Vacation home operator Mahindra Holidays & Resorts Ltd (MHRL), a Mahindra group company, is planning to foray into the budget resorts category. The company has so far focused on upper middle class. It is also planning to invest around Rs 250 crore in increasing its inventory by around 500 rooms.
Speaking to reporters on the sidelines of the company's Annual General Meeting, which was the first after the initial public offering (IPO), Ramesh Ramanathan, managing director, MHRL, said that as on March 31, 2010 the company had almost 1,10,000 members who are from upper middle class and above.
“Going forward, we are planning to focus on below the upper middle class category,” or budget category. He decline to comment further on the proposed plan.
On future expansion, he said the company increased its inventory across multiple locations taking the total to 1,476 as on March 31, 2010. “We expect to add significantly higher inventory during 2010-11.”
The company has proposed to invest around Rs 200-250 crore to build 450-500 rooms. The expansion will be a combination of green and brown field projects, he added. The projects includes Tungi, Maharastra, Theog near Shimla and Virajpet in Coorg with an outlay of around Rs 97.87 crore.
While some of the projects would be funded from the IPO proceedings, balance will be funded through internal resources. He noted that currently sundry debtors is to the tune of Rs 750 crore.
The company made an IPO in July last year and raised around Rs 176.88 crore to fund five projects including Ashtamudi in Kerala, Coorg in Karnataka, Ooty in Tamil Nadu, Tungi in Maharashtra and Theog, Himachal Pradesh.
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First quarter net dips
Meanwhile, the company has reported 60.6 per cent dip in the net profit during the quarter ended June 30, 2010 at Rs 13.29 crore as compared to Rs 33.74 crore.
Total income dropped by around 24 per cent to Rs 101.77 crore from Rs 135.30 crore.
Arun Nanda, chairman, MHRL, said that during the first quarter, the management had initiated a number of measures to strengthen its acquisition process and had taken various steps to enhance customer satisfaction. “These initiatives while impacting the numbers in the short run will benefit the company in improving productivity and build a stronger foundation for future growth,” he added. For instance, the company has increased down payment to 15 per cent from 10 per cent, according to Nanda.