The Hindu Business Line : EIH sees jump in profits as tourist inflow rises

HOTEL stocks today finished in the green on indications of a burgeoning tourist traffic, particularly foreign business travellers. The Q2 results of EIH Ltd today sent out a confirmatory signal that profitability would significantly grow this fiscal.

Mr S.S. Mukherjee, Managing Director of EIH, told Business Line that turnover of the industry may go up by 100 per cent over the pervious fiscal and the bottom line growth could vary between 80 and 100 per cent depending on the company and its asset class.

The first half ended September 30, though a dull tourist season, has still shown substantial growth and given a clear indication that "barring unforeseen circumstances, growth should double," Mr Mukherjee said.

Apart from increases in operational profits, EIH's non-performing asset offloading plan is also likely to raise cash for debt retiring and part funding of its Bandra-Kurla hotel project. "This month, we have sold 30 acres of surplus land in Gurgaon for Rs 110 crore. Three other such land assets in Agra, Pune and Karnataka are likely to be sold by March 31, 2006. The total proceeds would be used to retire or restructure debts and financing of expansion plan," he added.

The Mumbai project construction work till ground floor level is over and MMRDA permission is awaited for the superstructure. "We are behind schedule by a couple of months on account of delay in obtaining the permission," he informed.

EIH reported a net profit of Rs 8.03 crore in the September quarter, compared to a loss of Rs 4.94 crore in the corresponding quarter in 2004-05.

The two-hotel subsidiary, EIH Associate Hotels, reported reduction in net losses to Rs 15.5 lakh from Rs 28.30 lakh in the corresponding quarter in 2004-05. Mr Mukherjee said that EIH Associate is likely to report a net profit at the end of this fiscal considering the current booking situation. The high tariff Rajvilas Hotel in Jaipur is fully booked till March 31, 2006. The other hotel in Chennai is also seeing better traffic inflow.

EIH stock closed 2.17 per cent up at Rs 450.20. EIH Associate also finished in the green at Rs 96.50, up about one per cent. Indian Hotels, ITC Hotels, Hotel Leela Venture and Taj JVK also gained today.

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EIH sees jump in profits as tourist inflow rises