Sales and other operating income surged 28.9 per cent to Rs 168.9 crore. The contribution of Taj Lands End to the topline is not known. The refurbishment and renovation of key food & beverage (F&B) outlets led to a 29 per cent growth in F&B income. IHCL succeeded in keeping a tab on total expenditure that went up 22.5 per cent to Rs 128.9 crore. Consequently, operating profit grew 55.1 per cent to Rs 40 crore and OPM fattened by four percentage points to 23.7 per cent. Higher depreciation at Rs 11.6 crore (Rs 9.9 crore) neutralised the gains on account of lower interest outgo at Rs 9.4 crore (Rs 11.7 crore). IHCLs high leverage ensured that bottomline before exceptional items and tax catapulted to Rs 20.5 crore (Rs 7.2 crore).
The outlook for the fourth quarter looks better, thanks to improvement in occupancy rates and a marginal increase in room rates. The only concern is a possible war in Iraq that may disrupt international travel. IHCL should also benefit from its recently acquired Taj Lands End in North Mumbai, believed to be one of the fastest growing markets with an annual growth rate of 33 per cent. The cost to IHCL is Rs 0.8 crore per room (including Floor Space Index Value), which compares favourably with luxury projects where each room costs more than Rs 1.3 crore. The total acquisition cost is 40 per cent less than the replacement cost of an equivalent property. But North Mumbai market has also been witnessing new capacity additions by four new hotels that may intensify competition.