Hotel Occupancy Declines

This has hurt the company more so because almost 70 per cent of its room capacities are located in the metros and cater to the business traveller.

But this drop has been more than compensated by the improved average room rates (ARR), which have been a result of increased tariff. Moreover, the company's formerly loss-making division of in-flight catering has also been successfully turned around.

Revenue growth at IHC for the year ended March 31, 1996, has been the highest since 1978-79. Increasing tourist traffic and the depreciation of the rupee saw the turnover rise to Rs 547.36 crore, up by 43.29 per cent.

 

Operating profits improved by 77.53 per cent to 241.14 crore, which has resulted in better margins at the operational level too.

Despite a higher interest burden and an increased tax provision, net profit went up from Rs 82.11 crore to Rs 140.57 crore. Even a 13-per cent increase in the equity capital due to the company's Euroissue has not dampened earnings per share which has improved from Rs 20 to Rs 31.15.

However, if the predicted sluggish growth in business traffic comes true, this, coupled with the capital outlay for the company's ambitious expansion plans could create a serious drag

on IHC's profitability in the interim.