There have been fresh reports that Hotel Leela Venture’s Rs 3,000 crore debt restructuring proposal has hit the wall with the country’s biggest lenders such as Indian Overseas Bank and Bank of India.
The company has been grappling with its high debt for a long time. On a consolidated level, it had a debt of 3,800 crore at the end of FY11.
For the six-month period ended September, 2011, considering the stand-alone level of operations, debt rose to Rs 4,295 crore. Also during the period, the debt-to-equity ratio, on a standalone basis, was 2.15, against 0.72 for Indian Hotels Company and 0.15 for EIH. This high debt is due to expansion of operations in Delhi, Chennai and Goa. These three properties took the company's room count to 2,218 in a year from 1,609 rooms in FY11. Its Delhi property for instance, has the capital expenditure of Rs 3 crore per room. The construction costs for the hotel turned out to be Rs 780 crore. The company had projected average room rates, or ARRs, of over Rs 27,000, which were too high to the prevailing ARRs of Rs 8,500 to Rs 10,000 in the National Capital Region. Due to this, the company could not secure a high ARR even after the Commonwealth Games, raising its overall costs and impacting earnings. Hotel Leela Venture has had an erratic growth in revenues and incurred high operational costs. It does not have international operations, still its debt-to-equity ratio was high at 1.8 in FY 11. It sold its property in Kovalam, Kerala, for 500 crore and raised 1,000 crore through a combination of QIP and FCC-Bs. It has to redeem FCCBs of $67 million this month. Its consolidated cash flow from operations fell from 120 crore in FY08 to 69 crore in FY11. Going ahead, the company may still be in a position to address some of these challenges. It has a huge land bank measuring 8,93,013.5 sqft in Pune, Bangalore, Chennai, and Hyderabad. There are also various revenue-sharing opportunities with real estate and hotel companies in these locations.
Source
Search for Jobs with Leela hotels
For the six-month period ended September, 2011, considering the stand-alone level of operations, debt rose to Rs 4,295 crore. Also during the period, the debt-to-equity ratio, on a standalone basis, was 2.15, against 0.72 for Indian Hotels Company and 0.15 for EIH. This high debt is due to expansion of operations in Delhi, Chennai and Goa. These three properties took the company's room count to 2,218 in a year from 1,609 rooms in FY11. Its Delhi property for instance, has the capital expenditure of Rs 3 crore per room. The construction costs for the hotel turned out to be Rs 780 crore. The company had projected average room rates, or ARRs, of over Rs 27,000, which were too high to the prevailing ARRs of Rs 8,500 to Rs 10,000 in the National Capital Region. Due to this, the company could not secure a high ARR even after the Commonwealth Games, raising its overall costs and impacting earnings. Hotel Leela Venture has had an erratic growth in revenues and incurred high operational costs. It does not have international operations, still its debt-to-equity ratio was high at 1.8 in FY 11. It sold its property in Kovalam, Kerala, for 500 crore and raised 1,000 crore through a combination of QIP and FCC-Bs. It has to redeem FCCBs of $67 million this month. Its consolidated cash flow from operations fell from 120 crore in FY08 to 69 crore in FY11. Going ahead, the company may still be in a position to address some of these challenges. It has a huge land bank measuring 8,93,013.5 sqft in Pune, Bangalore, Chennai, and Hyderabad. There are also various revenue-sharing opportunities with real estate and hotel companies in these locations.
Source
Search for Jobs with Leela hotels