Royal Orchid aims to add 600 rooms to their portfolio

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Royal Orchid aims to add 600 rooms to their portfolio

CK Baljee, Chairman of Royal Orchids, in an interview with CNBC-TV18’s Sonia Shenoy and Ekta Batra, gave his perspective of the fourth quarter performance and their divulged future plans.

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CK Baljee, Chairman of Royal Orchid , in an interview with CNBC-TV18's Sonia Shenoy and Ekta Batra, gave his perspective of the fourth quarter performance and their divulged future plans.

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

Q: Could you take us through your numbers? You have a whole host of investments lined up. Could you share your plans with us?

A: This year we have added about five new hotels to our portfolio with about 518 rooms. Now, the total room count has gone up to 1622 rooms against 1100 rooms last year.

Going forward, we will add another 600 rooms to our portfolio and taking the count to 2200 rooms this coming year. Going back to the results, we have had consolidated revenues from Rs 122 crore and it has gone up to Rs 153 crore.

With a 25% increase in the revenues on EBITDA, they have gone from Rs 28 crore to Rs 41 crore. There is an increase of 44% in the EBITDA. In the net profit after tax, we have gone from Rs 6.97 crore to Rs 12.22 crore which is an increase of 75%.

Q: What kind of investment are you looking at for the five new hotels that are coming up? You opened a new one in Shimoga a while back. Where will the new property be located at?

A: The new property coming up this year will be in Hyderabad. There is a property in Delhi. There is a service apartment in Hyderabad, Surat, Lokahandwala and Bharuch.

Q: What are your investment plans? Weren't you planning about Rs 200 crore by August this year?

A: Yes. Our Hyderabad hotel will take a major investment. We will be investing money on this particular five-star hotel in Hyderabad with 233 keys and is situated in the financial district.

Q: Could you share your funding plans with us? Where is the funding coming from?

A: The funding has been tied up for this project. In 2006, we had gone in for an IPO and post that, the sources got back the internally generated money into the company, and then we took some debt.

Q: Could you share your overseas expansion plans with us? Which countries are you looking at? There has been a hotel plan in Tanzania as well. What are the details that you can share with us on that front?

A: Because of 2008-09 recession, we decided to make sure that we complete the on-going projects like Jaipur, Hyderabad and Ahmadabad at least for our India expansion.

Rather than taking on the total Greenfield project, we have purchased a piece of land of 30 acre in Dar-Es-Salaam, but we have put it on the back burner till we do this.

The projects like Ahmedbad and Jaipur are operational now and Hyderabad will be operational. Our major projects would be complete by October. Post that, we will take up the project in Dar-Es-Salaam.

Q: Do you see some amount of traction on the average room rates front? Where does it stand currently on an average for the quarter?

A: The rates have moved up form the last year. There has been a substantial improvement in the rates across most of the hotels, except Poona which currently has a big oversupply.

We have been an established player and had to take a small decrease in the ARRs. Otherwise, all hotels have done better this year than last year.