Indian Hotels looks to pare debt even as it expands
21 April 2015
Indian Hotels Company Ltd (IHCL), which runs the Taj Group of hotels, is in the process of restructuring its operations to rein in its high debt while continuing to expand its presence in India and abroad.
The company told media persons in Mumbai on Monday that the company has adopted a geographical approach to expand the Taj brand. It also plans to focus on joint ventures and even go for buyouts.
Managing director and chief executive Rakesh Sarna said the company was still two years away from posting a full-year net profit, as it initiates cost cutting and operational measures to boost performance.
Last month, the company started an organisation-wide restructuring to reduce its Rs4,000-crore debt.
Sarna, who was formerly Hyatt's group president of Americas, took over as IHCL's MD in August 2014, replacing Raymond Bickson who had held the position for 11 years.
''We need to improve cash flows, plug losses in our US properties, exit Belmond (formerly Orient Express Hotels) and settle pending issues like the Sea Rock property in Mumbai,'' Sarna said.
In 2013, Indian Hotels walked away from its bid to acquire Bermuda-based Belmond. But it still holds a 6.9 per cent stake in it, and Sarna said the company would sell this at the ''right price.''
IHCL reported a consolidated operating profit of Rs251 crore in 2013-14, but net loss of almost Rs554 crore. To increase sales, IHCL has roped in a chief revenue officer as the company wanted to move away from traditional sales and marketing to customer analytics and e-commerce.
IHCL is also moving away from a model of three chief operating officers managing brands such as Gateway, Vivanta and Taj; now there will be executives tasked with driving the Taj Group, geographically across the world.
The company, which operates 112 hotels in India and 16 abroad, plans to open 19 more with 2,500 rooms over the next three years. It also plans to explore overseas markets such as Bangkok, Hong Kong and Shanghai.