Nandini hotel group to up its room capacity

Forays into packaged foods business.

Bangalore-based Nandini Group of Hotels, the Rs 22 crore budget hotel chain, is all set to cash in on the demand for hotel rooms in Bangalore.

The group plans to double its room capacity to 450 by 2008-end. The Nandini group presently operates nine hotels, and five of them offer deluxe rooms, numbering 224, in Bangalore city.

Said N Ananda, Managing Director, Nandini Group of Hotels, "We have witnessed almost 85 per cent room occupancy in our hotels throughout the year. Following a huge demand for hotel rooms in Bangalore, we have planned to expand our network and build another four hotels in the city this year."

The company would invest close to Rs 12 crore on opening new hotels. While Rs 2 crore will be invested from the company's internal accruals, another Rs 10 crore will be arranged through bank loans, he told Business Standard.

Apart from building four new hotels in Bangalore city, Ananda said, the company is also looking at expanding its network in other parts of the state like Mandya, Maddur, Mysore and Shimoga. The company is looking for franchisees to expand its hotel network outside Bangalore. As regards to Bangalore city is concerned, the company will continue to run hotels on its own, he added.

The Nandini Group of Hotels' expansion comes in the backdrop of hotel majors, including Indian Hotels, Royal Orchid and Choice Hotels India planning to set up nearly 20 budget properties, at a cost of over Rs 250 crore, across Karnataka in the next two years.

These hotels are expected to add close to 1,500 rooms and ease the strain on the hospitality infrastructure in the state. Indian Hotels will add up to five properties, Royal Orchid will come in with around 10 and the remaining will be from Choice Hotels.

Budget hotels, which follow the 'no-frills' principle, offer the ambience and comfort of star hotels but at much lower rates. Room rents, depending on season and availability, typically range from Rs 1,000-Rs 2,500. The number of rooms per hotel may vary from about 60 to 100.

Nandini group has priced its hotel rooms in the range of Rs 1300 to Rs 3,800. "We offer star category rooms at the price of a budget hotels," Ananda adds.

However, Nandini plans to rope in as many franchisees as possible to expand its footprint in the state.

"The franchisees will have to make the investment in terms of working capital and the real estate required for opening the hotel, whereas we will provide them with the necessary design for both the exteriors and interiors. I have developed a considerable expertise in designing the interiors of our hotels and will help our franchisees in designing," Ananda added.

The company will also provide with the well-trained and experienced cooks to franchisee operators. "In food business, it is always the cooks who play a very important role in attracting customers. So, we have given a lot of stress on this factor," he said.

Nandini Group is also planning to set up a resort on Hosur road. "Our plan is to provide a middle class family a nice and affordable place to spend their weekend with the family," Anand said.

In addition to this, the Nandini group recently forayed into packaged foods business by launching its own spices and ready mixes under the 'Nandini' brand name.

The company has formed a joint venture company, Ramaratnam Foods Pvt Ltd, with a Bangalore-based rice merchant, Ramaratnam. The company has entered into an understanding with Mysore Sales International Limited (MSIL) to market its food products.

To begin with, the company has launched chilli powder, chutney powder, turmeric, jamun mix, rava idli mix, pepper and rice. The products have just been launched and are sold through leading grocery stores and super bazaars, Ananda said.

The company has set up a manufacturing plant at Yashwantpur in Bangalore to pack 10 tonnes of food products per day at an investment of Rs 50 lakh. Over the next one year, the Nandini Group aims to expand this business in other south Indian states, he added.

The company, which reported a revenue of Rs 22 crore in the last financial year, is aiming at a growth of 15 per cent in the current financial year.