisions, Stores, Wines & Smokes |
914.880 |
802.200 |
673.100 |
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Power & Fuel |
0.000 |
532.900 |
555.400 |
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Employees'
Remuneration & Welfare Expenses |
2328.050 |
1788.200 |
1512.200 |
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General Expenses |
0.000 |
2467.000 |
2008.400 |
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Miscellaneous
Expenses |
68.250 |
465.700 |
447.500 |
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Interest And
Finance Charges |
749.530 |
980.800 |
867.600 |
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Depreciation |
453.310 |
426.900 |
408.800 |
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Other
Expenditure |
3498.710 |
0.000 |
0.000 |
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Total Expenditure |
8012.730 |
7463.700 |
6473.000 |
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QUARTERLY RESULTS
|
PARTICULARS |
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|
30.06.2008 |
|
Type |
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1st
Quarter |
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Sales
Turnover |
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|
2362.500 |
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Other
Income |
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|
195.300 |
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Total
Income |
|
|
2557.800 |
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Total
Expenditure |
|
|
165.330 |
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Operating
Profit |
|
|
904.500 |
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Interest |
|
|
180.400 |
|
Gross
Profit |
|
|
724.100 |
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Depreciation |
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|
133.800 |
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Tax |
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|
210.200 |
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Reported
PAT |
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|
380.100 |
KEY
RATIO
|
Year |
31.03.2008 |
31.03.2007 |
31.03.2006 |
|
Debt-Equity Ratio |
0.80 |
0.87 |
1.04 |
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Long Term Debt-Equity Ratio |
0.71 |
0.78 |
0.97 |
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Current Ratio |
0.84 |
0.96 |
1.01 |
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TURNOVER RATIOS |
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Fixed Assets |
0.79 |
0.76 |
0.62 |
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Inventory |
33.96 |
25.50 |
18.79 |
|
Debtors |
10.02 |
10.06 |
10.15 |
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Interest Cover Ratio |
5.66 |
3.56 |
2.88 |
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Operating Profit Margin (%) |
43.50 |
41.73 |
38.49 |
|
Profit Before Interest And Tax Margin (%) |
39.30 |
37.19 |
33.08 |
|
Cash Profit Margin (%) |
24.31 |
22.74 |
21.47 |
|
Adjusted Net Profit Margin (%) |
20.12 |
18.19 |
16.07 |
|
Return On Capital Employed (%) |
23.66 |
21.79 |
16.98 |
|
Return On Net Worth (%) |
21.79 |
19.78 |
16.60 |
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.
DIRECTOR
REPORT
The Board presents the Fifty-eighth Annual Report together with the Audited
Statement of Accounts and the Auditor's Report in respect of the year ended
31st March, 2008.
The financial highlights are set out below:
(Rupees in Millions)
|
|
2007-2008 |
|
Total Revenue |
11511.17 |
|
Earnings before Interest,
Depreciation,Taxes, Amortisations, Exceptional and Extraordinary
Items (EBIDTA) |
4803.56 |
|
Interest and
Finance Charges |
749.53 |
|
Depreciation |
453.31 |
|
Exceptional
Income /(Expenditure) |
(34.03) |
|
Other
Amortisations |
68.25 |
|
Profit before
tax |
3498.44 |
|
Current tax |
1214.83 |
|
Deferred tax |
75.23 |
|
Fringe Benefit
tax |
36.13 |
|
Profit after tax |
2172.25 |
|
Extraordinary
Income (net of tax) |
NIL |
|
Dividend |
707.32 |
|
Dividend tax |
120.21 |
|
Transfer to
General Reserve |
750.00 |
|
Balance carried over |
2494.02 |
The process of amalgamation of the Company's wholly owned subsidiary,
Rajgarh Palace Hotel and Resorts Limited, was completed during the Financial Year.
The amalgamation was effective 1st April, 2005. The Financial Statements of
Rajgarh Palace Hotel and Resorts Limited have been incorporated in the
Accounts.
In accordance with the provisions of Section 217 (2AA) of the Companies Act,
1956 ('the Act') and, based upon representations from the Management, the Board
states that:
a) In preparing the Annual Accounts, applicable Accounting Standards have been
followed and there are no material departures.
b) The Directors have selected such accounting policies, applied them
consistently and made judgments and estimates that are reasonable and prudent
to give a true and fair view of the state of affairs of the Company as at the
end of the Financial Year and of the Profit of the Company for that period.
c) The Directors have taken proper and sufficient care, to the best of their
knowledge and ability, for the maintenance of adequate accounting records in
accordance with the provisions of the Act and for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities.
d) The Directors have prepared the Annual Accounts of the Company on a 'going
concern' basis.
In accordance with the Listing Agreement with the Stock Exchanges the following
are attached:
1. Consolidated Financial Statements prepared as per the Companies (Accounting
Standards) Rules, 2006 along with the Auditor's Report. The financial results
of Mashobra Resort Limited have been consolidated based on unaudited Annual
Financial Statements.
2. The Report on Corporate Governance in accordance with Clause 49 of the
Listing Agreement along with the Auditor's Certificate.
The Board recommends a Dividend of Rs. 1.80 (90%) per Equity Share in respect
of the Financial Year. The Dividend, if approved at the forthcoming Annual
General Meeting, will be paid to those Shareholders whose names appear in the
Register of Members of the Company on close of business on 28th July, 2008. As
per the provisions of the Income Tax Act, 1961, the tax on Dividend will be
borne by the Company.
Energy conservation measures taken during the Financial Year include
installation of high efficiency enthalpy wheels, chillers, pumps and drives,
high performance glass for fenestration, modernisation of elevators, solar
water heating systems, energy efficient lighting and lighting control gear.
Improvements in thermal insulation and metering have also been carried out.
Energy conservation measures begun in the above areas will be continued during
the current Financial Year.
The Company also has plans to install energy efficient transformers, energy
savers for lighting circuits and installation of more efficient Sewage
Treatment Plants. The above steps are expected to be further supplemented by
measures identified through energy audits that are being carried out in the
Company.
During the Financial Year, the Foreign Exchange earnings of the Company
amounted to Rs. 5,973.21 million as against Rs. 5,258.56 million in the
previous year. The expenditure in Foreign Exchange during the Financial Year
was Rs. 2,338.51 million as against Rs. 1,488.11 million in the previous
year.
Mr. Christopher Reeves, a Director of the Company, passed away on 20th
November, 2007. The Board wishes to place on record its appreciation and
gratitude for Mr. Reeves's invaluable contribution during his association as a
Director of the Company.
Mr. L. Ganesh was inducted as a Director in the casual vacancy of Mr. Reeves
effective 30th January, 2008. Mr. Reeves would have retired by rotation at the
forthcoming Annual General Meeting. Accordingly, Mr. Ganesh will retire by
rotation at this Annual General Meeting. He is eligible for re-appointment. The
required Notice under Section 257 of the Act, together with the requisite deposit,
has been received from a Shareholder proposing Mr. Ganesh as a Director of the
Company.
Mr. Rajan Raheja
is due to retire by rotation at the forthcoming Annual General Meeting and is
eligible for re-appointment.
MANAGEMENT DISCUSSION AND ANALYSIS
Industry Structure
and Developments
The Travel and
Tourism Industry in India has shown strong growth in 2007.
According to the
United Nations World Tourism Organisation ('UNWTO'), visitor arrivals grew by
approximately 13%. This compares favourably with a global growth rate of about
6%.
The 2008 Travel
and Tourism Economic Research Report on India published by the World Travel and
Tourism Council has forecast that travel and tourism in India will grow by 7.1%
in 2008. The contribution of the Travel and Tourism Industry to India's GDP in
2008 will be 2.3%. It is expected that by the end of 2008, the industry will
account for 3% of the total employment in the country. Hospitality, thus, could
overtake Information Technology as an employer.
One of the pre-requisites
of a world class destination is credible infrastructure. Direct international
connectivity, modern airports, world class hotels and a well established road
network are crucial components that will position India as an important
destination for the international traveller. Considerable progress has been
made over the past few years in this direction.
The new airports
in Hyderabad and Bangalore have started operations.
Rebuilding of New
Delhi and Mumbai airports are in progress.
There has been
some progress in building a quality road network but integration of
infrastructure must gain further momentum. As an example, road linkages between
airports and the cities require attention.
Traffic
bottlenecks are a disincentive for visitors. Numerous destinations in India
suffer from inadequate supply of water and a shortage of power.
The Government has
been assertive in addressing these shortfalls. A recent report in 'The
Economist' on 'Travel and Tourism' suggests that the Government plans to spend
more than Rs. 20 trillion (about US $ 500 billion) on infrastructure by
2012.
The Union Cabinet
recently cleared a greenfield airport policy to permit airports, airstrips and
helipads for private use. This will encourage private facilities as major
airports are congested.
The continued
interest of several international hotel brands in establishing their network
across the country is a good sign. International competition will compel Indian
hotel groups to further enhance their product offerings and service levels.
Availability of
quality manpower remains a challenge for the industry. The Company is conscious
of this and is taking. appropriate steps to mitigate this challenge.
Segment wise
Performance
The Company
continues to be largely engaged in hospitality and related services.
The segment wise
results and capital employed are given on page 91 of this Annual Report.
Outlook
World economic growth is expected to slow during the current year. The recent turbulence
in financial markets triggered by the sub-prime mortgage crisis in the United
States of America continues to impact the world economy. Despite this, emerging
economies like India and China are still expected to show growth. However,
rising food prices and the unprecedented increases in the price of crude oil
are major concerns. These will result in further inflationary pressures on the
Indian economy. The increase in the price of crude oil is likely to impact
travel. The challenges are considerable in managing costs and retaining market
share. The Company recognises these challenges and has initiated steps to
reduce waste, increase productivity and create a sustainable marketing
strategy.
Internal Control
Systems and Risk Management
An internal audit
team, headed by the Executive Vice President, Internal Audit, carries out
audits of the Company and its operating units. The Audit Committee closely
monitors this process. Audit findings are reviewed by the Audit Committee. The
response of the Management on 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 operations.
Risk Management is an integral part of the business process. With the help of
experts, the Company has mapped the risks in the business process and
enterprise levels and evolved a risk management framework. Measures to mitigate
risks are identified and are subject to review by the Board from time to
time.
Financial and
Operating Performance
The Company's
Total Revenue during the Financial Year increased from Rs.9,951.96 million to
Rs. 11,511.17 million. This represents an increase of approximately 16%.
The Earnings
before Interest, Depreciation, Taxation and other Amortisations (EBIDTA)
increased from Rs. 3,963.00 million to Rs. 4,803.56 million, which is an
increase of over 21%.
The Profit before
Tax and Exceptional Items at Rs. 3,532.47 million shows an increase of nearly
42% as compared to the previous year.
The Profit after
Tax increased from Rs.1,575.46 million (without considering Extraordinary
Income of Rs. 428.06 million) to Rs. 2,172.25 million. This represents an
increase of 38%.
The average room
rates, and the Revenue Per Available Room ('REVPAR') have continued to
grow.
Business consolidation and expansion
The strategic
alliance with Hilton International Company for marketing and co-branding of the
Trident hotels in India ceased from close of business on 31st March, 2008.
Therefore, all Trident Hilton hotels have been re-branded 'Trident' hotels
effective 1st April, 2008. The Company's hotel, Hilton Towers, Mumbai, is now
Trident, Nariman Point, Mumbai. The new Trident brand identity has been
assiduously created out of a comprehensive initiative involving extensive
research with Trident hotel guests, international and Indian travellers, the
travel trade and employees.
Construction of
the 440 key Trident, Bandra Kurla, Mumbai, is nearing completion. The hotel is
expected to open in the third quarter of the current Financial Year.
Progress of The
Oberoi luxury hotel at Gurgaon, National Capital Region, is on schedule. This
hotel will open in 2009. The Company will manage the hotel.
A 320 key Trident
hotel at the new Bangalore International Airport, a joint venture project, is
under construction. The Company will manage the hotel when it opens in
2010.
A 225 key The
Oberoi luxury hotel is being constructed at Cyber City, Hyderabad. This is in
addition to a 290 key Trident hotel also under construction. Both the hotels
are under a joint Venture. The Company will manage the hotels.
Management Contracts have been signed during the Financial Year 2007-08,
through a foreign subsidiary, for two The Oberoi luxury hotels in Abu Dhabi and
one The Oberoi luxury hotel in Oman. Construction of the hotels has
begun.
The Company continues to constantly upgrade and provide better facilities at
its hotels.
A new heated
swimming pool has been opened at The Oberoi, New Delhi. A new cafe will be
opened at The Oberoi, New Delhi, in 2008.
Four floors of the
Trident, Nariman Point, Mumbai, were renovated last year. Four additional
floors are currently under renovation.
The Company's new
Flight Kitchens at Kolkata and Mauritius are under construction and will be
operational in 2009.
Management Contracts have been signed for setting up and operating Flight
Kitchens at Cochin and Calicut Airports. The Flight Kitchens will be
operational in 2009.
Awards Mr. P.R.S. Oberoi, Chairman, was conferred the Padma
Vibhushan, the country's second highest civilian honour. He was also presented
the Lifetime Achievement Award at CNBC TV18 India Business Leader Awards,
2007.
Oberoi Hotels & Resorts was rated the best chain (outside the United
States) by the readers of Conde Nast Traveler magazine, Business Travel Awards,
2007. Oberoi Hotels & Resorts was also rated the leading luxury hotel brand
in Asia in a travel agents' poll at the World Travel Awards, 2007.
Trident Hotels was rated the best first class hotel brand in India at the
Galileo-Express Travel World Awards, 2007.
Some other major recognitions received by Oberoi Hotels & Resorts during
the Financial Year have been:
|
Hotels |
Award |
Awarded by |
|
The Oberoi Rajvilas, Jaipur |
Rated amongst the top 15 hotels in the world (Ranked llth) Rated amongst the top 10 hotels in the world for service (Ranked 8th) Rated amongst the best hotels in the world for design |
Travel + Leisure, World's Best Awards, Readers' Survey 2007 Travel + Leisure, World's Best Service Awards, Readers' Survey 2007 Conde Nast Traveler, USA, Gold List 2008 |
|
The Oberoi Amarvilas, Agra |
Rated the best Five Star Deluxe hotel in India Rated amongst the top 10 hotels in the world (Ranked 6th) Rated amongst the best hotels in the world |
Government of India National Awards 2006-2007 Conde Nast Traveler^ US A, Readers' Choice Awards 2007 Conde Nast Traveler, USA, Gold List 2008 |
|
The Oberoi Vanyavilas, Ranthambhore |
Rated the best resort in India Rated amongst the best hotels in the world for service Rated amongst the best hotels in the world for activities |
Conde Nast Traveler, USA, Readers' Choice Awards 2007 Conde Nast Traveler, USA, Gold List 2008 Conde Nast Traveler, USA, Gold List 2008 |
|
Wildflower Hall, Shimla in the Himalayas |
Rated the best spa resort in India Rated amongst the 5 leading hotels for location in Asia (Ranked 2nd) |
World Travel Awards 2007 Conde Nast Traveler, USA, Gold List 2007 |
|
The Oberoi, Sahl Hasheesh, Egypt |
Rated the leading all suite hotel in the world |
World Travel Awards 2007 |
|
The Oberoi, Mauritius |
Rated the leading hotel in the Indian Ocean Rated amongst the best hotels and resorts in the world |
World Travel Awards 2007 Forbes Traveler 400, The World's Best Hotels & Resorts 2007 |
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 :
Ř
New Broadway Cleaners
Ř
Akash Cleaners
Ř
Obeetee Private Limited
Ř
Parag Copigraph Private Limited
Ř
Bindal Paper Mart
Ř
Radhakrishna Food Land Limited
Ř
Aap Ki Pasand
Ř
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.
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.49.29 |
|
UK Pound |
1 |
Rs.80.40 |
|
Euro |
1 |
Rs.63.35 |
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 |
|