Mumbai: Tata group-owned Indian Hotels Co. Ltd reported a 28.01% increase in net profit to Rs.64.62 crore for the quarter ended 31 December from Rs.50.48 crore in the year ago.
Sales rose 4.42% to Rs.544.55 crore from Rs.521.48 crore. Finance costs fell 19.53% to Rs.25.21 crore.
Auditors highlighted exposures in long-term investments in and advances to wholly- owned subsidiaries aggregating Rs.1,563.67 crore. The carrying costs of these investments significantly exceeded the book and market value as of 31 December.
“In view of the strategic nature of the investments and the company’s continuing commitment and strategies, in the opinion of the management, there is no diminution, other than temporary, in the value of the aforesaid investment,” the company said in a note.
The hospitality sector continues to face demand pressure due to the uncertain economy, said Raymond Bickson, managing director. While room sales have grown in aggregate across all key markets, rates have continued to plateau.
Profits for the quarter improved through a combination of better operating margins and a reduction in financing costs.
In November, the board of Orient-Express Hotels Ltd of the US rejected a takeover offer—the second in five years—from Indian Hotels, which runs the Taj chain of hotels. Orient-Express said the bid was not in its best interests and undervalues the company.
On 18 October, Indian Hotels said it was making a new bid to gain control of Orient-Express after being rebuffed five years before. Indian Hotels, which hold a 6.9% stake in the Hamilton, Bermuda-based hotel owner, offered to purchase the rest of the company’s publicly traded Class A shares for $12.63 each. The unsolicited bid was 43% higher than Orient-Express’s 20-day average price. The Tata group hotel company made the bid along with Charme II Fund, an Italian fund managed by Montezemolo and Partners SpA. The proposal is valued at approximately $1.86 billion, including Orient-Express’ net debt.
On Monday, Indian Hotels dropped 0.73% to Rs. 61.50 on BSE, while the benchmark Sensex fell 0.12% to 19,460.57 points.