Require Rs 400-500 cr for expansion: Country Club

One of the hottest sectors in the recent few weeks has been the hotels and hospitality sector. The sector has also witnessed a lot of FII action in the recent past. JP Morgan picked about 78,000 shares at about Rs 320 per share and Morgan Stanley about 82,000 shares at about Rs 248 per share of Country Club in the recent past.

CMD of Country Club , Y Rajeev Reddy says the company is getting into golfing in a big way and would require between Rs 400-500 crore for property expansion.

Excerpts from CNBC-TV18's exclusive interview with Y Rajeev Reddy:

Q: How many properties do you currently have and how many more are you looking to set up in the regions of Hyderabad, Bangalore or Mumbai?

A: We have a total of 100 properties across the country, out of which 25 are our own properties and 75 are franchisee. This is a beginning of a major takeoff as far as the Country Club is concerned, because we have started our franchisee division very recently and have witnessed a fantastic response from the market.

Banks such as Citi Bank, ICICI, Standard Chartered, HSBC, are either co-branded or are directly associated in funding the membership of the Country Club.

Q: Going forward, how much capex have you laid aside for the expansion that you want in terms of ramping up your acquired properties?

A: We are just beginning to form the strategy and are getting into golfing in a big way. In fact, we intend to start golf courses in four different cities, Hyderabad, Chennai, one outside Bangalore and one outside Mumbai.

Q: How much money will you require to expand your properties?

A: We will require anywhere between Rs 400-500 crore.

Q: How will you be looking at funding at this expansion?

A: We are looking at funding this expansion mostly through internal accruals, also through a mixed debt as well as equity.

Q: What kind of a debt-equity portion are you going to be looking at out of this entire expansion plan of about Rs 400 crore? How much debt would you be looking at?

A: It again depends on the situation because now we are talking to a lot of people, in the United States, in England, etc. Morgan Stanley has picked up shares in the company, so there are a lot of institutional investors, who have been showing interest in our scrip, company and concept.

So fundamentally, we are looking at a situation where there is a mixture of small debt and also a certain amount of equity.

Q: Do you have a target in mind as to how much dilution of your equity are you willing to take on account of raising this capital?

A: We may dilute to some extent, but at any point of time, we will definitely not dilute the promoter’s interest to less than 55%.

Q: What are the plans for entering into Sri Lanka? There is some report suggesting that you are looking to set up some properties over the next three-four years in Sri Lanka.

A: We have already set up one property in Sri Lanka in Kandi and are promoting it through white river rafting. Apart from Kandi, we are also looking at some properties in Colombo. All these properties are basically affiliated with the RCI (Resort Condominiums International), which is one of the biggest timeshare providers in the world.

So Country Club is directly affiliated with the RCI, and therefore, the members get the benefits of using all these properties. 

Q: Is the service apartment market a very big market for you at this point of time?

A: This is a great market. The world is looking at India in a very positive way and if you see the kind of growth that is happening in India, it is really amazing, especially in our sector. In fact, all hotels and all clubrooms are full. We are trying to come out with a new concept called the country condos, which are nothing but service apartments.

Today in our country, service apartments are neither branded nor they are networked. We have about 1.5 lakh members and a lot of corporate members too. With our infrastructure we can build about 1,000 service apartments using only 10% of our FSI. These 1000 service apartments fundamentally will go in a very big way in adding not only revenues to our company, but also will be a great asset to all our members.