Business & Investment

Mahindra Holidays has a capital investment plan of Rs 1,200: Kavinder Singh, MD & CEO

Mahindra Holidays & Resorts India Limited (MHRIL) MD and CEO Kavinder Singh announces Q4 2009 results, COVID-19 second wave, and business, member additions, cash position, impact on international and domestic business Talk about. Candid chat with Swati Khandelwal from Zee Business. Edited excerpt:

Q: Losses have decreased, but what is your outlook for the future? And how big a concern is the second wave for the company and how can it be mitigated?

A: Looking at them at the standalone level, as far as the quarterly results are concerned, they were great. It added about 4,800 members, an increase of 32% year-on-year and an increase of about 48% quarterly. So it was good to add members. Most notably, it had an 85% share in the fourth quarter. It is important that we have a membership model, not a traditional hospitality player. As a result, members came and the occupancy rate was 85%, but at the same time we added about 4,800 new members. This is quite a few. Looking at profits, looking at profit margins at the stand-alone level, pre-tax profit and profit margin increased by 130 basis points (bps) to about 12% quarter-on-quarter. For the full year, EBITDA increased by about 19%, pre-tax profit increased by 37, and pre-tax profit margin increased by about 600 bps. Overall, the margin has reached the 18% level. Looking at our cash position, the cash position at the beginning of the year was about 781 rupees and the cash position at the end of the year was about 940 rupees. There are two things to look at in the hospitality industry: debt status and occupancy levels. Interestingly, we are a debt-free company with a market share of 85%. Our cash has increased to 940 rupees, increasing membership and occupancy. Therefore, these were standalone results. Regarding the Finnish business, we talked about the number of consolidations, but Finland faced some problems in the third and fourth quarters due to the second and third waves and strict regulations. .. Nevertheless, they have done a lot of cost control to manage our losses. Therefore, at the EBITDA level, it was about 8-9 million euros. That’s why you’re seeing these integrated results, but at the stand-alone level, they’re healthy, profitable, and in a growth model.

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Q: There is a second wave and there is a story related to the third wave. Therefore, the uncertainties created by CORONA are less predictable in the future and can put pressure on how many members can be added and how many want to leave in the midst of fluctuations. At the same time, there is news that the office of Club Mahindra in Gujarat has been closed due to a violation of the COVID protocol. From a perspective perspective, what are the levels that are causing these concerns?

A: If you talk about this wave of corona, you would say that the way it struck surprised everyone. Looking at the two factors of this corona wave, vaccinations gradually increased and vaccines were not available last year, resulting in a 75% occupancy in the third quarter and an approximately 85% occupancy in the fourth quarter. Expected. .. Therefore, in the absence of the vaccine, our resort gave members the confidence and confidence that they were safe and running a safestay program. As a result, all resorts have been certified as COVID Safe by Bureau Veritas. We also provided it in the form of a trip with the confidence to provide members with several facilities such as COVID inspection, e-pass acquisition, disinfection vehicle acquisition, etc. For this reason, vaccines were not available until then, but our occupancy has increased significantly. This time we have a vaccine and as the vaccination program is deployed, our occupancy has returned to over 80% and I believe. Interestingly, we also added resorts throughout the last quarter and year. Currently, there are 79 resorts in India and abroad, with 9 additional resorts this year. With the addition of 465 rooms, the total inventory will reach 4,197, and the capital investment plan will remain unchanged, with a capital investment of Rs 1,200 and an increase of 5,500 rooms. If you look carefully at these things, the second wave will decrease at the same rate as it happened in the United States. At the same time, vaccination will be deployed very quickly, this time in the next few days. So, given these factors, our occupancy will return, more members will be added, and resorts will continue to be added.

Q: The company added 12,000 members in FY2009, which is large, but I heard that COVID is increasing the number of overdue members. How many are there and by when can I collect them?

A: We have 2.50 Rakı members, some of whom fall under the EMI plan. As a result, we found that because of COVID, few members were not paying at that time, and they were provisioning properly. Cancellation of overdue persons is a one-time cancellation. This does not have a significant impact on our number, as there are provisions in place. Not surprisingly, COVID caused a slight change in their willingness to pay and we continued to follow them one-on-one. -Six months later we made a decision. From now on, as far as I can see, these waves are small and vaccinations are very fast, so I’m not worried about future arrears.

Q: You were talking about international business. So, there are very non-uniform patterns of COVID all over the world, so please tell us about the prospects you see there. Also, please tell us about the available inorganic growth opportunities.

A: First, let’s talk about international business. Fast-paced vaccinations are taking place in Finland, and there is international news that 30% of the population is vaccinated. Their true season begins on June 20th and lasts until August. Last year, they also reached 91% occupancy, recording a positive EBITDA. This time around June 15th, most people will be vaccinated, domestic travel will surge, the number of residents will increase and the business will be profitable, so better results can be expected. So this is the situation in Finland, with 25 resorts, 2 resorts in Sweden and 6 resorts in Gran Canaria. So overall the situation is good, the holiday season starts in June, vaccinations are going well and domestic tourism will increase rapidly. We look forward to inorganic growth opportunities in the range of 940 rupees we have. One important thing in our business is the need to add resorts when adding members. So I have no plans to buy a resort company, but with a focus on India and an increasing number of members, I would like to buy a good resort that is available at a reasonable price. Similarly, we are considering destinations in Southeast Asia near India, which are short-term destinations such as Dubai and Phuket, and if there is a good resort, we will buy it. At the same time, as soon as the corona is over, we want to let our viewers know that leisure travel is booming and ready. Family vacations are very good for us as people prefer to travel and visit outdoors. At our resort, people can enjoy the open and outdoor environment, and the resort rooms are big, with studio one-bedroom and two-bedroom apartments.

Q: How do I use the available cash of 940 rupees?

A: Cash is very easy to use and as soon as you find a good resort in a short-term destination in India or Southeast Asia, buy it at the right price. This is how to use cash. It helps increase the addition of our members, this is my belief. Therefore, our cash will be used to increase our core business resorts.

Mahindra Holidays has a capital investment plan of Rs 1,200: Kavinder Singh, MD & CEO Mahindra Holidays has a capital investment plan of Rs 1,200: Kavinder Singh, MD & CEO

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