Hotel Leelaventure Ltd, which owns and operates luxury hotels and resorts under the brand Leela, reported a net loss of Rs 135 crore for quarter ended September 30, 2013, against Rs 92 crore in the year-ago period.
The revenue of the company increased by 17 per cent to Rs 154 crore compared with Rs 132.5 crore in the same period last year.
While the company saw a jump in other income, it was not enough to cushion the impact of higher finance costs which rose from Rs 75 crore in Q2 FY13 to Rs 127 crore in the last quarter.
Leela has been battling with huge debt that it acquired over time in its spree to build properties across the country. The firm has managed to cut some of its long-term debt but has seen rise in short-term debt in the last six months.
The firm could also benefit from the recent development as the government has recently given the industry ‘infrastructure status.’ This could allow the firm to raise debt at cheaper cost going forward.
According to the recent development, government included hotels with project costs in excess of Rs 200 crore and convention centres with project costs more than Rs 300 crore in infrastructure lending list. This will allow companies with large hotel projects to access loans with longer repayment of 15 years at lower rates of interest with higher debt to equity ratio of 4:1.
Earlier this year, Vivek Nair, chairman and MD of Leela, told CNBC TV18 that the company is planning to cut down its debt substantially in FY14 by divesting 74 per cent stake in some of its hotels. The company was aiming to raise Rs 2,000 crore through this.
The firm also sold its IT park in Chennai to Reliance Industries for Rs 170 crore some time ago.
Leela Hotels, which was founded by Captain Krishnan Nair in 1987, runs eight properties in the country, including those in Delhi, Jaipur and Bangalore.
(Edited by Joby Puthuparampil Johnson)