Taj GVK Hotels eyes 40% margins in FY12

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In an interview with CNBC-TV18, Indira Krishna Reddy, MD, Taj GVK Hotels says, the company expects around 15-20% revenue growth in FY12.

The company is confident of achieving 40% margins in FY12, she adds.

Below is a verbatim transcript of her interview with CNBC-TV18's Anuj Singhal and Latha Venkatesh. Also watch the accompanying video.

Q: How has the season been in the last quarter of FY11? Has it been a better year than a year ago and quarter ago?

A: Yes, definitely it is better than the previous year. If you take all India into account, barring few areas like Hyderabad, still we have done the same as last year, little bit higher, about 4-5% because of the Telangana issue. Otherwise, other hotels like Chandigarh have done extremely well because of this match. Chennai also has started doing extremely well. Chennai as a city also has picked up.

Q: When you are saying done extremely well, for the company as a whole, what kind of revenue growth did you see in Q4? More importantly, how are you looking at FY12 now?

A: FY12, we are at least looking for 15-20% growth.

Q: What about occupancies and room rates? If we leave the World Cup out of the picture, because that was one off event, going forward, what is the likely trend as you see in next two quarters?

A: As far as our company is concerned, World Cup has got a boom only for Chandigarh. But as far as Hyderabad and Chennai are concerned, I don't think they are so much affected. But as you know that average room rates (ARRs) have gone up by Rs 500-100, maximum Rs 1,500 in one of the other hotels. But as always occupancies have gone up.

Q: What kind of expansion plans do you have for FY12 for the current year?

A: We will be opening our new hotel, Begumpet in sometime in June-July. We are planning to do it in July. Most probably the second quarter of the next financial year and we are looking at three areas, especially in Bangalore, Bombay and Delhi.

Q: What share of your revenues comes from Andhra Pradesh?

A: Andhra Pradesh, about 60%.

Q: And it doesn't look like it will change in FY12 or FY13?

A: We expect about 10-15% growth even in Andhra Pradesh because people now have forgotten this Telangana.

Q: What about margins? You operate at near 40% of margins. What were the margins in the last quarter that just went by, January-March quarter? What do you think the margins will be in FY12?

A: Almost similar, may be in the last quarter we must have improved a little bit. Accounts have not yet frozen.

Q: But you would do 40% you think?

A: Yes, definitely. That is for sure.

Q: Is there a possibility of Taj GVK merging with Indian Hotels, the bigger company?

A: Never.

Q: Will you be acquiring then any fresh interest, just management running interest or for that matter buying up hotels that are already put up?

A: That is what we are looking for.

Q: Are you close to announcing something?

A: I can't say. But we will talk about it when it comes.

Q: So, would you be raising money for that in that case, if you have some ambitious purchase plans?

A: We have plans, nothing is now decided. It depends on our financial capabilities, that time we will see.