Country Club weighs fund options for spread

Country Club India Ltd (CCIL) is planning to tap the market to raise funds for setting up 10 more clubs countrywide.

The Rs 250 crore Hyderabad-based Amrutha Group, which owns the chain, is exploring the possibility of setting up operations in Dubai.

Chairman and managing director Y Rajeev Reddy said: "We are keeping our options open and are likely to come to the equity market in a big way."

Reddy's group first forayed into the market in 1996 with an issue of Rs 3.8 crore to fund the four-star Amrutha Castle Hotel.

However, today over 80 per cent of the equity holding rests with the promoters. The group has also borrowed Rs 45 crore funds from banks and institutions. The group plans to set up three more clubs in Mumbai, two in Chennai, three in Karnataka and then look at second-class cities.

"Each project is likely to cost anywhere between Rs 10 crore and Rs 12 crore, of which the promoter's equity will be around 25 per cent," he added. This will mean raising well over Rs 100 crore in the next couple of years.

Aside from raising funds from the stock market, Amrutha group is looking at strategic investors either in the form of venture capitalists or owners of property.

"A lot of companies abroad are also looking at investing in our projects as they seek to park their long-term funds in India," Reddy said.

It is also looking at the proposition of franchising, which, Reddy said, will be the first of its kind in the club business, whereby the owner of a 2.5-5 acre plot will be provided management support, entertainment and the 'Country Club' brand name.

"The cost towards purchasing the property will be knocked off and this will reduce overheads. In exchange, profits will be shared," he added.

Aside from strategic investors, it is also in talks with institutions and banks to raise future capital. For fiscal 2003, the 10 clubs managed a turnover of Rs 50 crore.

With new projects coming up, the group has yet to make profits, though has broken even, Reddy said. The Amrutha group has invested over Rs 100 crore in its existing 10 clubs spread across Bangalore, Chennai and Hyderabad as well as in Punjab and Mumbai.