The Hindu : Business : Slowdown, terror attacks hit Indian Hotels’ profit

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Slowdown, terror attacks hit Indian Hotels’ profit

Special Correspondent

Taj Yashwantpur in Bangalore will be commissioned in February 2010

MUMBAI: The Indian Hotels Company Ltd. (IHCL) has reported a lower consolidated net profit of Rs. 12.46 crore against Rs. 354.98 crore in the previous year. The company’s turnover for the year was down 9 per cent at Rs. 2,782 crore.

The company declared a dividend of Rs. 1.20 per share of face value Re. 1 (Rs. 1.90 per share).

The performance was adversely impacted by the terror attacks in Mumbai in November last even as the hospitality industry was severely hit by the slowdown in business in all key markets during the latter part of the year, which is traditionally the peak season period. The profitability also declined on account of the shutdown of the Pierre Hotel, New York, which was undergoing renovations throughout the year at a cost of $100 million.

Recovery to begin

On a standalone basis, IHCL reported a 6 per cent lower turnover of Rs. 1,706.52 crore and a 38 per cent drop in net profit at Rs. 234.03 crore.

Addressing the media here, IHCL Vice-Chairman R. Krishna Kumar said, “we may have just seen the worst period globally due to the economic meltdown. It will take a little longer to recover but by early next year, I expect we will begin to see a recovery across the globe.”

Capital expenditure

Mr. Krishna Kumar said the Taj hotel, which was devastated in the Mumbai terror attacks on 26/11, was keen to recover as soon as possible. Its Tower Wing had resumed business completely but the Heritage Wing suffered extensive damage and the process of restoration was on. “We should be ready to launch by the end of the year or January 2010.”

IHCL is adding 1,800 rooms in the current year with an aggressive expansion. As part of its plan, it is incurring a capital expenditure of around Rs. 300 crore in the current year, of which Rs. 260 would be spent on the Taj Yashwantpur in Bangalore which will be commissioned in February 2010.

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