IHCL posts loss before tax of Rs 291 cr in Q1, total income dips to 117 cr

The coronavirus (Covid-19) pandemic weighed on the first quarter earnings of Indian Hotels Company Ltd (IHCL) as more than half of its hotels remained closed for nearly three months due to the pandemic induced lockdown.

The Tata group hospitality arm posted a loss (before tax) of Rs 291 crore in the quarter ending June 30, 2020 compared to a profit of Rs 36 crore in the year ago period, the company said in a statement on Thursday. The total income during the quarter also fell to Rs 117 crore compared to Rs 608.04 crore in the corresponding period last year.

IHCL has embarked on the so-called R.E.S.E.T 2020, a comprehensive five-point strategy, to provide a transformative framework to help it soften the blow of the pandemic, said Puneet Chhatwal, managing director and chief executive officer, IHCL.

“The global travel and tourism industry was at a virtual standstill in the last three months, which had a big impact on the hospitality sector,” said Chhatwal. The strategy to mitigate the impact of Covid-19, has started yielding results and will help the brand emerge stronger. Owing to the transformative strategy, IHCL was able to reduce the overall expenditure by 51 per cent during the quarter. It added Rs 77 crore to the topline and Rs 104 crore to the bottomline during the quarter.

Meanwhile, occupancies across its Taj SeleQtions Vivanta and Ginger brands have started inching up. It rose to 43 per cent on 17 June from 8 per cent on 5 March. For Vivanta it grew by 21 per cent from 4 per cent in the same period. 

Even though occupancy levels across the brands have started inching up, the pain for India’s hospitality sector is expected to linger on owing to restricted movement, said a recent report from JLL.

While hotels in certain cities opened in early June, guests are yet to return. As a result, the demand in business cities will take time to recover and it will only happen when companies allow their employees to travel through their revised travel advisories. 

Leisure demand may pick up around large cities wherein close friends and family groups may start traveling by road in the coming months, added the report.

Giridhar Sanjeevi, executive vice president and chief financial officer, IHCL said the company has taken substantial steps to preserve liquidity. “In addition, we are rationalising all costs and maintaining the highest financial prudence. This will assist us in managing the evolving situation,” he added.

The company raised Rs 500 crore of long term debt during the quarter and has secured additional lines of investment for any further requirement.