Royal Orchid Hotels Limited (ROHLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, I welcome you all to the Q2 and H1 FY '23 Post Earnings Conference Call of Royal Orchid Hotels Limited. Today from the management we have with us Mr. Chander Baljee, Chairman and Managing Director; Mr. Amit Jaiswal, Chief Financial Officer; and their team. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements which exemplifies our judgment and further expectations concerning the developments in our business. These forward-looking statements involve risks and uncertainties that may cause actual development and results to differ materially from our expectations. Also, this is a reminder that this call is being recorded. I would now request the management to kindly brief the participants about your performance for the quarter, post which we can open the floor for Q&A. Over to you, sir.

Good afternoon, and warm welcome to everyone. Thank you for joining us for the Royal Orchid Hotels Limited Earnings Conference Call for the second quarter of the financial year '22, '23. Please note that the Q2 '23 quarter results press release and investor presentation are available on the exchanges. I hope you had the opportunity to browse through the highlights of the performance. Last 2 years have been very tough for our industry. We have sailed through this turbulent years very successfully. The industry was coming to a near normalcy in November 2021, when the third wave of Omicron hit us in January 22. But we recovered from the third wave quickly and bounced back in March '22. From April '22 onward, we've done a robust business which is evident from the financial results of the first quarter. We have continued the success story in the second quarter also. The same is evident in our second quarter results. The company has posted a robust growth because of its being strong business model and effective risk mitigation strategy. We're aiming to post better margins than what our company has witnessed in the recent past. The second quarter results have been one of the best in the last 10 years. Financial highlights for the company in the second quarter ended September 22 on a consolidated basis are as follows: Consolidated revenue from operations Q2 '23 was INR 58 crores as compared to INR 31.85 crores in Q2 '22, a growth of 82%. This was attributed to increase in ARR and occupancy and also increase in F&B business. Consolidated EBITDA for Q2 was INR 20.45 crores. That is about 35% as compared to INR 8.75 crores in Q2 of '22, an increase of 134%. Consolidated PAT before exceptional items for Q2 '23 stood at INR 9.38 crores as compared to INR 0.55 crores in Q2 '22, an increase of 1,605%. During the quarter, we've been able to increase the average room rate from -- for Q2 '23, it stood at INR 4,898 as compared to INR 3,088 of Q2 of '22, a growth of 59%. During the last year, we opened 9 hotels with 388 keys and in the first quarter of '22, '23 we opened 2 hotels, taking the total hotel tally to 73 hotels with 4,546 keys. We are well in line with our vision to operate 100 hotels by 2023, and we're looking forward to opening new hotels in different cities of India. During the quarter, we witnessed a RevPAR growth led by higher ARR. We believe the industry has seen its revival, and we have bounced back with better results in the current financial year. The management has set out a strategy to diversify its product offering, provide unique customer experience and work towards a robust balance sheet. I would like to conclude my opening remarks by saying that we are witnessing major signs of growth for the industry as a whole which will show up in our overall earnings quality over the next several quarters. Thank you. And now we can throw the floor open for questions.

[Operator Instructions] We already have a participant, Agasthya. You may go ahead, please.

Am I audible? Thank you very much, [ Vinay bhai ], and thank you very much, sir, for your presentation in a great quarter. Sir, I had 3, 4 questions. One is that historically, we have seen that once we see growth -- industry-wide growth, it's only a matter of time that additional capacity comes in and things go -- revert back to low profitability, low ARR and low occupancy rate yes, on -- median occupancy rate. So what are you seeing this time, which is different than previous cycle? Is it different than previous cycle or we are just in the midst of a very good cycle and the cyclicality of the business will again reflect going forward sooner or later? So that's my first question. Second is, sir, for your company, in particular, given the base of hotels and properties that you have as of now, can you take us through the seasonality of the business that you're expecting? I'm assuming that Q1 was normal and Q2 is also normal. So what would H2, a normal H2 look like in terms of just seasonally, obviously, it will be higher, so how much higher? Just some idea on that magnitude. And one question is on the margin, sir. You guys have really done very well on the margin. So can you give some guidance on the sustainability of this margin, is it completely driven by, as of now, it seems to be driven completely by realizations, but what's happening on the cost side? I'm assuming that again sooner later, there will be cost pressures which you will see, so how do you plan on tackling that? And final question is on the number of hotels and keys that you expect by 2025. You have given a guidance till '23, but can you extend it to '25.

See, one is you raise a question on demand and supply. We see whenever the hotel industry was in a very bad shape and nobody wanted to invest in hotels for a very, very long time. And now that the industry started doing well, a lot of interest has come into people opening hotels and people would start. But there is a long gestation period in India and it would start by obtaining -- buy a land and takes you almost 3 years to open the hotel. So I think the real capacity will start kicking in from 3 years from now, start kicking in. And of course, we are assuming that economy is also growing. I think recovering over other countries, very small, so much growth. In fact, if you really look at it, our government has done a great job, attracting a lot of investment. And this investment is what is really causes a lot of demand. And if we look at it that we have got a large capacity in Bangalore and even in yesterday papers, in today's papers saying that Bangalore has attracted the largest amount of investment and almost 3x the investment of what Gurgaon has attracted. So I think to maintain this, supply and demand would remain robust as far as we are concerned. And other question is seasonality. Traditionally, 40% of the business comes in the first half and 60% in the second half. Now -- so I see no reason why that should not continue. And so the second half should be better than the first half, even if you don't see very high demand, but even if you see 45%, 55%, it's still better than the first half. So I feel that our second half results should be substantially better than the first half results. Then you mentioned about margins. Yes, there was a lot of cost cutting. We have reduced the cost and yes, cost over a period of time historically, it does arise. But we are keeping a strict watch on it and of course, we try to see whether our gross operating profit remains the same. Of course, if the income goes up, the cost also goes up and there's not much of a worry, but we are keeping a tight watch on that. And I think, I don't think there will be a runaway cost increase in the future also. You mentioned about the number of hotels in 2025. We are definitely beefing up our teams for example, in East we were very weak. So we have just hired a VP who has joined us a couple of days back who's based in Kolkata. So we are going to strengthen that. So East and Central India, he is going to be looking at. We hired a VP South who will join us next month, very experienced candidate. We did have a VP South for some time before the pandemic but then we did not hire anybody during the pandemic. So one VP South has also been hired who will then push some more hotels in the South. So South and East which have been, to some extent weak for us will be strengthened. So I think maybe if we're looking at 3 years from now, we definitely hope that we should be increasing our room count -- we got 4,500 right now, we think we should definitely go to about 7,500 to 8,000 rooms by 2025.

Great. Sir, one question which I forgot -- sorry for that. Sir, I believe that you are in the process of selling some of the properties in Africa. So any development on that side? That's the last question I have.

Yes, I did visit Tanzania in the month of August to get the situation, to get an analysis of what's going on in the market there. That economy is turning around. And in fact, the good part of it that there is a pucca road to our site, which was made recently, a lot of government housing and government offices, the DC office has moved almost very close to our site. So there is again now interest in -- so we are -- we have spoken to a few people to sell the place. And they're all advised that don't be too much of a hurry to sell because situation in Tanzania has turned around. The new President is doing level best to get back all the gas companies which have set up shop there. Some have already come there. So once that happens, the economy will be boomed. And I think we'll get a good value for our land.

What's a good value, sir, for your land?

Well, we are looking at about 4 million, but of course, it depends on the -- we can't say that. That's how we're asking.

To all the viewers, I would like to add where Mr. Baljee had stated regarding the margins. See, last quarter, we were speaking about INR 80 crores of EBITDA for the year-end. Already, we have achieved in first half INR 44.46 crores. So it looks like we should be able to touch an EBITDA of INR 100 crores for the year-end.

[Operator Instructions] I have a question from Mr. Susheel in the chatbox. His first question is, what is the percentage revenue share of 3 main centers, Bangalore, Goa and Jaipur in the consolidated numbers.

Come again?

What is the percentage share of the 3 main centers, Bangalore, Goa and Jaipur in the consolidated numbers?

Bangalore Goa and Jaipur. I just responded.

He just responded a few minutes ago.

The second question is, is the new addition at Candolim a revenue share hotel?

Yes, it is a revenue share.

His third question is, out of your total hotels, which ones are revenue share?

We're -- I'll respond to this. We have revenue share hotel, pure revenue share hotel is Nagpur, Hospet, Gurgaon. These are the 3 which are pure revenue share hotels.

His fourth question is, what is the breakup of other income, INR 5.11 crores in the consolidated results?

Yes. I'll tell you. See, INR [ 55.11 ] crores comprises of primarily interest income, which is roughly around INR 120 lakhs. Then we have a currency gain, the investment in Tanzania, the currency gain of almost INR 40 lakhs. Then we have certain recoveries from the managed property of around INR 2 crores. And apart from that, we have got some income as rent concession and some subsidy, which is almost around INR 50 lakhs and balance certain miscellaneous incomes are there.

We'll take the next set of questions from Aditya.

Sir, today, you have issued a press release to the stock exchange regarding the issue of debentures of INR 200 crores. So I believe this would be for acquiring new hotels on revenue share basis. So sir, my query is, whether you would be focusing on the leisure segment or on the business segment for this new ventures or new hotels?

No, it will be mostly for business, but it could be selectively for some marquee leisure property also. Like in Goa, if there is some more revenue share coming up, we got -- it's a mature market. Coorg is, again, a upcoming market. So there will be certain markets where -- which are leisure but which are established and they are not prone to that much fluctuation. So we will look at revenue share there also selectively.

Sir, I understand this is a very strong up cycle in the business. Sir, last time -- you are a very old hand in the business. So sir, last time, when was it that you saw a similarly or a similarly strong cycle in this business?

See, 2003 to 2008 was the dream run where a lot of things happened, business really did was a boom for the country as well as for as, particularly for us in Bangalore. That's why I emphasized that Bangalore was still going to the other big move and new hotels, our new airport is being inaugurated on the 12th by the PM. And it's going to be probably the best airport in the country. It is going to be at par with the Singapore airport also. And the projection they have given us are tremendous. So I think to my mind, Bangalore being our headquarter, we have a large inventory in Bangalore and we're adding more hotels in Bangalore. So Bangalore is going to be booming. Our country is going to be booming. So I see the similar sort of cycle happening in the next at least 5 years.

Sir, as compared to the pre-COVID levels, have international travelers come back?

See, international travelers not to that extent. But we, as a company, were never really dependent on international travel. I'll give you a example. When we opened our hotel in Goa, the first thing I did was to stop the charter business, which is international business because I noticed that the charter business was a low margin, high volume business. And we felt that Indian market will be growing enough and the interest in Goa will be there, sustained interest in Goa will be there. So I think -- so that has put us in good stead because then if you've noticed that business did so well that we bought out our partner in Goa. And I think that's the best decision we did because now we can expand our hotel, because the partner was not interested in investing money. We will expand that hotel, add more rooms. And so I think overall so far, whatever our judgement has not been too wrong. And I think going forward, we are looking for healthy demand in Bangalore as well as Goa, where we have 5 hotels right now and we're looking further also.

It has been a long week for the industry, sir, all the best.

We'll take the next question on a chat, which has come from Mr. Manoj [indiscernible]. What is the percentage of food and beverages in total revenue in Q2 and H1 FY '23?

Yes. See, Q2 -- sorry, first, I will say Q2, the F&B percentage was almost 34%. And if you look at H1, it is around 35%.

The second question is what is your expectation on business from wedding season from November to February this FY '23 as huge business is expected post COVID full season.

See, wedding business is definitely going to be booming because one thing Indians do spend on, educating their children and spending on their weddings. And it has become a trend to now use hotels rather than stand-alone convention centers or marriage hall. So that people find it a little prestige also attached to that. And we are focused on that. In fact, we have got 18 hotels in our group, which are focusing on the wedding business. So I think to my mind, that business is going to grow, season is also coming for the wedding business. So -- and now there is no restriction on the numbers. You see there was a restriction on you can have 200 people, 100 people and 50 people, all the confusion during the COVID time, rightly so. But now there is no restriction and people are going all out with a vengeance to and prove -- to go and have weddings in a hotel. And what we are doing is, in our resort hotel in Bangalore, we are renovating our banquet call. In our Jaipur hotel we are adding one banquet hall so that the bedding business can grow exponentially.

We'll take the next question from the line of Rajiv. Rajiv, you can go ahead and ask your questions.

Congratulations for good sets of numbers. I have my first question. We have targeted 24-plus hotels and 1,200 plus keys by March '23, as per our presentation. How much if this have we achieved, are we confident of reaching this target and the given result?

So there would be some sort of -- we are looking at actually 24, which are signed and in the project stage. There could be some hotels which will be overrun into the next half year. So I would say that within the next half year, next 1 year, these hotels will definitely come in, but we are also getting new hotels which we are signing. So if some of these hotels do not come through, right? Then we are hoping to sign some other hotels which may come, right?

Okay. Okay. My next question is your average occupancy has increased to 76% in H1. Where do we see it for FY '23? And where do you see it trending for FY '24?

See, I would say that the occupancy has reached a good level. But of course, there is still a scope of reaching to 80% over the next 5 months. October was not too good because of the holidays. So the city hotels suffered during holidays, leisure hotels do booming business in holidays. But I do see an increase going up to 80% and I think 80% is kind of optimal. You can't -- because of our diversity in so many hotels and all that, some may not do to better than 80%. So I would say going forward, I don't think we'll go beyond 80%.

Okay, sir. My next question is, similarly, how do you see average room rent behaving in second half and next year? And what will be key drivers for the same?

The ARR in the second half would definitely be 10% more than ARR in the first half. For example, let's see, it's about a hotel in Gurgaon, see Gurgaon started in this lean period. So there, I see an ARR increase of almost maybe 25%. So I would say I wouldn't like to make a sweeping statement. But Bangalore has done very well. So Bangalore we may do 10% more than what we've done in the past. So there can't be a single sweeping statement for all, but I would say the second half always looks positive than the first half.

My next question, any new states, we are looking at for growth and plans to increase the penetration in the existing states.

Any?

New states. Newer states...

Yes, that's why I pointed out that we have appointed VP South, and we have also appointed a VP East so that we are trying to see whichever states are not covered by us, we want to cover and we're aggressively going to pursue that.

We take the follow-up questions from Agasthya. Agasthya, please go ahead.

Sir, what would be the replacement cost of a 5 Star hotel nowadays on a per room basis?

Per room about INR 1 crore.

It's still INR 1 crore, sir. That's the number that was there, like 7, 8 years back.

You see what happens is that you -- 5 star is very, very -- you can -- if you talk of 5-star deluxe hotel, The Leela or so, there are 2 categories, 5-star deluxe hotel and 5 star. If I were to make a hotel today not counting land cost, not counting interest on construction during the construction phase and all that. And then I think about INR 1 crore can be done for a business hotel and also depends on the number of rooms. If you do a 200-room hotel than you are at INR 200 crores. But if you do a 100-room hotel of 5 star then it may come to 120 crores because the areas common are pretty much the same. It's a very, very difficult situation. If you ask a question, I won't be able to give a...

I understand, sir. I was just wondering on a broad basis, averaging out over individual sizes and also what are the facilities inside the hotel. So just a very broad average. So not much movement compared to last 10 years, right? Over the last 10 years, we haven't seen...

No. There has been, of course, an increase in the cost. When we opened our hotel we did it in about INR 22 lakhs a room. Of course that was 20 years back. So there has been an increase. And the same hotel if we were to construct will cost INR 1 crores. So it's almost in 20 years, there's a 5x increase, increase in the similar sort of a market, right?

Right, right, right. But I remember 2005 to 2008, there was almost a doubling of replacement cost for hotels. So I was just wondering whether we have started seeing other placement costs also moving up now.

It will move up because steel, cement have gone up and what has happened is people have started expecting hotel much better than what they were doing in the past.

Sir, my next question was that you mentioned to a question that I asked in terms of the key -- number of keys you will have by 2025. So there is a substantial increase, right, from 4,500 to 7,500 or 8,000. So how will your corporate overheads move -- a lot of the expenses will be variable I understand. But in terms of corporate overheads, in terms of your manpower, how much will the fixed costs go up by.

Fixed costs will go up also, but it won't be linear. If we are adding 40% to the room inventory, the cost will go up by maybe more 20% or 15% to 20%.

15% to 20%. This is the corporate overhead, right, sir? Excluding, because individual hotels will obviously behave as units. So, right. And sir, what kind of wage inflation are you seeing again, at the level of the properties and also in your...

See, in the property, we are trying to contain within 20%, some are a little more, some a little less. But we're trying to see that it is 20%. So if the wages increase, the revenue will also increase. We to try to maintain that.

So basically, sir, there is not a -- I can't figure out even a single cost item, which is creating a problem for you as of now. On the capital side, on the balance sheet side, the replacement costs are under control and also on the operational side, the expenses are under control, right? As of now, you are in a really nice situation.

Yes. We are in a sweet spot.

Extremely sweet spot, sir. And sir one final question. You mentioned that in the second half, ARRs will be 10% higher than H1. So how frequently are these changes implemented across the industry and by you? How frequently do you reprice your portfolio?

Daily, daily. And some time more than once a day. Like airline prices.

So you've given a reply 71%. This is regarding the 3 main centers.

Yes, yes.

So until the next person comes in the question queue, could you throw a bit more light on your strategy going forward with respect to being an asset-light business model?

What we are trying to do is, there are 2, 3 things. One is the management contract model which we are continuing to pursue. But what's happening is the management contract model, people have gotten a little disenchanted owners because they feel that the operator makes money and irrespective of the upside and downside, whereas, the owner suffers. So that is where we have started offering a service you give a choice. And we'll give you a revenue share where the downside is mine. And you are taking only a percentage of the profit. So you will never go down. So that is the option which they give. Another thing which we started some time back, the franchise model. There are certain people who don't want to let go. They want to control things, they're control freaks. They want to run the hotel themselves. So we feel that in certain cases, where the owner is an educated evolved owner, where he feels that he will run the show as per our brand standard, so we started that also. So we have got 15 hotels which are under franchise, 15, 16 hotels which are under franchise. And so we are pursuing that also. So we do franchise, revenue share, this thing. And of course, selective cases, we may look at particularly Delhi and Bombay, if we get an opportunity with a small investment and we get a share in a hotel property, we may take that also.

We have a question from Rahul [indiscernible].

Just a thing regarding your debenture announcement, what kind of investments do you end up making, let's say, if you do a revenue share agreement, which you just explained just a minute back. What kind of investments are you making there for you to need this kind of money?

INR 5 crores to INR 10 crores per property. And...

You'd be what, sprucing up the property, what are you going to with that?

No, what happens is you have to pay a deposit. You know that.

Refundable.

A refundable deposit. You have to bring in your operating supplies linen, cropping, [indiscernible] cutlery and things like that. In certain cases, we may ask you to bring in kitchen equipment also. We are negotiating this with some parties. So you said that kitchen equipment I am not doing, you do it yourself, right? In certain cases, he may say that you put in the TVs and the mini bars yourself. So this is a little variable and depending on our interest in the property, we will take a call on what is the investment we have to make. And also depends on the size of the property, if it is a large property the investment may go up to INR 15-20 crores. And in a smaller property, the property will end up with only INR 5 crores. But as far as [indiscernible] , there may be an average cost of about INR 10 crores per property. So we're targeting that if you get about 20 properties in the next year, 1 year, 1.5 years on [indiscernible].

So 2 questions there, sir. One is when you said INR 10 crores a property, what are we talking in terms of number of keys for, let's say, INR 10 crore investments? We're talking 40, 50 keys, 100 keys what are we talking?

For 80 to 100 room depending on where we are located.

Okay. So INR 10 crores for let's say a roughly 80 to 100-room property.

Yes.

And sir, in general, as you just shared, you will be making some investments, which is slightly different from the totally management contract, asset-light kind of model. So what are the kind of equity IRRs we are putting up as a threshold to make these investments and all the flexibilities that you're asking or looking for in a revenue-sharing?

I would like to take this. So Rahul, see, if we invest, take a property of, say, around 80 to 100 rooms, and invest around INR 8 crores to INR 10 crores in the property, I will get a top line of roughly INR 15 crores to INR 18 crores. And a net bottom line of, say, around 20% -- 15% to 20% of the top line, I'll get as a bottom line. So the IRR will be much, much higher around 20%, 22% if you take the bigger investment, if I take the kind of investment I'm looking at. So this will enable us to repay the interest as well as create a fund to refund the whole amount over a period of 5 years. In bank loan, what happens is that we have to do the monthly installment payment, so they don't give us the leverage to grow faster.

So that is exactly why you are going ahead with the debenture part of it.

Yes. Yes.

And this profit margin that you just said, this is after the revenue share for your partner...

Yes, my part.

We'll take the next question from the line of Deepak Poddar.

Okay. Sir, just wanted to understand, now you mentioned that room count, we are looking to round about double from 4,500-odd to maybe 8,000 in the next 3 years, right? So just wanted to understand, so the revenue traction also be likely to be similar, I mean, with some lag or...

See, what happens is this doubling of the room inventory depends on how many rooms which comes under revenue share and how many which comes under the management. So if you take the hotel, which is our main model of asset line. So if we do management then the top line doesn't grow too much. because we only get around 5% to 6% of the top line as management fees in our company. So it all will depend -- top line depends how we grow our revenue share model, where the entire revenue gets booked into our books. And the margin of the return also is higher in the revenue share model than the management model.

So do we have any understanding on that, the split between the -- both the models, revenue sharing and the management model?

Come again.

So do we have the split in terms of incremental inventory that is likely to come, how much percentage would be on the revenue sharing and how much percentage would be under management?

It is very difficult to say right now because it is as and when it comes, so we take it. But let me tell you, around 80% will be management only.

Okay. So because of the -- I mean the asset-light model that we are taking.

Yes.

Fair enough. And my second query is more on your EBITDA margin trend. I think in the previous call, you have maintained that we are looking at 40% kind of EBITDA margin. Now given what you said, we are looking at INR 100 crores of EBITDA margin, including other income, right, EBITDA in this year. So that comes to about 35%, 36% kind of EBITDA margin. So that's a downward revision, right?

I'll tell you Mr. Poddar. What happens is as we grow, as we are also trying to take the more revenue share model. So the EBITDA margin in the revenue share model is lesser than your own owned hotel. So that is -- since we are not growing with the owned hotel, so we will be growing with the revenue share model only. So our EBITDA percent -- the absolute number will definitely grow, but the percentage may come down because we have to pay the lessor and also out of the total revenues.

Okay. Okay. Okay. I understood. So this management sharing model is obviously going to increase, right, going forward, like...

Yes. Yes.

So what would be the sustainable EBITDA margin one should look at?

Yes, yes. The increase in the management revenue, that is the management fee. Definitely, most of it around 80% will flow down to the bottom line, which will flow straight to the EBITDA also.

Correct. Correct. Correct. So incrementally, that is margin accretive, right?

Yes. Yes.

Okay. So what is the rough range one should look at? I mean 35%, 40% is the right range.

No 35% is somewhere around 33% to 35% is the correct range of EBITDA as far as the kind of model we have.

We will take the next question from the line of Kush.

Congratulations, sir, on the good set of numbers. Sir, I had 2 questions. So first was, sir, the Mumbai market, any view we are presently not very active here, going ahead, sir, one is that? And the second, sir, can you -- could you throw some light on the second line of management? I understand the CEO has left, you had updated exchange filing. So those would be my 2 questions, sir, as of now.

We have a very strong management team. Okay. So person leaving does not really affect ourselves, particularly since we are headquartered in Bangalore, and we have already hired one, this CEO came during COVID time. So he was tentatively looking after mostly the South hotels, where we are based. And we've already hired a VP south already. So I don't think there's going to be any sort of disruption in the company. And so I think our -- we are a very close set of people been working for a very long time with us. And so I think they hold the ship, they run the business, frankly. And so I think we are proud of our team, including our CFO there, the last so many years with us, he has grown from a unit manager, controller to the CFO. And our other people also, Vice Presidents, all that various things, have over 10 to 15 years in the company. So they stand by us. And I think -- and they are developing their #2s, so that while we are growing, we need more vice presidents. So we are growing more vice presidents in our group also. We are working towards that.

Right, sir. And sir, the second question about Mumbai market, sir, is this market -- your thoughts on specifically Bombay as a -- and given that we are largely corporate driven.

See, this is why we are actually raising this INR 200 crores because revenues go to Bombay. I'd say that I want a INR 50 crore deposit to lease out this hotel, we don't have the liquidity write-down. So once we have the cash in the bank, we have the ability to write the check. So our main focus will be in Delhi and Bombay, where we don't have a presence right now and any hotel chain should have a presence there in these 2 markets. So we will definitely that's why we are raising that fund. To get the money, the ability to sign the check, and ability to take over --take hotels on revenue share.

But we are focused on our asset-light strategy and revenue share model also comes under that strategy only. We're not going to own any hotel.

And sir, out of this INR 200 crore debenture, have we made a plan as to where the rooms will be in terms of Bombay, Delhi, how many rooms are we targeting? How many hotels are we targeting? Have you thought about that, sir?

See, we are thinking, but what happens then is very, very -- if we say that we want 100 rooms in Bombay and we want 100 rooms in Delhi, yes, that is the wish. We have definitely made some things. And we have also looked at going into international markets also like Maldives and we've hired one person, who is going to look after Maldives and Sri Lanka and maybe Dubai. So that is a thing which we are trying to do explore also, it's at early stage. So I won't make any sweeping statements on that, but we are already started looking around for those markets also that we did discuss. We had something in Maldives. Maldives has stood the test of time, even in the COVID time, it did very well. So we are exploring. We are not -- but then sometimes, cash in the bank is required. Luckily, our positions right now are pretty healthy. We do have some surplus with us. But for a big-ticket investment in, maybe Maldives or Delhi or Bombay or Goa or in Dubai, we may need to have some sort of a cash in the bank, so ability to write a check.

I have one question in the chat from Mr. Sachin [indiscernible]. What type of interest rate we may pay for INR 200 crore debenture is? And how do we plan to deploy this INR 200 crores?

We have already mentioned that interest rate of, normally debentures would be about, I guess, about [ 10% ]. And the advantage that it is ability to payment at the end of 5 years. So we don't have the pressure of, monthly pressure or quarterly pressure of repayments and all that, and we can cost it on our business. That is what the thinking is. And I think -- and that should easily be able to service. I don't think there'll be any problem for servicing that.

And how much time do we plan to deploy this?

Well, if you get the money you try to deploy within 1 year.

We'll take the next question from Rahul.

Just a sense on -- when you use this INR 200 crores or INR 10 crores of property for, let's say, 80 to 100 rooms, you are looking at what a 3-, 4-star category thing or else higher there. What are we looking at deploying this money?

Mostly 4-star properties, but if there's some 5-star property comes our way we will definitely take it.

Okay. So mostly 4-star properties, what we are looking?

Mostly 4-star.

Right. So I believe that was the last question for the day. Would you like to give any closing comments?

I'd also -- I'd like to first thank all of you for this active participation. In fact, some of those questions always help us in thinking a little more. So that has been triggered off by all of you. Thank you very much. And we are looking at a much better H2 and I think we won't disappoint you. Thank you very much.

Thank you so much, sir. And ladies and gentlemen, that brings us to the end of this conference call. Thank you so much.