Real estate company, Parsvnath Developers, presented gloomy second quarter results on Monday. Its net profit dipped 41.5 per cent in the quarter ended September to Rs 29.08 crore from Rs 49.97 crore in the corresponding period last year, on the back of high inflation and rising interest rates. The drop is worse than the first quarter, when the net profit was down by 19 per cent year-on-year.
Its expenditure nearly doubled during the quarter to Rs 186.12 crore from Rs 99.9 crore in the same period last year due to increase in cost of construction, which doubled to Rs 151.8 crore from Rs 71.5 crore last year.
The revenue was up 28.7 per cent at Rs 254.9 crore against Rs 198 crore in the corresponding period last year. There was no change in its debt level this quarter, which remains at Rs 1,200 crore.
“We are not launching any new projects, but are solely concentrating on completing the ones in hand,” said Pradeep Jain, chairman. He blamed the high cost of funds and less liquidity in the market for the dismal year-on-year performance.
However, the company is venturing into the budget hotel segment and has tied up with Choice Hotels International. The venture aims to open 20 to 25 hotels across the country, with focus on Delhi and Tier-II and III cities such as Vrindavan, Varanasi and Haridwar. It will open five to seven hotels by the end of March, starting with Delhi this month.
The room tariffs across the hospitality chain will range from Rs 3,000 to Rs 5000 per night.
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“We will not build it on our own land, rather it will be a revenue sharing model or leasing,” said Jain.
It is targeting to roll out at least five budget hotels per quarter. Jain stressed it does not want to invest large sum of money in this segment. “We will enter into long- term tie ups with the existing owners,” he said.
These affordable hotels will cater to leisure tourists, businessmen and also religious travellers.