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

Ladies and gentlemen, I welcome you all to the Q2 FY '24 Post Earnings Conference Call of Royal Orchid Hotels Ltd. Today on the call from the management, we have with us Mr. Chander Baljee, Chairman and Managing Director; Mr. Philip Logan, Chief Operating Officer; and Mr. Amit Jaiswal, Chief Financial Officer. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to detail us about the performance highlights for the quarter that went by, their growth plans and vision for the coming years, post which, we will open the floor for Q&A. Over to the management team.

Good evening, and warm welcome to everyone. Thank you for joining us for the Royal Orchid Hotels Ltd. earnings conference call for the quarter and financial year 2023-2024. Please note that Q2 FY '24 and the results and press release and investor presentations are available on the exchanges. I hope you have had the opportunity to browse through the highlights of the performance. In the last financial year, the industry has bounced back very strongly after the COVID. Since April 2023 onwards, we also had seen good results, which are evident from the financial results of the first quarter as well as this quarter. In fact, we have built on the success and have added 12 hotels since April 2023. The company has posted growth because of the strong business model and effective risk mitigation strategy. We are working to post better margins than what our company has witnessed in the recent past. Financial highlights for the second quarter ended September '23 on a consolidated basis are as follows: consolidated revenues from operations was INR 70.08 crores compared to INR 63.17 crores last year, a growth of 11%. This was attributed to increase in ARR and also increase in F&B business. Consolidated EBITDA for Q2 '24 was INR 18.94 crores as compared to INR 20.44 crores in Q2 '23, a decline of 7%. Consolidated PAT before exceptional items for Q2 '24 stood at INR 7.67 crores as compared to INR 9.38 crores in Q2 '23, a decline of 18%. During the quarter, we have been able to increase the average room rate for Q2 '24 and stood at INR 5,087 as compared to INR 4,769 for Q2 '23, a growth of 7%. You must be thinking why this decline of EBITDA of 7% and PAT of 18% during the quarter. The reasons are attributable to increase in employee cost. We increased the salaries of all our employees in April '23 to control attrition rate, and also minimum wages had been revised by the government. The market had opened up with the competition. There are a lot of opportunities available to the employees, hence, we had to increase the salary. Since we have added 12 hotels in the last financial year and 12 hotels in the last 6 months, we had to strengthen our team. The cost of such ramp-up started immediately. However, the additional income and revenues of such newer hotels will take some time to come. The immediate effects on the costs will go a long way to make our company robust and powerful and more profitable in times to come. The employee cost has gone up by nearly 95 lakh. The cost of power and fuel has gone up as government has increased the rate of electricity and gas. As we know that all hotel's HLP cost is one of the major components of the cost. And the increase in cost, the same had gone up by 87 lakhs. Since COVID March 2020, we have not focused on [ maintenance of hotels ] due to reduction in the revenues. So the last year we were doing well. So the time has come for us to focus and spend some time on the maintenance of our hotels, so we were a little liberal in doing so. This has helped our company -- this will help our company in the years to come. If we maintain our hotels well, then we'll maximize revenues. There is a net impact of 130 lakhs on the financials due to Ind AS 116, the same is explained in our investor's deck. Further, we've added 24 hotels in the last 1 year and also have another 23 hotels in the pipeline. We have done some branding exercise for the same, which has cost us nearly INR 50 lakhs in the quarter. The company will reap benefit of the same in times to come. The last quarter, we opened our first international hotel. For that, in the present quarter, we paid the finder's fee of INR 41 lakhs. Please note that all the above contributed to increasing the cost in comparison to this -- to the last year's same quarter. We are well in line with our vision to operate 100 hotels before the end of the calendar year 2023, and I'm looking forward to opening new hotels in different cities in India and abroad. As we talk, we are operating 95 hotels. We are witnessing RevPAR growth led by higher ARR. We believe that the industry is on a growth path and we are on the right track, and we will bounce back with better results in the current financial year. I request all not to get worried with the marginal dip in the profit as we have taken planned and calculated steps and look forward to our long-term goals and targets, and the marginal dip has been taken in a calculative way. The same is necessary in the -- to achieve the larger long-term goals. The management has set out a strategy to diversify the 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 and which is shown in the overall and -- overall earnings quality over the next several quarters. Thank you. And now we can throw the floor open for questions.

[Operator Instructions] We'll take the first question from Axay.

Sir, what are our strategies for increasing revenue for food and beverage business? Hello?

Sir, you need to unmute.

Yes, sir. I unmuted myself.

Yes. Sorry, sorry about that. See what we are doing is right now we are concentrating a lot on revenue from banquets because over the years banquets did not happen because of COVID. But once it is opened up, I found that there is huge demand of wedding business and social functions besides, of course, corporate functions, which were limited earlier. Now earlier, people were doing through Zoom calls, but they find that they're getting bored and tired of that. So now they all want to meet up and they all want to have conferences. So we have found that there's a huge boost in that. We are also trying to introduce new menus in some of our hotels, which is modern day menus in our hotels. Our corporate chefs are working towards that. The young, modern children like to have that type of food, not the standard Indian, Chinese, continental. And now Japanese and the Italian, the Mexican, all those food that we are introducing across the group and so that we can continue to attract people to our restaurants. So we're working towards that, and I'm sure this will give us good benefits in the future also.

Okay, sir. So what is the expected growth rate in food and business? Maybe you can give some ballpark number?

See, expected business every year, we expect a 10% to 15% increase in the business. But overall, the business will increase substantially more because of the addition of newer hotels. So exact figures I may not be able to tell you now because so many hotels which are coming up. And -- but there is a substantial increase in the percentage of the food and beverage business overall.

We'll take the next question from the line of Rahul.

Just 2, 3 points. Last quarter, you had mentioned that you had taken -- you are going with renovation in your flagship property and so that's the reason why some of the rooms were off the inventory and corresponding cost also was higher. If you could give us a sense of where were those numbers in this quarter?

Well, actually, this quarter, we will not be taking up any blocking any room for renovation. In fact, last quarter, like our Metropole Hotel in Mysore, 8 rooms out of the 30 rooms were blocked for renovation, which got ready actually towards the end of October. We're trying to do by end of September, but our projects always get delayed. So right now, we're going to be just preparing for further renovation. We are taking up renovation of 1 floor of Royal Orchid Hotel, but this should be done from -- in March. And so the balance rooms in Metropole also will be done in the month of March. And another good news is that since we got -- our Brindavan Garden Hotel lease has been renewed, we are preparing to renovate that hotel also during the lean months next summer. Otherwise, small works will always continue to go on, but we won't be blocking much of inventory in the next 2 quarters.

Q1, Jaiswal, I think you had mentioned that there was maybe roughly INR 2.5 crores, INR 3 crores hit because of inventory going off the market. And there was a INR 2 crore cost hit because of renovation. Roughly, a INR 5 crore hit. Just wonder if you could help us with what the number would be in Q2?

Yes. See, in the Q2, baked in the -- sorry, the increase in the expenses I have given a separate slide in my business presentations. Okay. So that is there. Apart from that, let me tell you, see, in Q2 also, the core market didn't fare very well because of heavy rains. So there was a marginal hit of roughly around INR 50 lakhs to INR 60 lakhs in -- from Goa market, we had -- there was hit in the revenues. Apart from that, as Mr. Baljee added, a few of the hotels we were doing a bit of renovation in Q1 also and which has got completed towards the end of Q2. Like Metropole, we did some work. Even in the flagship hotel also, we had taken up a few rooms for getting our pipeline work and all those things done. But most of them have got completed now. So Q3 and Q4 we will have the full strength of revenues coming from all our hotels. A little bit of pending thing we will again do in the lean season in next year because, historically, Q3 and Q4 has always been good for the industry. So now we are not taking chance again. A little bit -- whatever pending, we will take it up in the next year.

Right, sir. The other -- the second question was on the recent announcement where you bought out the stakes in the JV, one particular JV. If you could give us a sense of what is the -- till now, was it kind of reported as profit from associates below the line? What will be the impact be in terms of top line and EBITDA now once it comes within the consolidated numbers?

No. Rahul, let me tell you. See, the subsidiary was Icon Hospitality. That was not reported as associate, that was always reported as subsidiary in the second quarter. Now it will become a 100% subsidiary. And the good news is that, that hotel, which was -- as you all know, is that Central Bangalore was always a loss-making hotel. Now it has turned into a profit-making hotel. So this decision of ours will get into affecting third and fourth quarter, wherein we will consolidate the complete profit of that hotel.

Okay. And just a final and generally question on the industry, sir. Do you see -- you have seen these ARR trends going up even in the Q1, Q2, which are relatively a leaner quarter compared to Q3, Q4. Do you see the ARR trends moving at 8%, 10%, higher even in Q3 and Q4?

See, we have seen the ARR going up by 7% in the Q2. And in Q3 and Q8 in comparison to last year, we are contemplating that around 10% growth will be there in the ARR even in Q3 and Q4.

We take the next question from Chirag Singhal.

So firstly, on the guidance, I know that you set the guidance in the last quarter, but just to again ask you on that. So are we on track to achieve the INR 400 crores top line guidance that you gave for this year? And also on the room addition, we were looking at some 1,500-odd rooms addition for this year. So could you please confirm on those 2 points?

Yes. As far as the guidance is concerned, that looks a little stretched as of now. Industry does 40% in first half and 60% in the second half. So we were very robust about that INR 400 crores we should be able to do. But I feel now at this stage that we will fall a little bit short of that, maybe around INR 20 crores, INR 25 crores short of INR 400 crores as of now. And this includes our associate, which is the Jaipur hotel I'm talking about. But yes, it will be a little short of the -- what we have thought in the beginning of the year. And -- however, a little cost has gone up. Okay, because we are -- as Mr. Baljee earlier said, that we are investing for the long-term prospect of the company. See, we have added 24 hotels in last -- since last year. So we need to increase our team and we have hired some senior management also. Keeping in mind the further growth, almost 20, 22 hotel further is coming. So that cost account starts from the day 1. However, return on all this work will come only in the next financial year. So that is the thought process we are having, right?

Yes. On the room additions, if you can comment on the room additions?

See, as for the room addition is concerned, we have already added in last -- this year, we have added around 12 hotels, totaling to a room count of roughly 600 rooms. 600 rooms we have already added. And another 7, 8 hotels, definitely, we are opening before March. So that will give us another 500 to 600 rooms. So we had said in the between 1,200 to 1,500 rooms. But 1,200, we will be able to definitely touch. However, we are trying our level base to open as many hotels possible before March.

Understood. And on the ARR front, you already gave a trend as to how things are shaping up. On the occupancy front, can you share what the trend is? Like in the JLO, are we around 77%, 78% as we speak?

No. We will be definitely crossing 75%. Definitely, we will be -- right now, we are at 73% in Q2. So 75%, we will definitely cross. But let us see, keep our fingers crossed as and when it comes.

Right. And on the managed rooms side, will it be, say, higher than, like, let's say, ballpark 65-odd-percent?

Because some of the hotels which are stabilized, they do more than that. But some of the hotels, which are new, will do less than that. It will start with 50%, go up to 60%, 65%. Normally, it takes about 6 months for a hotel to stabilize. So that is where the little lag may be there. But otherwise, I think we are on the right track.

We'll take the next question from [ Axay].

And sir, what will be your revenue guidance? What standalone entity, except that Jaipur hotel, for current year?

You are asking standalone or you're asking consolidated?

Consolidated, but except the Jaipur entity.

See, except the Jaipur entity, I feel that we should be ending up the year around INR 340 crores. We should be able to end around INR 335 crores, INR 340 crores. But it is very difficult to tell now, we have to see how the third and fourth quarter goes. We are in the best season for our industry. But let's see.

Okay. And sir, you have, [ another point ], taken Icon as a fully subsidiary. So how much it will add to your revenue?

See, our revenue always we have been consolidating fully, okay, in the earlier years also because it was a subsidiary of our listed entity. So we were always consolidating the revenue full. Only thing we were taking out the minority interest, which will not be there, and the entire profit will come to the listed entity.

Okay, sir. And sir, just one point I want to understand, that the industry is going very high and the growth prospect of Indian hotel industry are looking good. So why we are not growing on our own hotels? I am seeing that there is 77%, 78% occupancy in our own hotels. So we cannot further grow from there. So -- and we don't have much debt on our book. So why are we not growing from take-up and making our own hotels?

No, we are working on -- see, even buying our subsidiary was like an investment and which will be -- which will give us one is the freedom to renovate and all that because our partners, that are not their core business. So they didn't want to invest on renovation of the hotel. Now we'll be able to take up the renovation of the hotel and increase the revenue substantially, as we had done in the case of the Goa hotel last year. So that's -- the mix strategy is there. But now, of course, we are investing in revenue-share hotel, where there will be some deposit to be paid. Some -- so many other things will have to be done. So what we -- we are working on that. That will increase our profitability and turnover. But greenfield project, we are not planning to take up immediately.

Okay. So you are focusing on leased hotels?

Yes, revenue share or leased hotel, yes.

Okay. So how much hotels are -- can we expect to add in leased hotels at revenue share basis?

See, we are actually -- what we're doing is that in the next 1 year from now, we'll be adding definitely 25 total hotels, out of which 3 or 4 hotels would be on revenue-share. And balance 20, 25 hotels will be on 9-month contract.

We'll take the next question from the line of Parag.

So I just have a couple of questions. The first one, last quarter, EBITDA was lower as well as this quarter. So what is impacting the overall profitability?

See, I have given an explanation in my investor presentation. There are 4, 5 points, which are attributed to the marginal reduction in the EBITDA, okay? If you see our investor presentation that we had, there was an increase in the employee salaries and costs, okay. That had gone up by almost 25 lakhs. We have increased our team, as well as there were minimum wage corrections for the industry as a whole by the government. Plus the cost of power and fuel, the gas and all has gone up in comparison to last year. So that is attributed to around 87 lakhs of increase. Plus, we have invested some money in the brand presence and brand marketing. So -- which is going to add a lot of value in time to come. The yield from all these expenses will come in the next year -- next financial year. So that, the hit we have taken for our longer growth, as Mr. Baljee earlier said, that for our long targets and longer growth, we need to do this because last year we could not do anything. We were not sure about how the industry will turn out to be. Now that we are sure that next 3, 4 years is going to be good for the industry, so we are moving and looking forward to that.

And what is our view on improvement in the profitability and scaling up in the revenue growth, considering that we have started several hotels last year under the management operator route?

So see, what happens is when the hotel comes up, it takes a little time, 6 months to 10 months, it takes the time for the hotel to really get into the market and get started, leading to results. So whatever hotels we have started, now we will -- going forward, we are going to see the result. And whatever hotels we have started in the current year, those results will really come in the first and second quarter of next year.

And could you give us an idea about the ROE and ROCE profile of the management operator business versus the leased and owned hotel business? And what percentage of the revenue EBITDA and PAT would be coming from the management operator model?

See, as far as management business is concerned, let me tell you our investment yield there. Just that whatever we have invested in the infrastructure is the cost. So the ROCE in management business is really very high, somewhere around 75% to 80%. But as far as the yield is concerned, from the management business, we are getting a yield of around 40%, 45%. So -- which adds to the bottom line of that company.

The rest would be the leased business and the owned hotels. And if we were to exclude the rooms under renovation, would it be possible to get an idea of the ARR and average occupancy excluding these rooms under renovation? How will the average change in Q3 and Q4 once these are done?

I request our COO to take up this question.

I think your question in relation to rooms offline presumes that we're displacing income. So first and foremost, in Q2 and Q1 when we're renovating rooms, that was at a lower demand period. We have now finished that renovation and have got full inventory in -- for Q3 and Q4. And as Mr. Baljee said, we will then take that up again in Q1 or post-March. When it starts getting hot, we'll start putting some rooms offline, which would be otherwise not utilized by occupancy. And the other point that the investors should understand is that during COVID and during 2022, the hotels really were not being renovated because there was neither the staff nor the skills to be able to do it. And it was now time to get the hotels cleaned up and ready for growth. And in fact, in the last 6 months in my time here, I've seen that all JLO hotels have been undergoing a large cleanup of R&M and preparing ourselves for growth remembering that as demand lifts, so does the quality lift. And as quality lifts, so does demand for price. So you need to provide that quality. So the renovation or the R&M and then the taking some rooms offline is really reinforcing or underpinning price moving forward. And it's a simple process of cleaning up the ship so that we can go on for the journey. The growth in the new assets will take time. But as Mr. Baljee said, there's 23 coming online. And I think this company is growing, and we've now got some very clean and very efficient hotels. And the opportunity for growth in food and beverage and rooms is solid.

So would it be safe to say that with the significant room occupancies around the festive season and the cricket matches, that the Q3 will be our quarter and we will see an inflection in our growth?

Again, actually, it's like T20 World Cup Cricket, it's a bit like the Bangalore traffic. It's busy in some locations and quiet in some other locations. So Dharamshala in some particular nights was running absolutely full and off the dial and then the next day it was quiet again. So the Cricket -- World Cup Cricket has had impact in towns across India. But it's not -- it's been very specific to the matches and very specific to those cities. So if the match is happening in Nagpur, the occupancy in Nagpur is extremely high. But if it's happening in Dharamshala, the occupancy is extremely high. In terms of G20, the same impact. If your question is in relation to occupancies moving forward, yes, typically, Q3 or the second half is 60% compared to 40% in the first half. We are seeing lift in rates, but it's not solid right across India. India, as you know, is not one homogeneous country. So we have -- our resorts right now are absolutely brimming because it's -- it's actually result of city hotels over Diwali goes quieter. But as soon as Diwali finishes next Tuesday, bang, the city hotels are full again. And resorts, luckily, our resorts, Goa in particular, are seeing some really strong resurgence.

We'll take the next question from Axay again.

Sir, what is your reason for company for next 3 years, saying '26, '27 what will be your revenue and PAT target?

I don't think we'll make any wild guesses here, but I mentioned to you that we are on a track to increase revenues of 25%, 30% per annum. And -- but to give a very firm commitment, we can't say. But I think we should be able to do that.

No, I can add to Mr. Baljee is this, see, it's very difficult to see what will happen 2, 3 years down the line. But definitely, I can tell that we are on a very good track and there will be substantial growth in next 3 years. To our company, there will be some substantial growth. And similarly, our bottom line also will become very healthy in time to come. Even in this quarter also, I request you all to see one slide in the investor's presentation. That is the cash flow. The cash profit slide is very important to see. See, Whatever may happen, up and down, if you really look at it, our cash profit has been more than last year same quarter. Almost same. So around INR 30 crores of cash profit is there in H1 and almost INR 20 crores in Q2. Last year, in the same quarter, our cash profit was INR 18.88 crores. And this quarter, in this standalone, it is INR 19.44 crores, whereas in consolidated it's INR 30 crores. So that is very important for all the investors and our analysts to understand that this cash will give a lot of support and strength to the company to grow in time to come.

And just to add to that point, I think it's important to understand the growth that's happened since 2022. There's been a significant amount of properties that have come online. And as Mr. Baljee and Mr. Jaiswal have mentioned, the lead time between startup and delivering on some solid results varies between 6 and 12 months. So we haven't even seen the growth in the income of the hotels that have come online. And we've announced there's 23 more properties coming online. So if you just extrapolate last year's growth and the 23 properties, it will give you some indication of where those percentages are coming from.

We'll take the next question from Chirag Singhal.

Yes. So what is the CapEx guidance for this year and next year? And also, let's say, by end of FY '25, how many hotels and rooms we'll have under our brand?

The number of hotels within this next 1 year, 25 hotels already signed. They will come into operations. And they will be probably -- our development team is working towards conversions of some hotels, which we are negotiating. So those, I can't say right now, but those hotels will come online very quickly. So it will be definitely within the next 1 year, we will definitely add about 50 hotels.

As far as the CapEx is concerned, please understand we have taken the asset-light strategy. Most of our hotels are coming under management route wherein we don't invest anything. It is only the -- what Mr. Baljee said, 3, 4 revenue share or the leased asset, which will come up. Probably there, we will have to invest little money. However, let me tell you, the investment in these revenue share and leased model also are not that heavy unlike the owned asset. But that will give a lot of boost to our top line.

So you said 25 are already signed, which will come in the next 1 year. And you are seeing another 25 hotels that you...

Yes, we are working. We are working on signing another 25 further hotels. 25 hotels already we have signed, which will come up in time to come. It takes a little time to start the hotel. But the second 25, we are working.

Right. So that will probably come in the next 2 years? It won't be on...

By end of next year. By the end of next year.

By end of next financial year.

Okay. The 50 hotels is what you are saying will come by the end of next financial year?

Yes.

So number of rooms, how many will it add?

Another 2,000-odd rooms -- 2,000-plus rooms.

Okay. Okay. All right. And on the CapEx side, like how much CapEx are you guiding for this year and how much for the next year?

See, our major CapEx is going to come in one of our Goa hotels wherein we are adding. That's an owned property, 100% owned property. There, we are trying to add some 40-odd rooms there. So that will -- CapEx will come upward. That will not come in this financial, really it may come in next financial year, maybe around INR 25 crores. Apart from that, another INR 15 crores to INR 20 crores CapEx in -- small, small CapEx will be there, which we'll be doing.

Okay. And there was this recent announcement that we have sold a stake in Multi Hotels Limited. So what was the investment in...

No, we have not sold the stake. In fact, we are trying...

Exploring? Yes.

Yes. We are trying to sell. We have yet to -- we have announced that, that property we're trying to sell. We have kept the investors updated that, that property we are trying to sell. And if we are successful in selling that, somewhere around INR 20 crores of cash will come into the company. Estimated. We are estimating, we don't know exactly. Once the deal is done, only when the buyer is ready to buy it. But we are desperately trying to sell.

Okay. And what was the gross investments in that?

We will not make much profit because the investment was done some time back in 2008, although the investment was quite low, INR 8 crores. But if you really take the value of the escalation in the currency. So there will not be much profit. Just that some cash flow will come into the company.

Okay. So coming back to the CapEx, you are saying that INR 25 crores is the CapEx that will be spent on your own property? And another INR 15 crores, INR 20 crores will be spent on other things?

Yes.

Next fiscal year.

Next fiscal year, not in this.

We'll read the next question from [ Narendra Nandi ]. He seems to be away from the device. We'll take the next question from Rajesh Agrawal.

Hello, can you get me? Can you get me?

Yes, yes. We can get you clearly even without the mic.

Yes. I take you to the con call of February 2023. At that time, I had asked a question on Goa hotel. So it was expected that at least partially by September, October it will become operational. Could you please tell me the gap status now where we are?

In Goa, they are working -- the government is working on the CRZ, Coastal Regulation Zone. And that has taken a little time and they have not yet finalized that. So then we have got the plan ready. We'll be waiting for that regulation to come. The moment the regulation comes, then we'll put in the plans and then go ahead with the approval. And then that is why we have said that the investment will come in the next financial year because it might -- this financial year, we'll probably be just getting our approval and we don't want to start any work in the season. So we will take up the work probably in the month of April next year for the expansion of that hotel.

Okay. I'm asking a very deep question. That is simply, what is your -- any strategy on value creation for the shareholders? You see, Mr. Baljee, it's now almost 18 years old company on the stock exchanges. Investor's heart is they would like to see their wealth growing, their investment growing. After 18 years, 165 is not even 330 today. You see how much value disruption has taken place as far as Royal Orchid is concerned. And if you look at the other companies, peers, they have grown manyfold. Nothing wrong. Past is past, we might have made some wrong estimations, some decisions which later on did not prove fruitful. But today, do we have any -- really any strategy for wealth creation for the investors? Or we are just simply going on 1 quarter or the other, 1 quarter or the other. I can tell you, if I take you from the past con calls, you will see it was overpromise and gross under delivery. Like I told you, Goa, you were very sure that 100%, you have used the word 100% we will be partially operational in September, October. Okay. Things have changed. You say CSR line has changed and all those things, it will take. But my thing is that is it not the time to think of the shareholders, at least?

Mr. Agrawal, I would like to answer to your question. As you said past is past, right? So I will not give any justification for the past. But if you really look at it, shareholders' value from last year to this year has more than doubled. And it will continue to increase as the company is in the right path of performance. Our ROCE, return on capital employed, is the highest in the industry. You can compare the ROCE of our company with any other hotel industry. So as far as the company's performance is concerned, we are on the right track, and we are looking at the larger picture. As you said that shareholders' value, we are also looking at the shareholders' value only and taking all decisions in and around that. But shareholders' value will only come when we give performance. Quarter-on-quarter, a good performance, okay. Year-on-year, a good performance. So we are confident of giving good performance year-on-year. We are not increasing the liabilities of the company. Instead, we are trying to make the company solid as far as the working and the performance is concerned. We are trying to take calculated calls on all our investments. As you know, Icon, we have done a very calculated call and it will show you the result in the year-end how the things have changed. For our -- the value of our investment in Icon will totally change in the year-end. So like that, we are taking all the major steps to increase the value of the wealth of the customer. Please also understand, the promoter itself will have 63% stake in the company. So he will take most care that the value of the balance, 37%, investors, must grow. And we are on the right track, I can tell you at this moment of time.

Basically, my -- the thing is everything drills down to what you see. Have you forgotten about the IPO shareholders? 18 years, even your wealth is not doubled you are talking of 1 year. And you are talking of 3 years later on. Indefinitely, things cannot be. One year, 6 months, 3 months, if something goes up and comes down, this is not wealth creation. Wealth creation is always done when you look at the wealth vis-a-vis in the long path. You took INR 111 crores, INR 112 crores through public issue or IPO or whatever it was. It's now 18 years. Same capital, same capital is there. It's only because the industry stocks have improved a little, so share value has improved a little. Otherwise, you just think of candidly, you just think of INR 165 is not even INR 330. After 18 years, you did not do any -- we -- in the past, shareholders suggested so many ideas. They've talked off. But what is there? No idea was implemented. No idea was implemented. People came. Okay, there can be buyback, there can be splits. There can be so many things, capital raising, preferential capital. Even you can go for some QIPs also. Like I'll give you one thing, very, very pertinent thing I will point it out to you. See what happened. In February, one of the shareholders asked you that you have taken approval for the debentures, INR 200 crore debentures and said, what type of rate you are looking after in the market? You said 9%, 9.5% or maximum 10%. Mr. Jaiswal, candidly speaking, shareholders were looking at it, that one of the third-party -- related party transaction, the loan was given at 18%. What is fair? What is fair? You reduced it to 14% and said it's good corporate governance. No, it was not a good corporate governance. You are looking from the market at 9% to 10%. And the promoter's company related party transaction has been given at 18%. Tell me candidly...

I will answer to that, Mr. Agrawal. I will answer to your question. Let me answer before you go to next question. See, as far as that transaction is concerned, it was not in the last financial year. It was done when the company's chips were down, when there was a bank liability, okay? And the promoter has to borrow from market to fund the company. Okay? That time, when no bank was coming forward to fund the company, that was the time when the promoter had borrowed from the market to pay to the company. Last year...

But it was very high. 18% is too high a rate.

No, no, that is too high a rate because if you borrow from the market, you get at that rate only. You don't get a 9% if you borrow from market.

Yes. So 14% was very high rate. Very high rate. Very high rate.

No, that was the cost at which the promoter had borrowed from the market and given the company.

No, no, I think of today. Forget about past, today, today, you are looking at 10%.

No, no, no.

You are looking at 10%. Who will give you debentures at 10%, tell me. If you yourself had lent at the rate of 14%, even the recent proposal was there at 14%. It was recent proposal. And you said it's good corporate governance. You said it's good corporate governance. No, it was not a good corporate governance.

See, we need to -- we need to -- already, that decision has been taken by the shareholders. We will be refunding that money to the promoter.

Yes, because that proposal got defeated by institutional shareholders. That was very bad. You know it speaks very bad about the company that FII has defeated the proposal. Very bad. I'm telling you, let us see soul searching. If you don't think of the shareholders, I'm telling you whatever you do will go waste. I'm a shareholder for the last 18 years. 18 years holding -- I am holding around 1.2% equity in the company. I am holding 1 point -- I am probably one of the largest shareholders of the company. And I have given you -- see, if you do centralized, self-centered approach, it should have -- I remember, I have never talked about the split. Many shareholders, you have talked about why can't you do a split? [Foreign language] There's nothing to lose. You never did it. You never did it because we know every competitor is having a face value of INR 1, INR 2. We are having INR 10. You talk of the #1 companies, #2 companies. Think of what they have done. Three rights came from the Indian hotels at the rate of INR 75. Today, the share is INR 400. You are talking of 1 year back and we have doubled in ROCE, no, not palatable. Think of what the people did in 2006 when they gave money to you at the rate INR 165. Today, it is not even INR 300. It's -- not for you. You were not there. I was there, Mr. Baljee was there. Let Mr. Baljee do some soul searching. If he doesn't do at this age, I'm telling you, God help shareholders of the company. In spite of that, why I'm telling you, simply because I'm holding such a good chunk of shares. And in spite of that in this open forum, I am telling that there has been something very seriously wrong. Overpromises, under delivery. Overpromises, under delivery. If I give you fatigues so many times -- you know numbers, keys, hotels. We faltered. We keep on faltering. You keep on telling us...

Okay, Mr. Agrawal...

Sorry to interrupt you. Due to limitations of time, we have to take other questions. We'll take 1 last question, please, if you don't mind. Yes. We'll take the next question from Raunak Rathi.

I've got only 2 questions. One is, what is the debt position as of now? And second question is with regards to the premiumization that is happening in the market. Like there is a trend towards the premiumization and demand for a 4-star, 5-star rated property seems to be a lot more than a budget-friendly hotel of 3-star rated. So should we have a strategy in terms of the management contract basis also to go for a -- to look out for better properties in terms of association? That's it from my side.

We are doing that. See, what happens is that we did -- to become a certain sizable company now that we are approaching 100 hotels, people are beginning to recognize us as a formidable player in the market. So now when we go to a hotel where we are competing with ITCs, we're competing with Taj, we're competing with other thing, at least they are beginning to talk to us. Earlier, they were not even ready to talk to us because they were thinking that we are a marginal player. Today, we are not a marginal player. We are a very large player in the industry. In fact, in terms of room -- number ranking, we're ranked about the ninth in the country amongst all the hotel chains. So we are -- people are beginning to talk to us. And we also decided that very small hotels we are not going to take. This is a mandate given after Phil has joined our company that we will not take very small hotels. Unless it's a very boutique property, which is a marquee property. Like a palace, like we have got 2 hotels in Mysore, which are 100 years old, heritage properties, 30 rooms and 24 rooms and does reasonably well. So we are definitely going to be -- I think what you have said exactly is what we are going to be really doing is to look at hotels, which deliver us much more revenue rather than a very small revenue. We are working towards that also.

So further to that comment of Mr. Baljee's is that it is true that our focus on more upscale product, it does give you brand recall and gives you brand reputation. So as much as we are diversifying across the country in more cities and more locations and we're certainly going down lifestyle, historical, religious, down the different verticals, there's no doubt that now owners and investors are actually coming in the front door who probably wouldn't before. And that's a result of brand reputation and a result of growth. And I get the question, I can say there's [ growth for around ]. I actually get that question asked. Logan, why did you leave the big brands to come to Royal Orchid? And my answer is, India is ready for growth. And again, they've announced 23 openings this coming year, and I am certain it's a snowball effect. And I'm very confident of that. And I can see that both by the applications across my desk now. I have applications from all the major brands. Before, maybe they mightn't have applied, but now general managers from international brands are sending their CV and saying I'd like to join the group. You see quality attracts quality. And over time, whilst I understand Mr. Agrawal's frustration, a company built like a Marriott is built over many, many decades. And Mr. Baljee's investment over 53 years has been in the brand and he stands behind it. And I'm now here to say to you, I believe, very firmly, those who stay with this company on the investment will reap in years to come. And you can say, maybe not today. Well, just watch this space.

Thanks, Philip. I was going to actually invite you to give your closing comments, but you've done quite a bit of that. Mr. Baljee, would you like to add something to that before we end this conversation?

Yes. I like to end this conversion by saying that if you already look at it from 2008 up to last year, it was a turmoil year for the entire hospitality business and the Indian economy also, and so to say that we have not doubled, but there were so many cases where companies have gone down under also and sold out and gone away, but we have stood by. And we took some really hard decisions like with Hyderabad. And we never anticipated that Hyderabad will go to Telangana away during that time and so we took a big hit during that time. But still, we took a fast decision on selling it and the company survived. And otherwise, the company would not have survived. So we've taken hard decisions like some other companies did not take those hard decisions and they went down under. So I think we should -- at least we deserve credit for that, that we have now steadied the ship and it's good time for us and let's try to work towards that. And we are -- as Amit had also said, that being the highest shareholder of 63% in the company and my interest is aligned with all of you investors. And we'll do everything possible. And there is no question of any corporate governance things. We follow things very, very religiously. And it's only because of the exigency and the dire need, the company needed money that we took personal loans and put it in here and not because we wanted to make money out of the company. And we still don't. We are taking the money back from the company. And there are better investments available, but we'll continue to take care of interest of the company. So don't worry about all that.

Pleasure, sir. Thank you so much, and thank you to all the participants for joining on this call. And thank you to management for giving us their valuable time. This brings us to the end of this call. Thank you so much.

Thank you.

Thank you, everybody.