Taj Hotels' Owner Reports Biggest Drop in Net Profit in Almost Eight Years
Indian Hotels Ltd., the nation’s largest operator, reported it biggest drop in profit in almost eight years as costs rose and it kept part of the terrorist-hit Taj Mahal Hotel & Towers closed for renovation.
Net income at the company chaired by Ratan Tata plunged 80 percent to 33.3 million rupees ($716,000) in the three months ended June 30 from 164.4 million rupees in the year earlier period, the company said in a statement to the Bombay Stock Exchange today. That’s the biggest drop in profit since the quarter ended Sept. 30, 2002, according to data on the Bloomberg.
Indian Hotels fell 1.9 percent to 99 rupees at the 3:30 p.m. close in Mumbai, its biggest drop in almost two months. The heritage wing of the hotel built in 1903 was gutted when militants armed with guns and explosives killed 166 in attacks across Mumbai in 2008. Sales at the company, which plans to open the renovated heritage wing on Aug. 15, rose 25 percent in the quarter.
“This seems to be the lowest point,” as sales have started to increase, said Himani Singh, an analyst with Elara Securities Ltd. in Mumbai who rates the stock a “buy.” Still profitability will only improve if the company “can ensure they launch their coming properties on time and without delay.”
Indian Hotels has spent 1.8 billion rupees renovating its flagship hotel, Managing Director Raymond Bickson told reporters in Mumbai today.
The company’s insurance for business interruption expired in November, Indian Hotels said in the statement. Costs increased 9 percent.
Terrorists entered luxury hotels including the Taj and Oberoi, a railway station, Jewish center and tourist cafe on Nov. 26, 2008, spraying bullets and throwing grenades. Twenty-five days later, part of the Taj Mahal and the Trident Hotel, adjacent to the Oberoi, reopened.
To contact the reporter on this story: Siddharth Philip in Mumbai at Sphilip3@bloomberg.net
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