Indian Hotels looks to sell assets over 3 years to reduce debt

MUMBAI: Indian Hotels Co. Ltd (IHCL), which runs the Taj chain of hotels, plans to monetize around 10 properties in the next three years as part of a larger plan to bring down its debt and fund its future growth, said a top executive.

The Tata group firm aims to reduce its consolidated debt by 30% in the next 18 months, mainly through asset monetization, Puneet Chhatwal, managing director and chief executive officer said in an interview.

As of September 30, IHCL’s net debt stood at ₹2,082 crore.

In the second quarter ended September 30, the company’s net loss significantly narrowed to ₹5 crore from ₹59.95 crore in the year-ago period. Its total income saw a 13.5% growth to ₹981 crore from ₹864.18 crore in the corresponding quarter previous fiscal.

Chhatwal attributed the growth to its focus on asset management and cost optimization.

“At the moment, we are looking at monetizing around 10 properties. If we can do two-three per annum, then we are on a good track,” Chhatwal said, adding that IHCL would aim to retain a few of these properties through management contracts.

The properties for sale would span across all brands, including The Gateway, Vivanta and Ginger located primarily in the secondary and tertiary markets. In October, Oriental Hotels, an associate of IHCL, sold Gateway Hotel Beach at Visakapatnam to Varun Group, a diversified business enterprise, for an undisclosed sum. However, IHCL retained management of the hotel.

Chhatwal said the asset sale is also part of the company’s strategy to own 50% of properties while retaining the rest through management contracts with the property owners. At present, IHCL owns around 70% of the hotel assets it operates in India and abroad. “We just don’t want to sell (the hotel assets) at any price. Not just in terms of the amount you get for the property but also the contract you get in return. It should be a long-term contract with the right partner,” he said.

The firm plans to increase its portfolio of management contract, but would continue to look at opportunities to invest at the right property. For instance, IHCL is investing around ₹80 crore to renovate The Connaught hotel, an 85-room, four-star hotel property central in Delhi.