Envisaging huge potential for future growth, chemicals manufacturer Balaji Amines has diversified into hospitality business with its maiden opening of 129 room hotel in Solapur, one of the fastest emerging business hubs in Maharashtra.
Built at an investment of Rs 100 crore, the five star hotel is first of its kind in the region and also competes with any other hotel in this segment across major cities. Named as Balaji Sarovar Premier, the hotel will be managed for 12 years by Sarovar Group, one of India’s most reputed hospitality group.
“Until now, we were purely into chemical manufacturing and export business and hence, the growth was restricted. With the opening of hotel, the growth will multiply going forward,” said D. Ram Reddy, Joint Managing Director, Balaji Amines Ltd.
The project serves two primary objectives. First, the diversification made us entry into the business which has potential for 50% growth and also, the appreciation in the price of real estate.
“The estimated price of the real estate has gone upto Rs 8 crore now from the level of Rs 1 crore a few years ago. Hence, in addition to the ongoing expansion in business, price appreciation of the real estate will add to the existing assets of the company,” he said.
There are a number of kiosks available in this area which makes a good site for a five star hotel. The company has borrowed Rs 30-35 crore to part finance the project while the remaining was met through internal accruals.
“We are looking to retire the debt in the next couple of years with an estimated Rs 12 crore of net profit addition in the next five months of the current financial year and more than double of the same next year onwards. After that, the revenue generated through this hotel will be added directly to the company’s bottomline,” Reddy said.
Many large industrial houses including NTPC, Bharat Forge, Power Grid Corporation of India and Vasavdatta Cement etc. have chalked out mega investment plans in this region. Hence, around Rs 70,000 crore investment is lined up in this region in the next 10 years. Being the only five star hotel available in this region, we are confident of growth going forward, said Reddy.
He, however, warned that the hotel would have to offer rentals a little lower than the same available in cities due to its stiff competition from small hotels in this region.
