East India Hotels (The Oberoi Group) Report 2% Net Profit Growth in FY2014-15; Announce Opening of Three Luxury Hotels in 2016
THE East India Hotels (EIH Limited), which owns and operates the Oberoi and Trident hotels, besides a host of other travel- and tourism-related services, today announced a net profit of Rs 96.63 crore for FY2014-15, or a marginal 2 per cent growth above its FY2013-14 figure of Rs 95.04 crore. It reported a profit before tax of Rs 151.25 crore.
The company’s total revenue (including other income) for FY2014-15 saw a 4.5 per cent spike, rising to Rs 1,366.30 crore, compared with Rs 1,278.94 crore in the previous fiscal.
The company, in a media release announcing the annual results from its headquarters in Kolkata on Sunday, pinpointed two factors responsible for the sluggish rise in the net profit – one, the increased depreciation charges caused by the change in the calculation method as mandated by the Companies Act 2013 (the company took a hit of Rs 33.28 crore on this account), and two, an additional expense for corporate social responsibility initiatives, also laid down by the company law, that added up to another Rs 2.38 crore.
Without the depreciation and CSR charges, according to the company, EIH Limited’s profit before tax would have been higher than last year by Rs 35.63 crore and the profit after tax, by Rs 24.92 crore.
Explaining the circumstances under which the company had to perform in the financial year gone by, Vikram Oberoi, Managing Director and CEO, EIH Limited, said, “In the past few years, the Indian hotel industry has been facing the double challenge of weak demand and increased supply of rooms. In spite of these challenges, EIH was able to increase its market share leading to a strong profit growth.” The performance of the EIH Limited stock when the bourse opens on Monday will show whether the market has bought this view. Well, it turned out to be a Monday without surprises for the EIH Limited stock, which was trading at Rs 104.90 at 1 p.m., registering an insignificant 0.10 per cent drop in value on the National Stock Exchange.
The company also used the opportunity to announce the opening of three luxury hotels in 2016, including, as I had reported earlier on www.bwhotelier.com, one each at Al Zorah in Ajman (United Arab Emirates) and Marrakesh in Morocco.
The third, The Oberoi Sukhvilas in Chandigarh, being developed in collaboration with Punjab Deputy Chief Minister Sukhbir Singh Badal’s Metro Eco Green Resorts Ltd., promises to be one of the country’s most sought-after luxury addresses. It is coming at the site of a failed hatchery project of the Badals.
EIH Limited’s media release quoted Vikram Oberoi as saying that the Al Zorah hotel will be “managed by a wholly owned overseas subsidiary of the company and is expected to open in the second quarter of 2016.” Besides the 100-room resort hotel on a 12-km waterfront, the Al Zorah property will have a luxury residential and retail development and an 18-hole golf course.
In Marrakesh, apart from the 84-keys luxury hotel, “branded villas” are also being planned for sale. The hotel, which was to be operational by late 2015, will now be open in April 2016. It will be managed by a wholly owned overseas subsidiary of the company.
The media release said the company is also looking at another property in Morocco, this time in Casablanca, also to be managed by the wholly owned overseas subsidiary of the company. The hotel, located on what has been described as a prime ocean front site close to the central business district, will be operational in the last quarter of 2018.
The Oberoi Sukhvilas, which adjoins a 400-acre forest, will have a 20-acre hotel plot consisting of luxury villas with private swimming pools surrounded by extensive landscaped gardens. The Oberois are back to doing what they do best – raise the bar for luxury hoteliering.