ARR: Average Rate RoomRevPAR: Revenue Per Available Room is a performance metric in the hotel industry, which is calculated by multiplying a hotel's average daily room rate (ADR) by its occupancy rate. It may also be calculated by dividing a hotel's total guestroom revenue by the room count and the number of days in the period being measured.
Non – Operating Income: The portion of an organization's income that is derived from activities not related to its core operations. Non-operating income would include such items as dividend income, profits (and losses) from investments, gains (or losses) incurred due to foreign exchange, asset write-downs and other non-operating revenues and expenses. F & B: Food and Beverage.Management Fees: A charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise. It can also include other items such as investor relations expenses and the administration costs of the fund.
Agenda Learning The Financials of Oberoi Hotels Group. Effects of Financials on Company. Impact of IFRS on Oberoi.
Introduction EIH Limited, under the aegis of The Oberoi Group, operates 29 hotels in five countries under the luxury ‘Oberoi’ and five- star ‘Trident’ brands Oberoi Hotels & Resorts is synonymous the world over with providing the right blend of service & luxury Internationally acclaimed for all-round excellence and unparalleled services, Oberoi hotels and resorts have received innumerable awards and accolades The Group’s commitment to excellence, attention to detail and personalized service has ensured a loyal list of guests and accolades in the worldwide hospitality industry. Listed in major stock exchanges like NSE & BSE with symbol “EIHOTEL”
Shareholding pattern:Pattern of Shareholding as on 31st March, 2012 Percentage ofCategory Shareholding (%)Promoter Holding 75.00 Banks, Financial Institutions and 0.02 Insurance Companies FIIs 14.40 Private Bodies 3.67 CorporateIndian Individuals 6.71 NRIs/OCBs 0.20
Financials Performance for Group Rs. Million FY12 FY 11 Total Revenue 1904.54 1763.42 EBIDTA 576.63 564.84 PAT 133.55 120.17
Analysis Of Financial Performance Revenue from operations: Results :- Growth of 8% in FY 2011- 12; Rs. 1904 million in 2011-12 vs Rs. 1763 million in 2010-11. Reason The increase is mainly attributable to growth in Travel and Tourism sector. Cost of material consumed: Results:- Growth of 15% in FY 2011- 12 154 million(s) – 2011-12 VS `134 million(s) – 2010-11. . Reason: The increase is mainly attributable to increase input cost and import duties that are not fully absorbed through pricing.
Analysis Of Financial Performance Contd… Employee Cost : Results :- 333.15 million(s) in FY 2011-12 as compared to 318.72 million(s) in FY 2010-11, an increase by 15 million(s) in absolute terms. Reason The increase mainly relates to normal yearly increments, performance based payments, impact of wage revisions and partly due to increased head counts. Manufacturing and Other Expenses: Results:- These expenses have increased to 865 million(s) from 770.56 million(s) in FY 2010-11 . Reason: The increases are mainly driven by volumes, size of operations and also include inflation impact.
Analysis Of Financial Performance Contd… Other Income : Results :Decreased to 28.76 million(s) from 29.60 million(s) in FY 2010-11 Reason: The decrease is attributable to decrease in Interest on Income Tax Refund amount Consolidated Profit Before Tax (PBT): Results: Decreased to 175.28 million(s) in FY 2011- 12 compared to 182.86 in FY 2010-11. Reason: mainly attributable to a slow growth rate in tourisom industry and absence of significant economic reforms.
Analysis Of Financial Performance Contd… Profit before Exceptional Item, Depreciation and amortisation, Interest and Tax Results: Decreased from 182.86 million(s) in FY 2010-11 to in 175.28 million(s) FY 2011-12 Finance cost Results :increased by 20.0% to 274.11 from 254.53 of FY 2010-11 Reason: steep depreciation of rupee against all major currencies, Goodwill Impairment and other costs are in respect of subsidiary companies
Analysis Of Financial Performance Contd… Long term borrowings: Results : including the current portion increased to 1203.28 million(s) from 1137.08 million(s). Reasons : The increase in current maturities of Long term borrowings is attributable to Convertible Alternative Reference Securities (CARS), which will be due for redemption and fixed deposits. Trade payables: Results: were 30.34 million(s) as at March 31, 2012, as compared to `34.03 million(s) as at March 31, 2011. Reason: The decrease is attributable to volumes.
Analysis Of Financial Performance Contd… Other current liabilities: Results :were 161.55 million(s) as at March31, 2012 as compared to 454.81 million(s) as at March 31, 2011. Reason: The decrease is mainly due to decrease in current maturities of long term debt. Fixed Assets: Results: The decrease (net of depreciation) in the tangible assets of from 2916.86 million(s) to 2845.75 million(s) as at March 31, 2012. Reason: No significant establishment of new capability for new product plans of the Company.
Analysis Of Financial Performance Contd… Deferred tax assets: Results: Gone down to 318.49 million(s) as at March 31, 2012 from 373.59 million(s) as at March 31, 2011. Reason: The decrease is consequent to unabsorbed depreciation. Cash and bank balances: Cash and bank balances were 103.26 million(s), as at March 31, 2012 compared to 87.88 million(s) as at March 31, 2011.
Analysis Of Financial Performance Contd… Current Assets: Results: increased to 548.20 million(s) as at March 31, 2012 from 488.86 million(s) as at March 31, 2011. Inventories: Results:72.91 million(s) As of March 31, 2012 as compared to 74.01 million(s) as at March 31, 2011. Reasons: The decrease is mainly attributable to volumes slow growth. Trade Receivables (net of allowance for doubtful debts): Results: were 163.80 million(s) as at March 31, 2012, representing an increase of 149.92 million(s) Reasons: which was attributable to increase in sales.
Analysis Of Financial Performance Contd… Short term loans and advances : Results: Increased from 208.41 million(s) as at March 31, 2011 to 246.47 million(s) as at March 31, 2012. Reasons: The increase is attributable to an increase in VAT, other taxes recoverable statutory deposits and other dues from government. Reserves: Results: Increased from 994.47 million(s) as at March 31, 2011 to 929.21 million(s) Reasons: increase mainly due to strong performance on a consolidated basis as explained above.
Final Analysis Financial and Operating Performance:• During the Financial Year 2011-2012, the Company’s Total Revenue was Rs. 1904.54 million as compared to Rs. 1763.42 million in the previous year. This represents an increase of 8%.• The Earnings before Interest, Depreciation, Tax and Amortization (EBIDTA) were Rs. 576.63 million as compared to Rs. 564.84 million in the previous year, which is an increase of 2%.• The Profit before Tax and Exceptional Item was Rs. 175.28 million as compared to Rs. 182.86 million in the previous year.• The Profit after Tax was Rs. 133.55 million as compared to Rs. 120.17 million in the previous year. Foreign Exchange Earnings:• During the Financial Year 2011-2012, the Foreign Exchange earnings of the Company amounted to Rs. 1133.13 million as against Rs. 875.16 million in the previous year. The expenditure in Foreign Exchange during the FY 2011-12 was Rs. 63.65 million as compared to Rs. 47.44 million in the previous year.
Final Analysis (Contd…) The Cash flow from Operating Activities:A reduction in cash inflow has been observed in the FY 2011-12 whichwas Rs. 543.48 million compared to Rs. 562.69 million in FY 2010-11. The Cash flow from Investing Activities:Cash outflow has been reduced to a large extent from Rs. 180.72 millionin FY 2010-11 to Rs. 83.14 million majorly driven by sale of Fixed Assetsand purchase of Investments. A cash inflow of Rs. 40.77 million isregistered in FY 2011-12 compared to a mere Rs. 2.49 million in theprevious financial year by selling some of its fixed assets which were ofnot much use. Also, no major purchase of investments done in the FY2011-12 as compared to Rs. 84 million in previous year. The Cash flow from Financing Activities:21% increase in cash outflow has been recorded in FY 2011-12 as theoutflow was Rs. 449.29 million in FY 2011-12 as against Rs. 372.58million in previous year. Net increase in Cash and Cash Equivalentsfrom beginning of the year to end of the year is Rs. 11.04 million.
Net Results In A Nut Shell:- LIABILITIES: • Shareholder’s Funds: • No major deviation observed as Rs. 994 million recorded as against Rs. 929 million in FY 2010-11 • Non-Current Liabilities: • A 9.34% rise seen in non-current liabilities over last financial year as it increased to Rs. 1463 million from Rs. 1338 million • Current Liabilities: • Reduced from Rs. 1565 million to Rs. 1397 million due to major decline in other liabilities ASSETS: • 12% increase in current assets has been registered in FY 2011- 12 whereas no significant change is observed in non-current asset.
Impact Of IFRS On East India Hotels (EIH) - Associated Hotels Limited (A member of The Oberoi Group)
S.N. Heading IFRS IAS EIH Hotel’s policy Impact 1 Components of Following are Companies Act requires 1. Balance Sheet, Need to prepare Financial components that preparation of: 2. Profit and Loss SOCIE and Statement Statements together are considered 1. Balance Sheet, Account, and of Financial Position as a complete set of 2. Profit and Loss Account, and 3. Notes to as well. financial statements. 3. Notes to Accounts. Accounts. 1. Statement of Financial 4. Cash Flow Position (Balance sheet), As per IAS 3, Level 1 enterprises Statement 2. Statement of are required to prepare a Cash Comprehensive Income / Flow Statement using the direct Income Statement (P&L or indirect method. SEBI A/c.), mandates the use of indirect 3. Statement of Changes method for listed companies. in Equity (SOCIE), 4. Statement of Cash Flows, 5. Notes to A/c. and 6. Statement of Financial Position 2 Consolidated IFRS considers It is not mandatory to prepare Both Standalone No Impact. Financial Consolidated Financial Consolidated Financial and Consolidated Statements Statements as the Statements under AS 21. Financial General Purpose Statements are Financial Statements. SEBI requires from listed prepared. companies to submit Consolidated Financial Statements. Banking Companies are also required to prepare Consolidated Financial Statements.
S.N. Heading IFRS IAS EIH Hotel’s Policy Impact 3 Provisions – Provision are discounted to Discounting of provisions is not Provisions are made at Provisions need to made General Present value where the effect of permitted book value. at discounted value, the time value of money is provisions to increase, material profits to decrease. 4 Proposed Liability for dividends declared to Dividends are recognised as an Dividend as liability is Dividend to be Dividend holders of equity instruments are appropriation from profits and recognised as an recognized as liability in recognised in the period when recorded as liability at the appropriation from the year of declaration declared balance sheet date, if declared profits and recorded and not the year for subsequent to the reporting as liability at the which it is paid. period but before approval of the balance sheet date, financial statements.
S.N. Heading IFRS IAS EIH Hotel’s Policy Impact 5 Forex Rate a. Assets and liabilities, Translation depends on the Standalone: Transactions in forex The exchange differences Changes translated at the closing classification of that operation as are recorded at the rates will be accumulated in rate. integral or non integral. prevailing on the date of the foreign currency b. Income and expenses Integral Ops : monetary assets transaction. Forex monetary translation reserve translated at exchange translated at closing rate; non-monetary assets and liabilities translated at instead of charging it to rates at the date of items are translated at historical rate if year end exchange rates. Exchange P&L. transactions; and valued at cost and at closing rate if differences arising on settlement c. All resulting exchange valued on other valuation basis and of transactions and translation of differences should be income and expense items are monetary items other than accumulated in foreign translated at historical/ avg. rate. specified ones are recognized as currency translation Exchange differences are taken to the income or expense in the year in reserve until the statement of profit and loss. which they arise. disposal of the investment. 6 Forex a. Assets and liabilities, Non-integral operations : closing rate Consolidated : Assets and Income and expenses to Rate translated at the closing method should be followed (i.e. all liabilities translated at rates be translated at Changes rate. assets and liabilities are to be translated prevailing on the balance sheet exchange rates at the b. Income and expenses at closing rate while profit and loss date. Income and expenditure date of transactions translated at exchange account items are translated at translated at the average exchange instead of average rates at the date of actual/average rates). rates for the year/month. exchange rates for the transactions; and The resulting exchange difference is Exchange differences arising in year/month. c. All resulting exchange taken to reserve and is recycled to profit case of integral foreign operations differences should be and loss on the disposal of the non- are recognised in the Profit and Exchange differences accumulated in foreign integral foreign operation. Loss Statement and exchange arising in case of all currency translation differences arising in case of non foreign operations to be reserve until the integral foreign operations are recognised in the foreign disposal of the recognised in the Group’s currency transaltion investment. Translation Reserve classified rserve instead of Profit under Reserves and surplus. and Loss Statement.
S.N. Heading IFRS IAS EIH Hotels Policy Impact 7 Consolidated All entities have to Consolidated Financial As a listed Company No impact Financial prepare Consolidated Statements are mandated only with subsidiaries, Statements Financial Statements by the regulator i.e. Securities EIH prepares both under IFRS Exchange Board of India (SEBI) Standalone and for listed companies Consolidated Financial Statements. 8 Accounting for Parent’s investment in a Investments in subsidiary Long term Investments if valued Investment in subsidiary be accounted should be accounted for investments are at Book value can Subsidiary for in the parent’s in accordance with AS 13, stated at cost less fetch higher value separate financial Accounting for other than than at cost statements (a) at cost, or Investments, which is cost as temporary valuation, which will (b) as available-for-sale adjusted for any diminution diminution in value, lead to creation of (i.e. Market Value) other than temporary in value if any. revaluation reserve. of those investments 9 Contingencies Any events after balance Such events are required to be No such events In case any such and Events sheet date of such nature disclosed in the report of the occurred / events occurs the Occurring After that disclosure of them is approving authority, i.e. the reported. same needs to be the Balance required to prevent the board report reported in the Sheet Date financial statements from financial statements being misleading, the itself along with is entity should disclose financial impact. nature of event and estimate of its financial effect.
S.N. Heading IFRS IAS EIH Hotels Impact Policy10 Accounting for Initial direct cost Financial Lease : initial Finance lease : Increase in book lease incurred by lesser to be direct cost incurred by Assets are value of leased included in lease lesser to be either charged recognized at assets as such receivable off at the time of the lower of the costs will be amount in case of incurrence or to be fair value of the grouped in asset finance lease and in the amortized over the lease leased assets at value instead of carrying amount of the period. inception and charging it to asset in case of operating Operating Lease : Initial the P&L, so profits lease recognized as an direct costs incurred present value of too will be higher expense over the lease specifically to earn minimum lease however term on the same basis revenues from an payments. adjusted to as the lease income. operating lease are either Operating lease increased deferred and allocated to : Such leased depreciation on income over the lease term assets are not leased assets. in proportion to the recognized on recognition of rent income, the Company’s or are recognized as an Balance Sheet. expense in the statement Payments under of profit and loss in the operating leases period in which they are are recognized in incurred. the Profit and Loss Statement on a straight-line basis over the term of the
The Indian Hotels Company (IHCL)• Founder of the Tata group : Jamsetji Tata,• The company opened its first property : The Taj Mahal Palace, in Bombay in 1903.• The Taj, a symbol of Indian hospitality, completed its centenary year in 2003.• Taj Hotels Resorts and Palaces comprises 112 hotels in 53 locations a) 25 Ginger hotels across India b) 16 international hotels - Maldives, Malaysia, Australia, UK, US, Bhutan, Sri Lanka, Africa and the Middle East.
FINANCIAL HIGHLIGHTS Keywords 2011-12 2010-11 ` crores ` crores Gross Revenue 1,858 1,737.14 Profit Before Tax 229.92 221.45 Profit After Tax 145.35 141.25 Dividend 75.95 75.95 Retained Earnings 170.98 161.38 Total Assets 7,363.98 6,720.24 Net Worth 3,367.81 3,228.91 Borrowings 2,679.38 2,341.44 Debt : Equity Ratio 0.80:1 0.73:1 Net Worth Per Ordinary Share of ` 1/- each - In Rupees * 42.70 40.88Earnings Per Ordinary Share (Basic & Diluted) - In Rupees 1.91 1.93 Dividend Per Ordinary Share - In Rupees 1.00 1.00 Dividend 100% 100% * Excludes Warrants of ` 124.37 crores
INCOME• The total income for the year ended March 31, 2012, at 1,858 crores was higher than that of the previous year by 8%.• Room Income was higher than the previous year by 6%; Food & Beverage (F&B) income also increased by 11% over the previous year, enabled by a similar growth in banqueting income.
DEPRECIATION AND FINANCE COSTS• Depreciation for the year was higher due to incremental depreciation on the newly opened Vivanta by Taj - Yeshwantpur, Bengaluru, as also on account of Taj Falaknuma Palace, Hyderabad, being operational for the full year and the ongoing renovations at the hotels.• Finance Costs for the year ended March 31, 2012, net of currency swap gains at ` 111.99 crores were lower than the finance costs of the preceding year by ` 34.50 crores, resulting from interest rate restructuring and increase in capitalisation of interest on hotel projects under construction.
PROFITS• Profit before Tax at 341 crores was higher than the previous year by 4%, whereas Profit after Tax at 148 crores was higher by 3%.
CONSOLIDATED FINANCIAL RESULTS• The consolidated turnover of the Company for the year ended March 31, 2012 aggregated to ` 3,503.65 crores as against ` 2,932.20 crores for the previous year. Profit after Tax aggregated to ` 3.06 crores for the year as against the Loss after Tax of ` 87.26 crores for the previous year.• The consolidated turnover increased by 19% on account of launch of new hotels during the year by the Company, as also due to the change in status of certain companies from associates to subsidiaries. The Company, during the year, had increased its stake in Piem Hotels Limited, an associate; resultantly it has become a subsidiary with effect from May 25, 2011. The foregoing has also resulted in certain other companies’ status being changed to subsidiary. Among the Company’s domestic subsidiaries, Piem Hotels Limited and Roots Corporation Limited improved their turnover. The Company’s subsidiary in the flight catering segment also reported growth in turnover as well. However, its profitability has been marginal due to the continued turbulence in the aviation sector and a highly competitive environment. The Company’s US hotels have shown marginal improvement in occupancies and ARRs over the previous year, notwithstanding the continuing weakness in the US economy. The Company is putting all its endeavours to turnaround the US portfolio and make it profitable in the long term. The Company’s UK subsidiary continued to register a good performance in line with the previous year.
DIVIDEND• The Board of Directors are pleased to recommend a dividend of 100% for the year ended March 31, 2012.
FIXED DEPOSITS• The outstanding amount of Fixed Deposits placed with your Company amounted to 286.00 crores. (Previous year 354.18 crores) excluding 1.75 crores (previous year 0.28 crores), which remained unclaimed by depositors as on March 31, 2012. Your Company has stopped accepting/ renewing deposits from the general public and shareholders.
CORPORATE GOVERNANCE• As required by Clause 49 of the Listing Agreement with the Stock Exchanges, the report on Management Discussion and Analysis, Corporate Governance as well as the Practising Company Secretary’s Certificate regarding compliance of conditions of Corporate Governance, forms part of the Annual Report.
BUSINESS OVERVIEW• Global economic recovery is losing traction due to continuing Euro zone debt crisis and the resultant austerity measures being taken by th• Domestically, the state of the economy is a matter of growing concern with slowing economy, persistently high inflation, uncertain political environment and depreciation of the Indian Rupee weakening the overall economic sentiment of the country.• The International tourists arrival worldwide has grown to 980 million in 2011, 4.4% above 2010 and is forecasted to grow at a moderate pace in 2012. Emerging economies of South Asia, South-East Asia and South America led the tourism growth with 12% increase in International tourists arrivals.• In the year 2011, the tourism sector in India witnessed a growth as compared to 2010. The Foreign Tourist Arrivals in India during 2011 were 6.29 million which translates to a 9% growth over the previous year. Foreign Exchange Earnings from tourism grew from ` 64,889 crores during 2010 to ` 77,591 crores in 2011, registering a growth of 19.6%. The domestic tourist traffic is also estimated to have increased by approximately 9% to 804 million during 2011.• The Taj Group launched 5 new Vivanta by Taj hotels during the year at Srinagar, Yeshwantpur - Bengaluru, Coimbatore, Begumpet - Hyderabad and Bekal - Kerala. Ginger Hotels currently has a portfolio of 24 hotels with a room inventory of approximately 2345 rooms. Projects for new Ginger hotels are at various stages of construction in Bengaluru, Noida, Jaipur, Faridabad, Greater Noida, Chandigarh and Amritsar. The inventory of the Taj Group of Hotels now stands at 112 hotels with 13,629 rooms. e Euro zone countries.