CGH Earth (formerly Casino Group of Hotels) the five-decade old Cochin-based hospitality major, is understood to be exploring an option to exit from its air catering business – Casino Air Caterers & Flight Services (CAFS). According to private equity industry players, CGH Earth is looking at price of around Rs 100 crore to exit this business which has presence in Cochin, Calicut and Chennai and has around 14 Indian and international carriers as its clients
According to industry players, CGH Earth is looking to focus more on its primary business of developing eco-tourism resorts and feels that running the highly competitive air catering business with presence in limited locations is not fetching revenues as expected. However, senior CAFS officials said the stated strategy of the Group is to explore or exit. “We are exploring options to expand into Tier II towns such as Madurai, Trichy and other cities. In the process of this, if we get a good deal, we are open to exiting the air catering business,” a senior official of CAFS told Business Standard. CAFS has a capacity to process 10,000 meals per day and clients include Air India, Air India Express, Jet Airways, Etihad, Kingfisher Airlines, Bahrain Air, Silk Air, Saudi Arabian Airlines among others.
The air catering business is growing at 15 per cent annually in India and is dominated by the likes of Oberoi Flight Services, TajSats, Sky Chef and Ambassador. During late last year, Zurich-listed $3 billion Gate Gourmet acquired a majority stake in Skygourmet from Indian Hospitality for close to Rs 400 crore.
Even as this transaction to exit the air catering business is in the works, CGH Group is parallely charting an expansion from the current nine locations, primarily in Kerala and Lakshadweep. CGH Earth was founded by Dominic Joseph Kuruvinakunnel on the harbour island of Willingdon, in Cochin, Kerala during 1957 and is amongst the pioneers to have developed the eco-tourism concept in Kerala. The Dominic family started out with the Casino Restaurant, catering to the dock workers and commuters of Willingdon Island, evolved into the familiar Casino Hotel, then into The Casino Group, and now - CGH Earth. During 2008, some of the major private equity players were in talks to invest around Rs 300 crore into this company, which did not sail through.
