Hyderabad based Taj GVK Hotels & Resorts Ltd. owns and operates three five star hotels in Hyderabad and one five star hotel each in the cities of Chennai and Chandigarh. It came out with the Standalone Financial Results for the Quarter and Year ended March 31, 2011 on April 28, 2011.
Fourth Quarter review: For the fourth quarter ended Mar'11, net sales of the company reported at Rs. 69.68 crore that increased by 10.00% as against Rs. 63.34 crore in the corresponding quarter last year.
This was primarily on the back of improved occupancy levels of about 75% at its properties at Chennai and Chandigarh respectively. Operating expenses inclined by 13.41% to Rs. 42.01 crore from Rs. 37.04 crore mainly due to rise in raw material cost by 12.32% to Rs. 6.42 crore (Mar'10 Rs. 5.71 crore), employee expenses by 25.53% to Rs. 11.51 crore (Mar'10 Rs. 9.17 crore) and other expenses by 8.67% to Rs. 24.08 crore (Mar'10 Rs. 22.16 crore).
The operating profit therefore only increased by 5.21% to Rs. 27.67 crore from Rs. 26.30 crore with OPM declining 181 basis points to 39.71%. Depreciation charges crept up by 4.32% to Rs. 5.27 crore and the tax levied also increased by 7.05% to Rs. 6.89 crore.
On the contrary, the interest expense slid by 6.54% to Rs. 2.68 crore. Consequently, the firm"s net profit for quarter ended Mar'11 remained flat at Rs. 12.89 crore against Rs. 12.18 crore for the corresponding quarter last year. EPS for the fourth quarter was Rs. 2.06 against Rs 1.94 during last quarter of the previous year on the face value of the equity share of Rs 2 paid-up.
Fiscal year review: During the year ended Mar"11, the firm clocked revenues of Rs 260.66 crore rising 14% over last year's Rs 229.25 crore.
In line with this, operating expenses inclined by 14.39% to Rs. 163.02 crore mainly due to rise in raw material cost by 18.93% to Rs. 25.23 crore, employee expenses by 14.11% to Rs. 46.77 crore and other expenses by 13.33% to Rs. 91.03 crore.
Consequently, OPM declined 37 basis points to 37.46%. The net profit increased moderately by 19.5% to Rs. 43.34 crore from last year"s Rs. 36.27 crore. During the year, the hotels at Chandigarh and Chennai recorded occupancy levels of 72% and 61% with properties in Hyderabad registering 66% occupancy.
According to Ms. Indira Krishna Reddy, MD, Taj GVK Hotels, the Andhra Pradesh region itself contributes 60% to the total revenue. The firm plans to open their new hotel in Begumpet, Andhra Pradesh sometime in July 2011.
Although rapid growth is estimated in Chandigarh and Chennai, the company expects about 10-15% growth even in Andhra Pradesh as the Telangana issue has taken a backseat. According to Ms. Reddy, the revenue growth rate is likely to hover around 15-20% in FY12 and the company is confident of achieving 40% margins in FY12.
The company also plans to target key metropolitan areas for its expansion viz. Bangalore, Mumbai and Delhi in the second quarter of the next financial year. As the global economy recovers the hotel industry is expected to do well in near future. The Taj GVK group intends to gain firm foothold in the metropolitan areas to benefit from the demand and restricted supply going forward.