SBI has pickced up a nearly 20-per cent in Mayfair Hotels in Orrisa, for an undisclosed sum. The group currently has four hotels in the state and plans to use the funds to expand organically and geographically.
SBI acquired 3.7 million fresh shares of a face value of Rs10 each issued by the company. As a result, the subscribed equity base of the company has increased to 18.9 million from shares from 15.2 million earlier.
Aftetr the deal the promoters' stake will be reduced to 80 per cent. The group plans to dilute its stake upto 40-45 per cent fund its expansion in the east and north east.
Dilip Ray, chairman, Mayfair Hotels, says that the east and the north east offer untapped potential.
Mayfair has a Rs260-crore expansion plan for which it may raise the remaining amount through an IPO in the next 24-36 months depending on market conditions.
It also plans to borrow Rs65-Rs70 crore from banks and financial institutions.
The company has a turnover of Rs 48.5 crore in 2007-08 with a net profit of Rs 9.27 crore. The group claims 100 per cent occupancy in its hotels and says that the slow down in the hospitality industry has not affected them. They aim to achieve a turnover of Rs 60 crore in 2008-09 with expected net profit of Rs13 crore.
Most hotels in metros have been offering up to 40 per cent discount on rack rates. Such a practice is not uncommon in the industry in off peak seasons and reccessionary times. A hotel room is a perishable commodity and occupancy is of paramount importance.
Mayfair group is promoted by former union minister Dilip Ray and his family. Ray was an MLA. for 10 years from the Rourkela Constituency and cabinet minister for five years betwen 1990-95. He was also union minister for 4 years holding the independent portfolio of food processing, coal and steel.
Areas of expansion
- Mayfair is proposing to immediately develop a property in Gangtok. The 48-acre property has been taken on lease from the former chief minister of Sikkim, Nar Bahadur Bhandari. A 5-star deluxe spa resort will come up on about 15 acres with facilities for online casino.
- Mayfair will also look to set up properties in Siliguri, Kalimpong and Chilka. Currently, the group is working on the region's second convention centre with a capacity of 1,200 people. It should be operational by January 2009.
- In Orissa, the group has acquired 100 acres in Sipakuda village on the shore of the Chilika Lake to develop a 5-start deluxe resort of international standard with golf course and helipad.
- It is also planning to set up a new hotel in Cuttack, while undertaking repair, renovation and replacements (RRR) of its existing hotels in Bhubaneswar, Puri and Rourkela.
- Mayfair is also looking at acquiring a hotel in Hyderabad and converting it into a 5-star one. The company has bought two properties in Darjeeling, where it already has a hotel. It is also looking for a plot at Rajarhat in Kolkata and another in Siliguri.