Member additions to rise post consolidation: Mah Holidays

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Member additions to rise post consolidation: Mah Holidays

In first quarter of 2010-11 Mahindra Holidays has been hit by a lower enrollment of members. Arun Nanda, chairman of the company they had consciously taken steps to consolidate member base. Once the consolidation is done, numbers will bounce back, said Nanda

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Mahindra Holidays See previous management interviews See what other Experts & Brokerages are saying about Mahindra Holidays Mahindra Holida BSE | NSE 30/05/12 Are Mutual Funds betting on Mahindra Holida?

In first quarter of 2010-11 Mahindra Holidays and Resorts has been hit by a lower enrollment of members. During the period, it reported  a top and bottomline of 23.6% and 60.6%, respectively as compared to previous year's corresponding numbers.

Speaking about its performance, Arun Nanda, Chairman, Mahindra Holidays said the company has consciously taken steps of consolidating member base. Once the consolidation is done, numbers will bounce back, said Nanda.

Nanda said since the company is taking all precautions to  reduce delinquency rates, it will improve the numbers going forward. He expects FY11 to be better than FY10 as the company will make up for Q1 losses going forward.

Below is a verbatim transcript of the interview. Also watch the video.

Q: Your margins are down to 22% and net profit is down 60%. What happened in the current quarter?

A: One thing that I have learnt in life is that when growing at 35-36% CAGR you have to pause and consolidate. We took consciously took certain steps in this quarters on our member acquisition processes and member caring processes.

These things do hurt in the short-term but if you look at it our member addition was 3,500; our occupancies went up to 85% and this is just a consolidation phase. It is a question of a quarter or two and you see the numbers will bounce back better than before.

Q: This membership addition is still pretty low compared to the same quarter last year. What kind of full year target do you have in terms of membership adds?

A: We do not give guidance but let me tell you certain things. We did few things. We were finding that we need to improve our membership base. For example, we cut 60 month installment plan and brought it down to 48%. We increased our down payment from 10% to 15%. Ultimately, we are a member centric organization. We have to make sure. We have good quality members at the resorts. We have to make sure that our delinquency rates are very low and these are some of the steps that we took.

There has been on and off stocks of, sometimes are sales people push, we got ride of a lot of people. We did a survey and found out who were the people who were not following the company's ethics policy. So we did a lot of cleaning up in the organization in the month of April and May and that is what has affected us but the June numbers bounce back.

That is what gives me the confidence that things will bounce back substantially. It is not a market factor it was an internal organisation structuring problem.

Q: Should margin expectation be reworked though on the company? Right now analysts expect you to do about 37-38% in terms of margins for the full-year. Can you recover to that level?

A: I am quite hopeful that the year will end better than the previous year. We will make up the losses of this quarter in the subsequent quarters.