The resources raised through property development may be deployed for bolstering capital structure of its leveraged hospitality business. Thomas John Muthoot, chairman and managing director of group, said one of the options for the group was to enter into a joint venture for property development. The plan is to carry out work over a three-year period. Another option is to sell the parcel if MPG gets good price.
The group is also developing commercial real estate properties and looking at entering into affordable budget housing segment in Tamil Nadu, he said.
Besides, MPG is also expanding its hospitality business. Earlier this month, CRISIL, in its report, on the company’s hotel business, had raised concerns over continued pressure on the group’s financial risk profile.
This was despite the group’s deleveraging plans in the near term. The group plans to improve its capital structure through sale of land parcels. The extent of improvement will depend on the timeline and valuation in the current external environment. The improvement in Muthoot Hotels group’s capital structure will remain a key rating sensitivity factor, rating agency said. TJ Muthoot did not respond to queries on CRISIL’s comments.
MPG is adding 45 rooms at resort at Kovalam in Kerala, with an investment outlay of Rs 35-40 crore. The property is managed by Tata group-owned Taj Hotels. The convention centre at site became operational from this January.
At Kakkanad in Kochi, the group is building a business hotel, which should be ready by December 2016. MPG has already signed an agreement with Taj for the gateway brand. It is going to be a hotel in IT corridor, where about 60 per cent of construction has already happened.
The funds for business expansion plans for have already been tied up, he said.