Just two days before his 92nd birthday, Chittarath Poovakkatt Krishnan Nair, widely known as Captain Nair' for his army background, has decided to call it a day as chairman of Hotel Leela Venture.
The company he led for over three decades (Nair started the chain named after his wife, Leela, when he was well past 60), however, has no intention of letting him go completely. Nair will join the ranks of peers such as Ratan Tata, Keshub Mahindra and N R Narayana Murthy in being crowned chairman emeritus.
Hotel Leela Venture will now have a unique structure at the top. While Nair's elder son, Vivek Nair, who was vice-chairman and managing director, will now be the chairman and managing director, Dinesh Nair, the younger son, who was the joint managing director, has been elevated to co-chairman and managing director.
Starting with the Mumbai property, spread across 11 acres near the international airport, Nair set foot in the hospitality industry in 1986. Since then The Leela Palaces Hotels and Resorts has risen to become one of the most sought luxury hotel brands globally, winning several global hospitality awards.
Today, the company has six owned operating hotels and five more under development, while two others are managed by the company. However, the rapid expansion, dependent on heavy investment, has led to a multi-fold rise in debt on the books of the company.
For instance, one of the newest properties, in Delhi's upmarket Chanakyapuri area, was built at an average cost of Rs 6.53 crore a room, making it one of the most expensive hotels in India. With 260 rooms, the Delhi property was built for Rs 1,700 crore.
Interest hits margins
Hotel Leela Venture posted its third consecutive quarterly net loss for the quarter ended December.
High interest payout, which continued in the quarter, dented the margins. The company posted a net loss of Rs 97 crore for the quarter against a loss of Rs 100 crore in the corresponding quarter a year ago.
Finance costs, on account of the Rs 4,000 crore debt, jumped to Rs 118 crore for the quarter against Rs 109 crore in the corresponding quarter a year ago. The company has posted losses in the last six of the seven consecutive quarters.
However, the company saw an uptick in demand seen from the 14 increase in revenue during the quarter. The company saw its revenue rise to Rs 182 crore, on account of the favourable peak season traffic, from Rs 159 crore posted last year.
Restructuring of debt under the corporate debt restructuring has been approved by its lenders. The company has stated already that it will liquidate some of its non-core assets to cut debt.