EIH Ltd has successfully completed a voluntary retirement scheme (VRS), through which the company has managed to reduce its workforce in Mumbai and Delhi by around 400 employees. The company has spent Rs 195 m on this. Besides this, the company will also in future reap the benefits from its restructuring exercise which was undertaken in FY96 and FY97.
EIH Ltd, India's second largest hotel chain operates 14 hotels under the "Oberoi" and "Trident" brands. Of this the company owns 10 hotels (1,690 rooms) and manages the other four (636 rooms). Its Mumbai and Delhi hotels contribute to around 80% of the profits of the company. The company reported a net turnover of Rs 4,405 m in FY99.
EIH had spend a total amount of Rs 150 m on its restructuring exercise which was conducted by Mckinsey & Co to help the company focus on its strategic planning and processes. This has resulted in improving the company's productivity and work culture. Appropriate training too was provided for its employees.
As far as the company's expansion plans goes this year the new hotels which are slated to come up are the Wildflower Hall, Mashobra in June, and the Oberoi, Agra which is expected to open towards the end of this year.
Besides these the other major expansion plans of the company are a 500 room Trident hotel in the Bandra Kurla complex in Mumbai and a 175 room Trident hotel in Pune over the next two to three years.
The company's restructuring efforts should pay off in the next two years in terms of better operating margins for the company. Further the improved economic scenario and political stability will lead to higher inflow of business travel which will benefit EIH, a metro dominated hotel company. The hotel industry's occupancy rates and average yields are expected to start improving during this year.
On valuations, EIH Ltd is trading at 6.4x (on FY99 earnings). This is low as compared to multiples of 20x-25x it had traded at few years ago and the negative news which had affected the hotel industry seems to be in the price.
More Views on News
Sorry! There are no related views on news for this company/sector.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407