Hyderabad: Close on the heels of acquiring a luxury hotel in Dubai for Rs175 crore, Country Club India Ltd, the Hyderabad-based family club and leisure infrastructure company, proposes a few more overseas acquisitions, according to chairman and managing directorY. Rajeev Reddy.
The company concluded last fortnight its largest acquisition till date by taking over a boutique luxury hotel with more than 100 rooms, the Chelsea Group’s Chelsea Hotel.
Country Club currently owns or operates 25 clubs and also has 125 franchises throughout the country and overseas.
The company posted revenues of Rs223 crore and a net profit of Rs51.4 crore for the nine months ended December 2007.
“We have chalked out an expansion plan that includes both organic and inorganic growth plans, involving an investment of around Rs1,000 crore over the next three years,” Reddy said.
The company plans to split the amount pretty evenly between organic growth and acquisitions, mostly overseas.
“We have identified some hospitality properties in countries such as Thailand, Malaysia, Singapore, Poland and Mauritius,” said Reddy.
Country Club is using Group RCI, a global provider of leisure travel services, to scout overseas acquisitions. Group RCI has access to more than 67,000 vacation properties in approximately 100 countries.
Country Club India proposes to acquire some of the overseas hospitality properties through long-lease arrangements over the next year,said Reddy.
Reddy said the company has adequate expertise and experience on domestic acquisitions. Country Club India has spent more than Rs150 crore over the last four months in buying clubs and properties in cities such as Mumbai, Chennai, Pune, New Delhi, Kochi, Kolkata, Ahmedabad, Vadodara and Surat, he said.
On funding the growth, Reddy said the company would rely on a debt-equity ratio of 1:1.
The company has recently raised Rs486 crore through an issue of global depository receipts and qualified institutional placement. Leading global investment institutions such as Fidelity Investment International picked up 9.88% equity in the company, while Goldman Sachs International and New Vernon picked up 6.59% and 4.94% equity, respectively.
“We are looking at international locations with a large Asian diaspora with a target of achieving over 50% of our revenues from the overseas markets within the next five years,” said Reddy.
Mihir P. Shah, an analyst with the Mumbai-based equity research firm Prabhudas Lilladher Pvt. Ltd, said the company will use the proceeds of overseas equity issue for expansion through acquisition of around 30 new properties in the next three years.
“New properties and forays into new territories, higher visibility and convenience of payment for consumers through EMIs (equated monthly instalments) will enable the company to post higher net sales growth,” Shah said.
“Higher realization in turn is expected to drive profitability growth,” he added.