Kamat Group considering merger
Mumbai-based Kamat Hotels (India) Ltd (KHIL) is looking to merge some of the promoter group hotel and restaurant companies with itself. Kurian Chandy, chief financial officer, KHIL, confirmed the development saying a board meeting to this effect will be held on March 26, 2010, to decide which companies will be considered for this merger exercise.
Industry sources said that KHIL management wants to bring in the profit-making businesses onto the books, thereby strengthening the KHIL balance sheet. “These are zero-debt, profit-making hotels wherein the asset is owned by the promoters and are outside of KHIL books.
Similar is the case with the restaurant business which is already profitable. The hotels to be merged are under management wherein KHIL only gets a management fee. With the new arrangement, the P&L of these hotels and the restaurant business will come under KHIL books,” said a source.
Merging of the hotels and restaurant business will give the promoters additional stake in the listed entity. As a result of this move, hotels owned by the promoter group companies in markets like Goa and Murud are likely to merged with KHIL. A few other similar projects outside of KHIL will come under its fold over a period of time.
“For instance, hotels in Silvassa, Bhubaneshwar etc will eventually be brought onto KHIL books. These are properties where expansion is currently going on and may have debt on their books. Once the properties become debt-free, they will be merged with KHIL,” the source said.
The company currently operates around 34 restaurants in Maharashtra, Orissa and Rajasthan. The company management has plans to expand this business through franchise model in addition to owned and managed outlets.
“It is poised to be a highly profitable business and hence makes good sense to bring it onto KHIL books,” said the source.