IHCL Plans Select Acquisitions Of International Hotels, Brands

Mumbai, Aug 25: | Updated: Aug 26 2002, 05:30am hrs
Indian Hotels Company Ltd (IHCL) now has a focused growth-by-acquisition plan, wherein the company is following an asset-light strategy. The company has been looking to expand its domestic and international portfolio, but has now clearly stated that such investments will not be asset intensive.

According to the companys annual report, The company aims at expanding both in the domestic and international markets but in a manner that is not asset intensive.

Hence, while your company will continue to extend coverage, investment in assets will be limited and in proportion to their strategic importance and financial return, the report continued.

The company has planned its international expansion for select gateway cities. It plans to selectively acquire leading hotels and brands to provide a high profile for its brand. All acquisitions will be carefully evaluated for return and EVA criteria, as well as the impact on the companys financial statements.

IHCL, in March 2002 raised Rs 300 crore, of which, Rs 100 crore was raised in the form of secured bonds with interest rates of 9.75 per cent per annum, redeemable at par at the end of five years. The company simultaneously completed a yen swap for an equivalent amount, in order to reduce the effective cost. The balance Rs 200 crore was raised in the form of secured bonds, with interest rates of six per cent per annum, redeemable at a premium of 25 per cent at the end of five years with put options at annual intervals with graded redemption premia.

The borrowing programme was to ensure funds for growth plans including acquisitions and to enable the company to refinance a portion of its existing high cost borrowing.

Last year, the company had stated that it was actively looking at growth opportunities, both internationally and within India, with a view to maximise shareholder value. IHCLs annual report had stated, The Taj Group will continue the process of internal transformation and actively scout for opportunities for expansion in India and abroad. With the focus on asset-light acquisitions, the companys efforts towards establishing itself in the international market might prove more investment- savvy.

The company has been on the lookout for acquiring an international hospitality chain, efforts towards which, have yet not borne fruit. IHCL managing director RK Krishna Kumar had earlier announced in the media that acquisitions such as these would help position the company in the premium league of the international hospitality market.