Last checked at 14 Feb 2008 07:30
India Hospitality Corp. Provides Strategic and Operational Business Unit Update IHC Posts Strong Growth in Fiscal Third Quarter
NEW YORK, Feb. 14 -- India Hospitality Corp. , today provided its shareholders with an operational update for fiscal third quarter ended December 31, 2007. India's demand-driven economy continued to benefit IHC's core businesses in the quarter, highlighted with a year over year 83% increase in meals served at SkyGourmet (Sky) and 9% growth in same store sales at Mars Restaurants (Mars).
Operating Outlook
"India Hospitality remains firmly committed to exceeding the forecasts it presented to its investors on its July 2007 investor road show," said Chairman of the Board Jason Ader. "IHC is at the nexus of three rapidly growing consumer industries in India and is well positioned to capitalize on the continued increase in demand in the hospitality and travel sectors of the economy."
The company will continue to execute its growth strategy into 2008 and beyond:
-- Gain market share in the airline catering industry through new kitchen openings utilizing state of the art technology and signing new clients -- Identify and execute accretive hotel development opportunities -- Capitalize on the 35% annual increase in shopping mall square footage in India to expand IHC's leading food service brands -- Implement operational efficiencies across the company's businesses -- Evaluate and execute high return acquisitions in each of the company's business segments -- Maintain and grow the infrastructure required by IHC's growing hospitality company -- Hire a new Chief Executive Officer to lead the growth of IHC's businesses in the years to come Business Segment Overview
"We are very pleased with the performance of each of IHC's business segments," commented Rick Foyston, IHC interim CEO. "SkyGourmet continues to expand its capacity into key markets, top line growth at Mars remains solid, and Gordon House has a strong pipeline of accretive growth opportunities."
SkyGourmet
SkyGourmet's airline catering business experienced an 83% year over year surge in total meals served during the quarter.
Sky is one of the leading two flight caterers in India's booming aviation sector and the company anticipates continued growth in capacity, volumes and cash flows. Sky added a new customer in the quarter -- Jet Lite -- to which the company supplies snack boxes from its kitchens in Mumbai, Delhi and Bangalore. The company now serves major domestic and international carriers such as Kingfisher, Jet Airways, Indian Airlines and Air France.
Sky's cash flow margins contracted slightly in the quarter due to pre- opening expenses at the company's newest kitchen units. IHC expects margins to normalize as capacity utilization increases over time.
SkyGourmet continues to pursue its long-term growth strategy and is in the process of expanding its Air Catering Unit in Mumbai by 50% and its fourth and newest kitchen in Chennai opened in January 2008. The company's 2008 pipeline already includes two new kitchens in Hyderabad and Kolkata, the addition of which will ensure that Sky has operations in all six key markets where over 90% of the current Indian air passenger traffic exists.
Mars Restaurants
Quarterly same store sales at Mars grew 9% over the prior year. Margins were impacted by higher input costs and increasing rents, factors that have impacted the Indian retail and food service sectors overall. Recent price increases at mars restaurants should offset the current quarter's food price increase and should benefit fiscal fourth quarter results. We are currently evaluating several new location opportunities for our Mars division with a focus on high returns on invested capital.
Gordon House Hotels
Revenue at Gordon House Hotels (GHH) grew 8% over the prior year. EBITDA margins were even with the prior year at 56%. Average Room Rates (ARR) and average occupancy at the Colaba property in Mumbai stood at $170 and 87%, respectively compared to an ARR of $121 and 81% occupancy.
Management is focused on capitalizing on the supply-demand imbalance in the lodging industry in India. GHH currently has one owned and one managed hotel, with three new properties in the pipeline. The company also owns an ideally located four-acre parcel of land adjacent to the Delhi Airport.
Notice of Annual Meeting
India Hospitality Corp. will hold its Annual General Meeting of shareholders on March 14, 2008 to approve the re-appointment of certain directors to the board of directors of IHC. In connection with the Annual General Meeting, shareholders will receive, among other things, a letter from the Chairman of the board, notice of the Annual General Meeting, and a performance report delivered by the Chief Executive Officer of IHC.
About India Hospitality Corp.
In August 2006, India Hospitality Corp. raised US $103 million in an IPO and private placement and is listed on AIM, a market operated by London Stock Exchange plc, under the ticker IHC. In July 2007, IHC closed on the acquisition from Navis Capital Partners and its Affiliates of India-based Mars Restaurants Private Limited, an emerging hotel and restaurant company, and SkyGourmet Catering Private Limited, an airline catering company with 1,700 employees operating out of four locations in India.
In December 2007, in order to fund strategic growth initiatives, Hayground Cove and Navis Capital jointly invested US $28 million of additional capital in IHC, bringing their total invested capital to US $56 million. Following such reinvestment, Hayground Cove and Navis own approximately 52% of India Hospitality.
About Mars and SkyGourmet
Since its incorporation in 2000, Mars has diversified into bakery outlets and operating and managing food courts and hotels. SkyGourmet was incorporated in 2002 and is headquartered in Mumbai. SkyGourmet currently provides in- flight catering services to a number of domestic and international airlines, including Jet Airways, Kingfisher Airlines, Air India Express, Indian Airlines, Malaysian Airlines and Air France. It has operations in Mumbai, New Delhi, Bangalore, and Chennai. For the nine months ended December 31, 2006, the combined entities had audited revenues of approximately US $18.9 million and 1,700 employees.
Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin -- Federal Financial Supervising Authority) and with respect to UK commodity derivatives business by the Financial Services Authority; regulated by the Financial Services Authority for the conduct of UK business. Deutsche Bank is acting exclusively for IHC and no-one else in connection with the acquisition and related transactions and other matters referred to in this announcement and will not be responsible to anyone other than IHC for providing the protections afforded to clients of Deutsche Bank AG nor for providing advice in relation to the acquisitions and related transactions or any matter referred to in this announcement.
Deutsche Bank is IHC's nominated adviser and broker for the purposes of the AIM Rules for Companies. Its responsibilities as IHC's nominated adviser and broker under the AIM Rules for Nominated Advisers are owed solely to London Stock Exchange plc and not to IHC, any director of IHC or any other person.
No offer or invitation to purchase or subscribe for ordinary shares in or warrants to purchase or subscribe for ordinary shares or warrants of IHC is being made by this announcement.
For Further Information Contact: Investor Relations Contact: ICR Inc. William Schmitt 203-682-8200 Nominated Adviser and Broker: Deutsche Bank Mumtaz Naseem +44 20 7545 8000
SOURCE India Hospitality Corp.
02/14/2008
/CONTACT: Investor Relations, William Schmitt of ICR Inc., +1-203-682-8200; or Nominated Adviser and Broker, Mumtaz Naseem of Deutsche Bank, +44 20 7545 8000, both for India Hospitality Corp./
INDIA HOSPITALITY CORPORATION