Hotel industry's recovery to pre-Covid levels profits 3 years away: ICRA
The Indian hotel industry's recovery to pre-Covid levels profits is at least three years away, ratings agency ICRA has said.
 
The ratings agency said that road ahead for the industry is rough as revenues and margins are expected to post record decline in FY21 with losses mounting over the next two years.
 
The hotel industry has witnessed one of the worst revenue declines, in Q1FY21, with revenues for the industry sample declining by 85 per cent.
 
"Given the high operating and financial leverage in the industry, the revenue decline led to huge operating and net losses in Q1 FY2021 despite the extensive cost-cutting measures adopted by most entities in the industry," ICRA said in a statement.
 
"Despite sharp weakening in interest coverage, recourse to the RBI provided moratorium on debt servicing as part of its Covid relief package announced in March 2020 supported the industry."
 
As per the statement, about 66 per cent of ICRA's hospitality portfolio applied for moratorium under this scheme and several of these will apply for restructuring under the K.V. Kamath committee too.
 
"Although hotels have been gradually allowed to reopen, occupancies have remained subdued in H1FY2021," the statement said.
 
"This will keep revenues moderated, resulting in operating losses and stretched debt metrics during FY2021 and FY2022."
 
The industry has reported a 2.7 per cent de-growth in topline with flat operating margins at 22 per cent in FY2020.
 
"With an 85 per cent YoY decline witnessed in revenues in Q1 FY2021 and subdued occupancies witnessed in Q2 FY2021 as well, industry wide revenues are expected to witness sharp de-growth of 60-65 per cent for FY2021," ICRA said.
 
"Despite several measures taken by the companies to variabilise the fixed costs, the industry is likely to report massive operating and net losses in FY2021."
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Future-Reliance Retail deal stalled; RRVL says 'intend to enforce rights & complete transaction'
    E-commerce major Amazon has got a favourable ruling in Singapore regarding the Reliance Retail's buyout of the debt-laden Future Group as the deal has been temporarily stalled.
     
    Reliance Retail Ventures Ltd in a statement said that it has entered into the transaction for acquisition of assets and business of Future Retail Limited under proper legal advice and the rights and obligations are fully enforceable under Indian law.
     
    "RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay," it said.
     
    The arbitration panel, in an interim order, has directed the Kishore Biyani-led Future Group not to proceed with the deal with Reliance Retail for now.
     
    "We welcome the award of the Emergency Arbitrator. We are grateful for the order which grants all the reliefs that were sought. We remain committed to an expeditious conclusion of the arbitration process," an Amazon spokesperson said.
     
    Future Group, however, did not immediately respond on the matter.
     
    In a major turn of events in the buyout of the businesses of the debt laden Future Group by Reliance Retail, e-commerce giant Amazon.com earlier this month stepped in and said that Future Group violated a contract with it by entering into the sale agreement with the Mukesh Ambani-led retail major.
     
    Last year, Amazon acquired a 49 per cent stake in Future Coupons, a Future group entity.
     
    In August, Reliance Retail Ventures Limited (RRVL), a subsidiary of RIL announced that it is acquiring the retail, wholesale, logistics and warehousing business from the Future Group as going concerns on a slump sale basis for lump sum aggregate consideration of Rs 24,713 crore, subject to adjustments as set out in the composite scheme of arrangement.
     
    The acquisition is part of the scheme in which the Future Group is merging certain companies carrying on the aforesaid businesses into Future Enterprises Limited (FEL).
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    saharaaj

    4 weeks ago

    Two crooks fighting losers small investors

    IL&FS expects to address debt of over Rs50,000 crore in FY21
    IL&FS Board is hopeful that it will be able to address the targetted debt of over Rs 50,000 crore in the current financial year despite the impact of the pandemic.
     
    It is hopeful of achieving the targeted debt resolution of over 50 per cent of the overall debt.
     
    In a statement on Saturday, IL&FS said that the aggregate value of debt being addressed is pegged at Rs 56,300 crore, with over Rs 50,000 crore likely to be addressed by March 2021.
     
    In July, the company had said it expects to address debt of about Rs 57,240 crore, with around Rs 50,500 crore likely to be addressed by March 2021.
     
    The overall debt of the group stood at over Rs 99,000 crore as of October 2018.
     
    As per the last update shared in July 2020, the overall debt addressed based on cash balances stood at Rs 17,640 crore.
     
    By September 2020, an additional debt of approx. Rs 1,460 crore has been addressed, by way of sale of Education business, recovery from non-IL&FS group entities, increase in cash balances and debt repayment in Green entities, increasing the overall debt addressed based on cash balances to Rs 19,100 crore, it said.
     
    The number of entities resolved as of September 2020 stands at 173, half the original number of 347 entities of the IL&FS Group.
     
    Elsamex S.A., an IL&FS Group company with 100 step down subsidiaries, was admitted into insolvency during the September 2020 quarter, thus contributing to the substantial reduction in the number of entities of the IL&FS Group.
     
    As compared to the previous update, the Rs 7,300 crore shortfall in target for debt addressed by September 2020 is being rolled over for achievement in subsequent quarters, the company said.
     
    "The delay has been mainly caused on account of significant impact of Covid-19, which has added time and logistical complexities in the process of completing discussions with stakeholders and in obtaining approvals from lenders, regulators and judicial authorities," it said.
     
    As per the revised estimates, Rs 13,200 crore of additional debt is projected to be addressed by December 2020. This includes Rs 8,150 crore resolved through the proposed InvIT for which an 'in-principle' approval from SEBI has been received.
     
    Further, resolution of Rs 4,200 crore being achieved through debt restructuring has moved from September 2020 to December 2020. Resolution for Rs 10,000 crore, earlier communicated for achievement in Q3 FY21, is being moved to be achieved in subsequent periods.
     
    The New Board of IL&FS has developed a unique "Group resolution framework" that received approval from NCLAT on March 12, 2020. The framework has the potential to form a benchmark for future group insolvencies in the country.
     
    The IL&FS New Board has been following a three-pronged strategy -- Resolve, Restructure and Recover -- while adopting an approach of equitable distribution and balancing interests of stakeholders across the IL&FS Group under the IBC and Corporate Finance principles, to resolve the debt of the Group, the statement said.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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