The Indian Hotels Company Limited (500850) Earnings Call Transcript & Summary

Good day, and welcome to the Indian Hotels Company Limited Q4 and FY '20 Earnings Call being hosted by Mr. Puneet Chhatwal, Managing Director and CEO, IHCL; and Mr. Giridhar Sanjeevi, EVP and CFO, IHCL. [Operator Instructions] Please note that this conference is being recorded. At this time, I would like to turn the conference over to Mr. Puneet Chhatwal. Please go ahead, sir.

Good afternoon, everyone. I'm here, as always, with my colleague, Giridhar Sanjeevi to walk you through the key highlights of the full year '19/'20 as well as Q4 of '19/'20. When we look back although it did not happen in Q4, but I think we cannot ignore the fact that Brand Finance recognized Taj as the strongest brand of the nation in all categories. And together with Tata brand retaining as the most valued brand category, I think this is a very good space to be in for a brand from a hotel industry, which has been severely affected due to the pandemic. But also, it makes us feel very, very proud that our Taj has made it as the nation's strongest brand. When we then move to a kind of rewind of the year gone by, you will see that some of the key milestones achieved where we reached the portfolio size of 200 hotels, of which 158 were operational till we started having the lockdown. 50 new hotels were signed in the last 2 years. And in the last year alone, we signed 29 more, totaling almost 3,000 rooms. We opened 17 new hotels in the last 2 years. And last year, we fulfilled the promise of opening 12 properties, 1 property a month. And the size of management contract portfolio grew from 32% to 42% over the period of 2.5 years. The number of rooms increased from 18,000 to 25,000, while the 18,000 is that when we announced our journey of Aspiration 2022, and the number of hotels increased from 160 to 200 in this period. Moving forward, on the highlights of restructuring our portfolio. As I already mentioned, we delivered 12 openings. We had a consolidated presence in Goa, which is a key market for us by the addition of Cidade de Goa last year as well as Taj Hotel & Convention Centre, unfortunately, open for almost less than a month, but together, it gave us 500 additional rooms in one of our key profitable market. We added another palace after many years, the Taj Fateh Prakash Palace are making us a formidable force in the city of Udaipur, together with the Taj Aravali. So we have 3 properties, one for Mile along with Taj Fateh Prakash at a lake in a palace environment together with the romantic Lake Palace. Very important, we repositioned the Ginger brand as most of you would know, and Ginger reached a key milestone of 50 operational hotels. And as I've consistently said, this is a brand to watch. Unfortunately, like any other brands, any other hotel business, this also got hit in March very negatively because of the COVID. Otherwise, we had much more better news in store for Ginger. We signed 20 new hotels on -- and you will see that in that 13 were Ginger branded properties. Actually, if you look at a single brand in India last year, Ginger had the highest share of signings of new contracts to its business. Then improving on that, we consolidated Indian Hotels presence in the Northeast. We always say Northeast is there where Africa was 15, 20 years ago. It's a market ready to boom in the next few years. And now after a very good success of Guwahati where we are present and also with the Ginger in Agartala, we added hotels in Shillong, Gangtok and Tawang in in Arunachal Pradesh. We've also got the intimation of disapproval, the IOD as they call it, which means basically a kind of an approval to start building a 371 key flagship Ginger in Santacruz on the property that we own, which was belonging to the old flight kitchen of the TajSATS business. We even had a record year for growth, both in terms of signings and in terms of opening. As we have always constantly communicated, one of the key values that needs to be unleashed is the values in our brands and also trying to make our brands -- the result you have already seen for the Taj brand. But also the same year, we came up with the rebranding of TajSATS. We came up with the rebranding of Chambers, Khazana. We've introduced a new brand like Ama Homestays & Trails. We introduced a new brand in the salon business called niu&nau, and several food and beverage brands, including the one in partnership with AB InBev for which we have also got the required permits. So within 4 weeks, the first group under the brand that we have jointly developed with AB InBev will be going live in the city of Bangalore at the Taj on the MG Road. So these brands have been drivers of our top line. And a lot of these brands have been carefully chosen because they are significant margin risers. These are not brands that have been chosen because they just create the bulk around our mainstream brands like the Taj or Vivanta, but also in themselves, they are brands like reimagining Chambers. Why? Because Chambers margin contribution is as high as 80%. Same is the story with some of the Microbrewery brand which I told you. This Microbrewery brand has a very high-margin contribution versus any other food and beverage restaurant. And also Ama Stays & Trails we have no investment. These are existing bungalow and guesthouses of Tata Coffee or of other individual owners, reaching very quickly. I think this year, we'll have at least before the end of December 25 operational Ama and these are all adding value to our portfolio of brands and helping us drive our market share. Moving on, some of the campaigns that also assisted us and you must have seen especially in the month of February and the first week of March was our campaign from parts like always and like never before. It had an off-line reach of almost 4 million, social media reach of 2.5 million, we used displays and search to get to several millions in terms of our rates and this brand really helped us in driving our market share. So that's all, these kind of activities resulted in what we're going to show you now is our results for the full year. If we move on to the next slide, which is -- if you see, the revenue came in flat. And this revenue came in flat because 15th, 20th of February, the growth had started slowing down. Actually, our memories tend to be short. We tend to blame everything just on COVID because it is such a major impact on our business and shutting down our properties, but the slowdown had started a bit earlier, which is reflected in the GDP numbers for the full year. And that all did not come in end of February or March. The growth in the GDP has been constantly slowing down from the Q1 of last year. So although our revenue growth was flat, our EBITDA still grew by 20%. Our EBITDA margin grew by 400 basis points and our PAT had a growth of 24%, which is -- when Giridhar takes over from me on the detail, then he will take you through, you'll see what kind of an impact we had alone in the month of March and how much it drove us into the negative territory versus where we were almost in year-to-date December or year-to-date February. When we look at the details of the last 10 years, you see that, especially in the last 4 years or so, the revenue growth is only around 10%, but our EBITDA growth and EBITDA margin growth is very phenomenal at this stage. That is mainly because of the change in our business model, which we have been communicating. The revenue growth if we get rid of properties that we own that are loss leaders and reduce the debt with it, the revenue goes on, when we add to the management fee business, the management fee business is only added as management fees and not the revenue of the hotel. So that part of the growth slows down, but what it really helps to achieve is the margin expansion, which we have done. And if you look at the last 3 years, we've consistently grown from INR 700 odd crores to INR 1,100 crores in EBITDA from 17% EBITDA margin to almost 24% EBITDA margin, from a PBT of 162 to more than doubling it to 355 and a profit after tax at a 3.5x increase from INR 101 crores to INR 354 crores. Moving on some of the key initiatives that we had announced in Aspiration 2022. And this is important because we are exactly today halfway through the Aspiration 2022, which was launched middle of Feb in 2018 when we did our Capital Market Day, invited all of you and announced what we were going to do. And the 5 key pillars of Aspiration 2022 was restructuring growth. We said we will grow by 15 hotels per year. If I look at only the last 2 years, we added 50. So if you look at the restructuring of portfolio owned and managed, we said we wanted to have a 50-50 balance at the end of 2022, we have already reached a 42% managed portfolio. When we said we'll reimagine excellence in being the most iconic and most profitable hospitality company, we were awarded the strongest brand across all sectors, and I don't think you can be more iconic than that. And in terms of reengineering profitability, our EBITDA margin expansion, we have given a guidance of 800 basis points, but we achieved 700, of course, with the -- a little bit help from the change in the accounting standards. But even if we were to discount back, we would still have 350 to 400 basis points growth in EBITDA margin despite COVID impact which you will see in March. And our ambition and aspiration was to bring down our net debt-to-EBITDA to less than 2 and we finished the year at 1.69. Moving on, I think we need to now address the COVID challenge. And there is -- this unprecedented issue has been a challenge for not just India, but globally for the hospitality, tourism and airline industry. There is an estimated loss of $2.1 trillion in terms of the top line. There are 75 million jobs at risk. And there is a fall in global aviation revenues by $252 billion. And the global economy is expected to contract for minus 6, it can be anybody's guess, it could be even minus 10 or even a number higher than that, depending on which economies one talks to. When we further move on, based on these numbers to the Indian Travel & Hospitality sector, the loss is estimated at INR 10 lakh crores, with 38 million jobs at risk and up to 25% impact on international travel. And India's estimated GDP growth is supposed to be contracting to minus 3.2. I was on a webinar yesterday or day before where one of the former economist or adviser to the government actually expected a much larger number, which was more than twice than what is shown here. And every time somebody -- every week somebody or the other comes up with new forecast. So I think definitely, there is going to be a contraction in GDP, which has a very strong correlation with our business. After getting all this information and after having had the experience for exactly 3 months today, the international borders were shut down on the 11th of March. Because all visas for travelers coming was canceled, people of OCI card holders were also stopped as of 13th of March and today being the 10th of June, it's really 3 months into this. We decided to turn our strategy that said, okay, we have already achieved maybe 70% of our goals of Aspiration 2022. This is not the time now for looking only midterm and what we're going to do in 2022 rather to address the issues now. And we came up with what we call R.E.S.E.T 2020. And as of next quarter, we will give you new targets on what we think would be our aspiration going forward, just for the sake of clarity. And I would like to repeat that very loud and clear, all of the targets will be enhanced. They will not be corrected downwards, rather they will only be corrected upwards because we have a very strong belief as management in the future of our industry, and we don't see this as a permanent problem rather under the same thing that this too shall pass, the question is only when, in 3 months or 6 months or 9 months. But this too shall pass and that's why we need to press the bottom of R.E.S.E.T. Another recent response to COVID-19 is based on revenue growth. We will be announcing 7 key revenue initiatives, one was already launched yesterday or day before in Karnataka and Kerala where the hotels have opened. It's based on the concept of dry fish and is called the 4D Experience, that is dream, drive, discover and delight. So you dream and you get into a car, you drive, you discover a new destination around your place 3 to 5 hours ride and this will certainly delight yourself. So similarly, we have lined up a number of initiatives, including new lines of revenue. I think it would be prudent to mention in this call that within a week from now, we will also be launching our own home delivery business under a new brand with our own app, which was a long time desire to do something in our business also on the digital side. So in the State-of-the-Art app, you'll get to read about it, but has to be patient for a week. So there are several such initiatives, as I said, the top 7 of ours, which are meant to compensate for the loss in revenue or benefit the loss in EBITDA or in PAT, which is definitely the case for us and for the entire global hotel industry in the Q1 of this financial year. So on top of that, we are also coming up with strategies for new corporate leisure wedding and Mile businesses across different states. We will have new business based on this app will also be taken as shops into hotels, and momento shops in key city center locations where they are large foot forms like the President and corporate, all the ambassador in Delhi, which is Pandara Road, Golf Links, all that catchment area. Then as an example, something which we launched on 10th of April, hospitality at home initiative has proven to be very successful. This was just delivering hampers or people coming to pick up 3 different kinds of hampers have given us some kind of incremental revenue, which was not existent before. So some of these initiatives, which are already launched and some that will be launched over the next 4 to 6 weeks depending on the openings are all ready, we are ready to go with it. And our focus will be definitely on one of the initiatives we launched last year, which is a very big success for us, was driving Chambers membership. Chambers in it's absolutely new look, feel and design is being launched at The Mansingh in Delhi, it's delayed by 3, 4 months for obvious reasons for COVID because the hotel is shut. And also, it got delayed because of the air pollution issues Delhi had, when the Supreme Court fully made all construction stopped for several weeks in the NCR region. So the Chambers will be launched at the month saying by September of this year at the latest, hopefully by October, which gives us clear 6 months in the rest of the year. And the same will be the case in London. So the Chambers will be entering the London market, and we think this gives a definite great positioning for a private club brand that only we have, and that would be our competitive advantage going forward. Moving on to the Excellence initiatives. I think you all know we have launched the Taj Mahal, the commitment to restrengthen, these are initiatives built around the new normal, as they call it, the health, the safety standards, the standards of food production, the food delivery, the food service, but also excellence in what we do, excellence in our values. Our values stem out of the 3 letters, Taj, which is Trust, Awareness and Joy, and the trust of the community is with us because we have supplied 2 million meals in this time to the assistance of Taj Public Service Welfare Trust to the doctors, to the medical fraternity, to the migrant workers and also hosted so many medical room nights, approximately 25,000 plus room nights have been hosted by us and also subsidized for Taj Public Service Welfare Trust. So I think this is something extraordinary. And now I come to one which you all like to hear the most. Of course, I think revenue is very important, but very important is our initiative on spend optimization. And when I talk about spend optimization, we need to make sure that 50% operations have been shut down, mostly operations were shut down, and there is a staggered opening. So 50% of our hotels across the portfolio were closed, all were used only as active quarantine centers as of mid-end of May. And post-relaxation of lockdown we have poor compliance for the staggered opening in place. The factors considered for the staggered opening is obviously different in every state. It depends on the rules and regulations of the state and also the country because we also have hotels outside of India. The second is, obviously, the profitability of the hotels in terms of steady state EBITDA margins. And the third, because if your multiple hotels in the same city, you have to look at the chance of which one drives the maximum margin or which one helps you to keep the cost best under control. The third is a threshold occupancy levels for the hotels to be profitable or stabilize or to breakeven and ability to synergize within a city and maximize business potential as well as in these difficult times, maintaining owner relations and having understanding of the limitations of the owners on cash flows as every owner is not in the same financial position. Moving on further from this too, it comes to the spend optimization initiatives. I think we go through a historical phase in our company where we have embarked already since 1.5 years or so, which most of the analysts have been open to enroll and the investors also they've been working on the organizational and payroll optimization since 1.5 years, and now that has accelerated. And if you look at our corporate overhead as a percentage of revenue, it has continuously declined despite the normal inflationary increases in payroll expenses. And I think we will now see a more significant change in the corporate overhead, but also in the operations of the hotels as we have so many openings of hotels, we have the possibility to redeploy people. I always say, yes, cost cuts also comes on top if people were to be taking pay cuts. But ideally, you redeploy because all those measures are temporary. Whereas if you effectively reset the cost base, reset the manning base, reset the number of executive base, reset based on the branding and the portfolio that you have, that has a longer term impact. So when the business comes back, you will reset your cost base for a much heavier future tomorrow. Similarly, on heat, light and power, I think we are being able to drive these costs significantly lower. So in some places to 1/3 of the level it was there before. This is also an ongoing project and it has accelerated now. Ongoing why, because we picked up 19 hotels together with Siemens to do a kind of a study. And now while it has accelerated in certain states have been forthcoming, for example, Maharashtra has given, both on the fixed and the variable cost based on the consumption a reduction to the discounts and to the energy providers, which has been further given to us. Similarly, on unnecessary repairs and maintenance expenses, going forward also on stores and supplies, nice to have versus what is necessary to have in the period of lockdown. Advertisement and promotional expenses, cleverly using digitization going forward, which is much cheaper. And as I already alluded to administration expense and having cut at all consulting levels, having cut with all other people who worked with us. With this spend optimization, comes the next E which we have, is the Effective Asset Management initiative. I think this is also something which is a very lasting impact. As you have all known, we have been monetizing noncore assets, like sale of apartments, sale of some kind of villa, which you have never used for last 25 years, let's say, in Pune, we have some kind of farm land, et cetera. So those initiatives will keep going on also this year. Also, in our subsidiaries like OHL, we had the sale of Hotels in Trivandrum and Vizag and we used those proceeds of the sale to bring down the debt. We'll continue to explore the opportunities at IHCL level also. So this year, we plan to definitely sell one or the other asset and take it on a manage back or on a leaseback basis and also minimization of lease costs. So wherever possible, we have entered into dialogue with the landlords and started getting reduction in leases. And some of those places the leases have been reduced and have had a significant impact and then other places, we have to carefully check where we have the rights to do so based on the contracts we have, if there is a force majeure clause or not. If there is a force majeure clause, that can be hoped, yes, we have the possibility to do so. Following on with the asset management initiatives, we also have what I already alluded to, a part of our being thrift that the T in the R.E.S.E.T is thrift and financial prudence initiatives, which is, obviously, I said, reduction in corporate overhead, which has gone down by almost 10% in the last 2 years despite the increase in 2 years of almost 12% to 13% in the stock cost. We have deferred a lot of renovations. We have been spending almost INR 400 crores on an average per annum on renovations and upgrading our portfolio and we were successful in upgrading a lot of our Vivanta properties through Taj and a lot of Gateway properties to the Vivanta level. And also in terms of raising credit lines, which is very important to have the liquidity as none of us knows how long this crisis would last, we have no intention of increasing debt and living out of debt, but we definitely need to have the liquidity and all the one-offs that we have will help us to keep reducing the debt as we have done before. I always give this example, we tend to forget, if we just look at the renovation of Mansingh, and we add to it the prepaid lease that we have made there, all our -- the deposit that we had to give for the renewal of Lake Palace, or when we add up all these things, they have been done from the cash flow generated from the operations. We did not raise any debt and our EBITDA kept rising and that's how our net debt-to-EBITDA went down to 1.69. Moving on from this slide. I think the best is I hand over now to my colleague, Garindhar Sanjeevi, to take you through the details of all our financial performance of Q4 and the full year '19/'20.

Thank you. Thank you, Puneet. I think I move on to the financial numbers. I think if you look at the Q4, I think you saw the numbers that we declared. For Q4, we had a top line of INR 1,100 crores. And then we had a profit after tax of INR 74 crores. I think what was important to highlight was the January, February and the March impact of COVID. So if you see what had happened up to the end of February, we were pretty much on kind of growing. Of course, this year, there were impacts in terms of GDP growth slowing down and a whole bunch of other factors, but nevertheless, until the end of the February, we did grow revenue by 2%, operating expenses degrew by minus 4%, which means we had a positive EBITDA leverage, which resulted in margin expansion. Finance costs were broadly in line in terms of what we saw. And exceptional items of INR 53 crores represented some of the monetizations that we did in the month of March, which is all about the Padma Vilas land, which gave us the INR 145 crores, what do you say, profit after tax. March, of course, we saw the impact of COVID coming in after around March 10, which did result in our revenues dropping by 48% as compared to the previous year. Operating expenses reacted less because we didn't have too much time in terms of reacting in terms of operating expenses, which gave us an EBITDA loss of INR 37 crores and rest of the lands were kind of consistent to that, and we had a profit after tax of INR 70 crores. So what this slide demonstrates is that till the end of February, we were broadly going in line with what we had planned and March was the time when there was an impact. Go to the next. In terms of exceptional items, I think what is worth seeing is that beyond the sale of Sri Padma Vilas property, and then gain on sale of property of INR 6 crores for the sale of Ginger in Pondicherry, we also sold apartments. We also saw the depreciation of the dollar, which came up in the last quarter, which resulted in a INR 20 crores impact in terms of mark-to-market. So this is just a slide on the exceptional items for Q4. If you look at the full year, basically, this is looking at YTD December and Q4 effectively as we look into summary slide, the top line was flat at INR 4,000 crores, the EBITDA margin expensed upwards because operating expenses was down by minus 5%. And then interest costs broadly stayed in line. Exceptional items contributed the sale of noncore assets, resulting in a profit after tax of INR 354 crores, while this is post Ind AS. So even on a per Ind AS basis, the impact was INR 393 crores, which was -- which represented on a post Ind AS basis, a 406% margin expansion. And even on a pre Ind AS basis, it represented plus 2.39%, which is what we had always communicated in terms of a secular growth in margins. Moving on. I think in terms of consolidated exceptional items, I think pretty much it's the same picture as we saw in the quarter. And I think you can see the full impact of the gain of sale of flats of INR 87 crores during the full year. Go on, please. And I think what is very important to highlight is that ever since 2015, '16, and then beyond, you have seen the very steady improvement. And what is interesting to see is that while the top line moved from INR 4,123 crores to INR 4,596 crores, which is an improvement of approximately under 15%, I think the EBITDA grew from INR 652 crores to INR 1,100 crores, and the profit after tax went up from a loss of minus INR 230 crores to a profit after tax of INR 354 crores. So really speaking, it has been a very conservative in terms of working on the revenue levers, the cost levers in terms of achieving these results completely. If I look at the stand-alone numbers, stand-alone numbers, once again, reflect a similar pattern where again we distinguish between happened up to the end of February and March separately for Q4, while we reported total revenues of INR 754 crores, we did save in operating costs of 8% resulting in some leverage impact after February, there was a positive leverage of 10% in terms of EBITDA, the margin expansion clearly occurred up to the end of February, and profit after tax up to the end of February was about INR 145 crores. March clearly was a loss of INR 53 crores, impacted by the drop in top line of 47%. Moving on. The stand-alone exceptional items. I think one of the item to note is that like -- as always, whatever is the cash loss that year incurs we sort of provide for that in the stand-alone to ensure that the investment block does not get related. So we had about INR 42 crores there. But other than that, it reflected the sale of property, including flats and the rate NTM on derivative contracts. Move to next, please. So on a full year basis, the stand-alone numbers were also flat to INR 2,878 crores. EBITDA went up by 9%. EBITDA margins went up 2.56% on a post Ind AS basis and PAT went up to a historical high of INR 401 crores. In fact, on the pre Ind AS basis, the PAT was INR 418 crores, and even on the pre Ind AS basis, the margin expansion was 208 basis points, which was completely in line with what we had talked about secular expansion. Go to the next. On a full year basis, this does reflect the full year numbers, where the revenues were flat, operating EBITDA margins went up, finance costs were broadly in line. Exceptional items reflected the sale of property, ForEx losses and the provision for PL and profit after taxes for this year was INR 401 crores. You will see on this slide the exceptional items. The only point I want to highlight is that on PS, we actually improved. The minus INR 32 crores that you see in 2018, '19 was after the Boston income of INR 46 crores. So therefore, in the prior year, the loss on PR was INR 78 crores INR, which came down to INR 69 crores in terms of cash losses. So there was a concerted improvement on the PR position. In fact, on the international properties, which is U.K. and U.S. put together, our cash profit improved by GBP 2 million -- $2 million or so. So hence, I think, overall, our international portfolio did better as we have kind of always highlighting. Next, please. I think I'm spending a minute. I want to spend a minute on some of these stand-alone revenue metrics actually. Once again, if you look at Q4, I think, as we've always said in the current -- in the last financial year, the RevPAR increase was influenced a lot by the occupancy and less for the ARR. So up to Jan, February, for the Q4, the occupancy grew by about 1% or so, the ARR degrew by 1.5%, giving us an almost flat RevPAR actually. March, obviously, was a different story. Occupancy dropped, we protected the ARR and that resulted in a RevPAR growth, giving us the overall Q4 position. And I think the strategy here has been just reversed. If you see after February, occupancy -- RevPAR was driven by occupancy, while rates went down. The moment the crisis hit us, we were able to sort of protect the ARRs as much as we could actually. In terms of room revenue, the room revenue growth was 3%. F&B revenue degrew by 4% after February, and March, of course, was a different story. Move on. For the full year metrics, once again, you see that after February, the occupancy grew by 2.1%. ARR was negative, minus 2.3%, giving us just about 1% of RevPAR. March, of course, as I said, the occupancies were impacted, giving us the full year metrics. Room revenue grew by 3% -- 3.5% up to February and F&B revenue grew by 1%, which was clearly impacted by March. Move on. In terms of this year, we have discussed in the Capital Market Day, I think we continue to make efforts in terms of the different cost lines, whether it is raw material lines, fuel and par. Payroll costs, of course, changes because when the top line drops, you get an increase in payroll costs. Other expenditures also went down. But now as we go into R.E.S.E.T, there will be much more work here, which will happen, as Puneet has highlighted, in terms of change in operating markets and driving these inordinately. Next slide, please. Monetization. This is just -- this continues to be part of strategy, which is the noncore monetizations, whether it is land, residential apartments, simplification. I think all of those will continue. Last year, as you know, we totally monetized about INR 211 crores. On the balance sheet and liquidity update, I think what is good is that like -- I put up a slide in terms of the pre Ind AS performance over the last 5 years, I think the balance sheet performance has also been significantly kind of under focus where the net debt-to-EBITDA went down from 6.47 to 1.69, and the net debt-to-equity went down from 1.27 to 0.36. So I think this is a key measure that we look at very closely, and we will continue doing so actually. Go to the next. In terms of the net debt, the net debt at a consolidated level actually reduced and net debt at a stand-alone level also reduced. You will notice that the liquidity went up in both in stand-alone and consolidated. But that was because of the strategy in terms of ramping up liquidity as we saw the impact of COVID. The weighted average cost of debt all remained under control and we spoke about the net debt-to-equity and net-debt-to-EBITDA. In terms of funding, I think we have been -- I think the credibility of Indian Hotels has been very significant. So in the month of March, we drew down the Kotak Mahindra and the Axis Bank loan. And I think what is incredible to see is that we were able to take advantage of the TLTRO operation that the RBI announced, the long-term repo operations. And at a time when people talk about hospitality industry being impacted, we were able to draw unsecured credit lines worth INR 450 crores, which just speaks to volumes in terms of the credibility that we enjoy. And the important thing to note is that we have not resorted to any short term funding. Our -- the unsecured loans are a 3-year door -- a 3-year maturity. And in terms of the other loans, the door-to-door maturity is 6 years. Our credit rating agencies have all been kind of reaffirmed and our borrowings are also covenant-lite. So we continue to kind of sort of make sure that we deal with the financial markets as far as liquidity is concerned, in a sensible way. And that's the right thing to do because we need to maintain the liquidity. And we're also keeping a close watch on the net debt. And in fact, one of the things that we said, the monetization will be an important lever that we want to use this year. And any monetization we do, we would like to repay some debt so that while we sort of ramp up liquidity to deal with the crisis, we will also be able to keep the balance sheet held simultaneously. So that's really going to be our approach actually. With this, I kind of come to the end of the presentation and happy to move into question and answers. Thank you.

[Operator Instructions] We will now take our first question.

Sumant here from Motilal Oswal. So my question is post-COVID, what are the changes in the domestic market and international market in terms of business dynamics? And what are the steps we have taken for the domestic and international marketing in cost side?

Shall I go, Giri on this or?

Yes, yes, please.

So Sumant, hope are you well and staying safe. The first is on the international, on the cost side. On the international on the cost side, the San Francisco property, the New York property and the London property are the ones which we own. The other contracts which we have are either management contracts or are in a joint venture. The good news in these very bad times is that in the U.S. and in the U.K., the government is bailing out the operators very heavily on the cost side. So they are putting it in the money. For example, in the U.K., up to 80% of your staff cost with a cap of GBP 2,500 on a monthly basis is being subsidized for a period of 6 months. So that is one of the examples. Second example -- for example in U.K. is the property cost has been laid off for the full financial year. On that alone, just a property cost in the U.K. for us with the Buckingham Gate and St. James Court is almost GBP 2.5 million. So there are things like this that are different market to market. We can do detail on off-line things if you wanted a detail on a market-by-market basis, where like Dubai, we have management contracts, the new hotel which had just opened, we shut it down, which will reopen in September, October. So we lose the management piece for the period that it is shut. But we have to, as I said, have understanding for the owners, their cash flows also. We have kept only one hotel open, which has been there and is very well-established in the market in business space. So that one is open. Maldives, we are preparing for the reopening. And Sri Lanka, we never shut down the property, so they are now operating at a low level. When it comes to -- on the staffing part of it, of course, there is a serious reduction on the contractual labor, which is a labor of the contractor because if you're not operating at 70%, 80% occupancy, you also need 50%, 60% less people to do the same work. So there is a lot of that happening, both on the domestic front, but also on the international front, which I would say is on the Indian subcontinent, which is in or around India. When it comes to other costs, I think Mr. Sanjeevi showed you, how over the years, not just because of pre-COVID or post-COVID, we have been taking measures to harmonize our cost to become more efficient and to increase our margin. That journey is on and will continue, but actually, in this COVID period gets even accelerated. On the revenue initiative side, on the domestic front, I think in any country today, the initial business will come back based on the domestic business. And the revenue initiatives that you will hear that we are announcing, the 7 initiatives of which 2 I already told you, they are all based on the domestic market growth. As we don't know whether international travel will start in September or October and that it will come back to its normal level maybe after January of next year. So the reliance has to be on the domestic market. But it is also an opportunity. Now why is it an opportunity? It is an opportunity because 26 million people are traveling out of India. So if those people are not able to travel and even if 10 million of them are captive for hotel business, at some point, need to get out, both on business and on leisure at least within the country and take their families also out on a holiday, and that's why this drivecation could be an answer in the short-term versus flying or taking train to a destination.

Yes. So talking about the cost inflation side, can you elaborate more on how fixed cost overall percentage term or variable cost percentage term reduced during this pandemic?

Can I answer that, Puneet?

Yes.

Yes. I think, as I said, I think we should look at cost optimization on an overall basis because it is not just 1 line of cost alone, but I can tell you that if I look forward to just Q1, as we have planned out looking at cost reduction. On the domestic side, our cost reduction we expect it to be upwards of 40% and on the international side, we expect it to be upwards of 65% actually. So that's the overall cost reduction metric in Q1. And we are yet on some aspects of the cost, we are kind of deliberating in terms of how to do it the right way. But even without that, I would say that this is the kind of reduction. So we will kind of talk about it more. But I would say that this is what we hope to achieve immediately.

So that 40% and 60% -- 65%, you're talking about it is on an overall basis or fixed costs?

It's overall. And that's...

Okay. And when the international market...

Giri, if I may add?

Yes, Puneet.

What this crisis has shown to us is a lot of fixed cost in a crisis can also become a variable cost. Everything doesn't stay put.

Okay. And any expectation of opening your St. James and U.S. hotels?

Yes, we think a slow opening in London is anybody's guess, either July or August.

Okay. And U.S.?

U.S., we don't know because at the moment, what is happening in U.S. is a bit risky. So we have to take 1 step at a time. I don't want to give any kind of a misguiding answer. This -- all this unrest in the U.S., and especially in Midwest is very strong, but you never know when it becomes out of control for New York. But if it stabilizes, yes, we can open in New York.

Okay. And Jan, Feb also...

San Francisco will be later, San Francisco will not be now. That state is itself, they also have this federal system, every state decides. So California is a little bit more strict. So that will take a few more months to open.

Okay. So Jan, Feb was washout for St. James, right? Or Jan was okay. And also about the U.S. business, how was the performance in Jan, Feb or March?

Giri?

I think I don't have the exact numbers for Jan and Feb for U.S., but I think my sense is that the -- can I take it offline as of now?

Yes. We can do that. Giri, I will answer. The Jan, Feb for U.S. was quite good. And so was it for U.K. also. It all started slowing down in the U.S. and U.K., 10 days before in India. It started 1st of March was, when we started seeing negative growth. I remember that very well because I was personally in London on those dates. And we had a meeting where we discussed that. The pickup became negative.

So we now take the next question.

This is Deepika from JPMorgan. Hope everyone is doing well. I just had a question on the balance sheet. So given the recent capital raises, what would be your debt levels right now? And would you say that would be the peak debt for the year?

I think from net debt level, we are still okay. I think the net debt level from INR 1,857 crores or so has probably gone to INR 2,000 crores. I don't think the net debt has gone beyond it. Now I think in terms of target for the year, it's hard to state the target at this point of time. I think a lot depends on how the recovery process starts. And as I mentioned Deepika, I think monetization continues to be a major plank of what we want to do here. And on the assumption that we are able to successfully monetize meaningful some, we will use it to manage the debt level.

Got it. So sir, could you -- if you -- I don't know whether it's too premature, but could you outline what would be your fixed expenses on a monthly or quarterly basis after the cost initiatives that have been taken?

I think in Q1 itself, I would say that based on whatever little EBITDA, I think the fixed costs would have gone down by at least around INR 35 crores to INR 40 crores at a minimum basis. I think that is what I would say at this point of time. And I think this was -- as I said, this is what is the estimate at this point of time on a monthly basis. And we have not yet touched the number of other initiatives. So those will kind of -- you will see that happening since February in the year.

Right. And sir, last question on the payment for Sea Rock land, which you have to do, I think, some portion this year, would you be going forward with that?

Yes. I think the Sea Rock agreement is one of the strategic plan. I think it is very important for us to sort of take control of that. And I think what so far we have done is that, I mean, we have not yet kind of completed it, but we do hope to complete it actually, absolutely. And I think in any case, that payment is targeted at the end of 2021.

We take our next question. You are on mute, please repress your mute button. As there is no response, move to the next question.

I'm Kaustav Bubna from Rare Enterprises. So just could you give us some more color on your domestic and international subsidiaries? How have they performed in FY '20 over FY '19 financially and operationally? Could you like go into some major subsidiaries internationally and domestically and just explain that to us? Because I feel like in FY '20, your subsidiary operational performance was better than FY '19, right? There was a big jump at least in the 9 months of FY '20. So could you explain where this is coming from?

I think if I look at what are the major subsidiaries for us, the biggest subsidiary is PIEM Hotels. The PIEM Hotels continue to do well. Of course, I think domestic businesses were impacted in the month of March. So I would say that -- and you will see that in the published numbers. I think for the full year number, PIEM will probably be near INR 400 crores in terms of top line, which was minus 7% in terms of [indiscernible]. EBITDA was INR 52 crores. That EBITDA was minus 30%, that is because, in PIEM, we also get a certain dividend on that company. So I think you should factor in for that. And overall, that was approximately INR 11 crores or so. So, but on a like-for-like basis, without the extraordinary dividend that PIEM received, I think it was broadly fine actually. In terms of Roots, Roots did topline of INR 213 crores, which was a 3% up. I think in terms of EBITDA, it was in positive territory INR 15 crores was EBITDA. PAT was impacted because of the impact of March, and we were not able to complete the -- all the monetizations in the month of March. So PAT was negative, minus 9%, which is still an improvement from the previous year's PAT of minus INR 15 crores. So that is as far as Roots is concerned, the second important subsidiary. On the international side, very clearly between St. James' Court and U.S. business, there was an overall cash improvement of about $2 million or so. So therefore, the performance, we continue to focus. U.K., of course, did very well in terms of the improvement in performance. And as far as U.S. is concerned, as I pointed out in my presentation, the losses came down. So therefore, on a cash profit base -- cash impact basis, overall, there was a $4 million improvement actually. So I would say that obviously that the international entities did well and most entities performed in line with the Indian hotels stand-alone in terms of the domestic market.

Okay. Great. When you speak about simplifying your corporate structure and sale of noncore assets, I just wanted to understand, I mean, what are you guys thinking is the next steps in simplifying your corporate structure? And are you focusing on simplifying the international portion first? What are the difficulties in doing this that you're facing? And also when it comes to sale of noncore assets, I mean, what are the -- I'm sure there are a lot of assets which you plan to sell, but there are probably some difficulties if you're -- it's not easy to sell hotel assets. So could you just speak a little bit about all that?

Yes. No, I think our simplification strategy has been fairly consistent but we have far too many legal entities. I think -- and therefore, we need to sort of start what do you say, simplifying the complex legal entity structure. What we have been able to achieve so far are some of the simpler ones like last year, we sort of simplified the Taj Madras Flight Kitchen which was standing separately away from Taj Santacruz and wanted to ensure that TajSATS takes over. There was another company called Taj Enterprises where -- which had, again, significant other shareholder, we kind of once again changed it. So therefore, in terms of shareholding patterns that historically, there have been multiple shareholders in some of these companies, we are simplifying that. So that is number one. As far as the business legal entity structures are concerned, do we need all these different legal entities. I think the reality is that as far as PIEM and Benares and other hotels are concerned, some of these are listed, as you can imagine that Benares and in companies like PIEM, we have partners who are significant shareholders. My ideal solution is that can we just merge all of the Indian Hotels and give them shares in businesses. That's probably is the best solution. But with partners there, it is not the simplest solution. I do believe that the present crisis is putting different stresses on different companies. And maybe that creates an opportunity for some of these mergers as we talk about. I think that is one part of it. On the international side, about 4 years ago, we had clearly simplified in terms of making sure that all international companies come under our [indiscernible] I hope so actually. I think no immediate plans in terms of restructuring we have planned. But I think let's see how that goes forward, actually. Simplification continues to be an important part of our strategy. As far as the monetization is concerned, I think what we have tried to do is that, number one, has been clearly noncore assets like residential apartments where our employees used to stay. That is where we had maximum success. We have sold more than I think this year, we sold -- we made a profit of from INR 87 crores to INR 100 crores odd sales happened. Next, we looked at land, which we have never used like whether it is Padma Vilas land in Pune or even development of the Ginger building in what you say hotels that we are talking about in Bombay. That's also a form of making good use of land assets. The third, of course, is the sale of hotel assets. So far, we've only done 2, which is part of Oriental Hotel, which is in Visakhapatnam and the Trivandrum Hotel, which was used to reduce debt. Fourth is that, are there hotels and Indian hotels system that we can dispose of, of course, yes. We do also have the platform with GIC, where we are trying to see if we can monetize some assets through that platform. So that work continues. So clearly, you're right that monetization continues as a key objective. And of course, we have to be sensible because we are not trying to undersell any of this stuff. And I think right from balance sheet strategy as Deepika had asked, how do you manage, what is your target [ based on these ] sectors. So monetization will be an important part of strategy to sort of manage the balance sheet. We are certainly not intending to undersell the asset section. So therefore, we will continue to pursue it with all the discipline that goes with it.

Okay. And thanks for that. Thanks for sharing that. Just what's happening with the Sea Rock Hotel. Could you please, so once you complete that process of buying out the partner who is that 15% remaining portion. Environmental clearance-wise, there was some hold on that land, right? So what's next after that?

Yes. So I think you're absolutely correct. And we wanted to take charge of our [ investment ] and therefore, we wanted to -- we want to buy out our partner and take 100% control of [ Sea Rock ] and cut out some of the litigations that have been associated with it. And clearly speaking, there are 3 levels of approvals that we are pursuing. One is that, we have debt. The second is the [ decree ] and third is the PIL, which we're trying to eliminate. Our sense is that I think there's a much greater understanding with the government in terms of supporting it. The -- I think -- so therefore, we believe that over the next couple of years, we should be able to make significant headwind. And I think we've also discussed in the past that we are trying to create an alternate access from under the Worli Sea Link access direct to Taj Lands End. That also in principle, the government is supportive. So my sense is over the next couple of years, we do hope to sort of make significant progress on these approvals. We will keep you posted. It's been a long and hard journey on this actually. And I don't know, is there anything else you want to add Puneet on this?

No, just we are very close to finding a solution, but the transaction value is so high that we have to be prudent in doing the right thing. And we have a lot of history on this one. So we have to settle like 1 step and the next step and the next and the next step, and we are almost now coming to the end of it in terms of solving it, the 15% you mentioned and acquiring that. Then we have to go and get the permissions to build and I think it's becoming an opportune time. The timing works now in our favor, which worked against us in maybe the last 10, 15 years.

Great. Just if you don't mind, last question. So just if you've done some survey if you have this data in your domestic hotels, so if you take all your hotels in India, would you know on average, how much percentage of that -- of your client base is international? So how many people are traveling from international destinations to come and stay in your domestic hotels?

Yes, it's a good question, actually. We don't mind at all. It's a question which has several answers. So let me try. Giri, shall I go and try and attempt it?

Yes. Yes.

Yes. So we have different brands in different market positionings. If we look at Ginger branding, almost 99% of the business is domestic. Then we come to Vivanta level of branding, I would say almost 80% to 85% of the people visiting those properties is domestic. When we get to the SeleQtions, I think it is a mixed bag, and it's a very small portfolio, only 12 to 15 hotels. So it is not so impactful. When it comes to Taj, the numbers remain the same. The international improves from 20% to 25%. And then you are on the domestic front at 75%. When it comes to the palaces that we have, there, the international and the tourism driven business versus only business and MICE and weddings becomes almost 50%. But the palaces are not that large in size. So I think international business is very important for us because it is high paying. That's how it gets to those percentages, but it's not the biggest volume driver for us. The volume driver still remains in India your domestic MICE business, your domestic wedding business, the domestic business and the leisure segments, which drive occupancies and rates. And that is why the growth of domestic business or the rebound of domestic for India is far more important versus if India was, let's say, a country like Greece or south of Spain or south of Italy etc., or even both of them in fact.

We now take our next question.

This is Amandeep Singh from Ambit Capital. Sir, firstly, can you help us understand your industry outlook across domestic, international business and leisure, including MICE? And how would be the recovery across these segments?

I think we did answer this question in various forms. We think domestic is the one which is going to come back faster. International will only come back through the international travel or the repatriation flights, bringing back nonresident Indians back to India. Now if they are holding another passport or another card then they are also counted as international when we count the traffic coming in. So -- but in the short term, in the next 3 to 4 months, we don't see international travel coming back that strongly. Once we do our Q1 call, I think the visibility will be higher to give that answer. The domestic business, wherever the markets are opening up, we are seeing that business is reviving faster than we thought 6 weeks ago. Including in hotels like if the hotels were given the permission to sell or get rid of their liquor stock because there is an expiry date for beer, et cetera. So it went faster than anybody would have thought is possible. At a lower margin because we can only sell it at MRP. So -- but the sales actually started happening. So this is the -- we started this hospitality at home, selling hampers and it worked more than we thought it would work. So there are domestic -- this is the thing that domestic is stronger and domestic is far more important. And those potential travelers, as I said, who are not able to travel abroad are also stuck here. I'm sure they will need to get out, whether they go to Goa or Kerala or Bangalore or Rajasthan, that is the one which will come back faster. Also because some countries might put in, like we have different states saying different things. Some countries might put in protocol for quarantine that people might be discouraged to travel to international destination.

Sure, sir, that's helpful. As a follow-up to this, how do you expect ARRs to pan out given the higher share of quarantine travelers currently and company's dependence on the luxury segment?

So, it's a good question. I think, again, this is a very important factor for our industry, as we all know, how it -- like all of you know, is the second half of the year. So October to March, we are expecting ARRs to bounce back in this period. But now it's the time you take any business you get, right? So if you're getting to open the hotel because you are taking on quarantine or you're hosting medical workers, you just do it because it reduces your suffering as long as it is above your taking care of your cost and you are not out of pocket, you're fine, and that's what -- not only us, almost all hotel companies are following the same.

Fair enough, sir. And lastly, can you guide us with your CapEx plans for next 2, 3 years if possible?

See 2, 3 years, we can't say. The only good news is I will let Mr. Sanjeevi answer the second half of the question is what we are doing is the necessary. So we have to finish for example, the Connaught in Delhi, which is only 1 month, it needs to finish. So we will do that. The second is on the Mansingh, we are renovating Mansingh, so we will have that also. And the third, is things that we have had started, like we have started building a microbrewery pub in Bangalore, so we'll finish it, and we will open it next month. Giri?

Yes. No, that's right. I think we are focused on what is the most important at this point of time. Everything else has been kind of deferred until we get better clarity. Clearly at this point of time, cash conservation is critical. So I think -- I don't think we'll be able to answer for 2, 3 years because, really, if the business recovers, so what we have kind of deferred will go back, like for example, for Ginger [indiscernible], while for a [Audio Gap] And we see better visibility in cash than at this point of time, because, that even though they are strategically important we will kind of defer. So I think we'll be very prudent in terms of how we sort of spend money on renovation.

We now take our next question.

This is [ Atul ] from HSBC. So I had a couple of questions. First of all, I wanted to understand. So as you rightly said, you are in cash conservation mode. And of course, uncertainty is too high. So what drove you to still go ahead with the dividend payment? I mean, so that was a bit unclear. So if you could please help me on, what was -- why you decided to go ahead with the dividend payment?

Dividend payment. I think you're saying why we declared the dividend, is that what you are asking?

Yes. I mean, exactly. So what was the factor drove you to still announce the dividend payment when most of the companies are cutting the dividend because of [ the time is not right ]?

Yes. No, I think we have to be -- if I answer that question. I think last year, we have retail shareholders. And to see, while I can't talk in terms of the future numbers, I think very clearly, this year, given the COVID impact in the current financial year, there is going to be a significant impact on our P&L. So therefore, we thought that it is unfair for retail shareholders not to get the dividend, reduce dividend this year and maybe minimum dividend the next year. So we just felt that it is only fair that we kind of maintain the same dividend of 50% that we announced. And this year, as you know, there is no dividend distribution tax. So while -- while it took last year cash of INR 71 crores, this year the cash outflow is about INR 59 crores. I think in the overall scheme of things, I think it's very difficult to sort of look at every expense and say this is good or bad. I think we have to take a balanced call on what is the right way of approaching business actually. And we genuinely felt that this is the right thing to do for the shareholders, especially the retail shareholders actually. I think it's okay, fine, even if you have reduced dividend, we may have saved maybe INR 10 crores, INR 20 crores, that's all, nothing more than that.

Right. Fair enough. The other thing I also wanted to understand. So you have given the NCD commitments for the next 2, 3 years, which ranges about [ INR 40 billion ]. So how are you planning to meet those commitments? I mean, are you going to finance and how are you planning to meet those commitments? Because at the moment, I mean, I think you need to finance those, right? I mean, so how are you planning to do that?

What commitment? What commitments you said, NCD?

NCDs, nonconvertible debentures you have. And so how you can...

Yes, this is fine, that those payments are coming up next year. As I said, we are very prudent in terms of how we are approaching the financial market for liquidity. We enjoy tremendous trust and reputation with the market. We are pursuing a monetization strategy. So at this point of time, if you ask me, I think we will be fine in terms of being able to meet the commitment next year. I don't think there's an issue at all.

Right. Okay. Okay. In terms of costs, so I mean, you outlined that how your prices are performing and of course most of the hotels are closed. And so you have cut down the cost recently. But as you start reopening those hotels, your cost will start coming. So how do you see and how the cost would evolve because if we have more cost, I mean, fixed cost, and then probably you'll only see about -- even if you open some hotels, you will have to pay some more costs. So do you think that profitability would suffer in the next few months due to -- as we open the business? Or do you think -- actually, no, that's not the case? And secondly, how your cost structure would look like once your business is open fully? And so you must have reduced some of the costs or there must have been some structural decline in the cost. So how would you -- how your cost structure would look like once your business opens completely?

Yes. So I think we need -- I think thank you for the question. I think as I -- I think we are seeing substantial progress in terms of cost savings. We are looking at it, as I told you, even in the dividend question. It is not one line of cost in terms of the comments on what we are doing. It's about in the aggregate, the way we are approaching all the different cost levers. And I think some of the structural changes we do is something which is [indiscernible]. And it is not something which should be achieved in 3 months' time. So I think the COVID has given us an opportunity to restructure. We already started it as far as our Aspiration and that work continues. So my request is that we will be able to give you a better update every quarter in terms of the progress. We have already outlined to you so many times on cost savings that we're expecting in our domestic and international segments. So when we meet next at the end of Q1, we'll be able to say what more are we doing. So I think we will have to take it 1 step at a time in a very sensible fashion and those things we can take major reactions in terms of cost reductions there.

Right. Okay. And the last question, if you could please -- from me please. I just wanted to understand so now you have given a target that, that you will be opening 15 hotels every year. So would you be focusing more on the Ginger brand? Or so if you could please give us sort of a bit of a sense in terms of how the mix would look like?

Yes. You -- I think we did not say Ginger. We said, when we started the Aspiration 2022 that it will add 15 hotels to our pipeline every year, which is possible because we have so many signed contracts that we end up opening also on 15 going forward. But definitely, in terms of number of hotels, the Ginger brand would be definitely ahead. Up till now, it has been the Taj and Vivanta and SeleQtions. But going forward, in number of hotels, it will be Ginger, but in number of rooms, it will not be Ginger as Ginger could be smaller properties, 60, 80, 120 rooms. Because in that business model, you can still make money in a smaller set of property. So there are 2 large Gingers we have envisaged. One we have announced, one we have not yet announced, which we are not allowed to at the moment as it's -- it's in a confidentiality phase. But the one which we have announced is the Santacruz that it will take 3 years to get built and open. That's a 371 room one. But the other -- the average size of Ginger if we can achieve above 100 rooms is very, very good. So yes, number of hotels because you can have a Ginger, you can have 20, 30 Ginger properties in Mumbai itself. So that's the kind of branding. And I always give an example of some other chains and some other big cities of the world. They have sometimes more than 100 hotels among their different brands in 1 city alone. Of course, India is not in that life cycle phase in its economy. But if you can -- if others can have 100, we can have 10, 15, 20, but different sizes in different areas of the town. But the total number of rooms will not exceed, let's say, Taj Mahal Palace tower, plus Taj Lands End, plus Taj Santacruz the number would -- those 3 hotels put together, the 3 Taj put together would be equal to maybe 10 or 12 Ginger hotels.

Can we take one last question, please. And then, of course, we are happy to converse offline. So one last question, please.

Sure, sir. We take our last question for the day.

This is Vinod here, Am I audible?

Yes.

This is Vinod from [indiscernible] Highly uncertain times, but does management have any sort of broad expectation about sort of the recovery path for the year both in terms of occupancy and day rates next, say, 12 months, 15 months, how this could pan out. And based on that, do we have -- have not fully clear with that, but do we have any near-term debt payments in the next 12 months that is of leveraging to us?

Yes. No, I think we have not yet kind of given out any guidance in terms of what will happen in the next year or so. I think that is -- I think we've just started seeing things opening up from the lockdown. And as we explained, for us, October to March, the entire hotel industry, this is lucrative period that about 65% of the business, normally coming during this period. So I think if you look at experience from China and if that pattern of recovery happens, and we kind of come back to a reasonable level of recovery by October, I think it will be great. So I guess, maybe in the next quarter's call will probably be much clearer in terms of how we see the patterns of recovery. In terms of debt repayments, we only had 1 major debt repayment this year in the month of last month, in the month of April, about INR 200 crores, which we have repaid. And there's nothing as of now, no other major debt repayment that we're expecting in the current year. So we're fine. In any case, as I said, we enjoy huge credibility with institutions. So our ability to refinance and raise debt of different maturities, and as I said, we have no reliance on short-term debt is kind of fine. So we don't have concerns on our balance sheet and debt repayment capability at this point.

I have 2 small questions as well if I may. Based upon your recent cost program, what will be the EBITDA breakeven occupancy for you? Or can I put cash breakeven EBITDA and interest cost put together, what is the cash breakeven occupancy rates for you?

Yes. So I think it's a great question, but I think that question has to be answered, if you -- if approach to cost reduction is kind of clinical. I think we have to -- I think our approach to cost reduction is much more holistic in terms of all segments across the line. I think in general, I would say that maybe 50% occupancy is what we will predict. But we'll work on it. I think -- and a lot depends on our recovery of business. I would say 50% cash breakeven is most probably fair enough.

Right. And lastly, in this management contract business, which is a great lever to pull up margins and growth in an asset light approach. Do you think that business would be under greater challenge than our native asset ownership business? The asset owners will have -- this could be in cash flows. So a, is there a risk of losing some of those properties that they may not come back so easily back to business? And b, growing the inventory management business, can that be also a challenge?

Yes, very, very good question. Giri, if I may go first and then you can?

Yes, yes, of course.

It's an excellent question because this is exactly what will happen. So not just with us, but in the industry, it will happen. You do -- bad times is a good test of the relationships. And as a part of our legacy hospitality company, as we mentioned before, we have to do the right thing and not necessarily be the fastest. So if our owners are not in an ethical behavior with the employees or with other things and take unnecessary [ defects ] it does spoil the relationship and maybe we have to walk away from it, right. So that's what happens if you have a third party contract, and you figure out a way. But because of all the goodwill that has been generated around the Taj name becoming the nation's news that for all the things that we delivered for hosting the medical staff, for all the reasons that we have been in the television and newspaper news, there are a lot of people who will also want to partner with us because they're dissatisfied with another brand. So this will definitely happen is a consequence of such a market situation that the market is confronted with, but we will not do anything that is not right. For example, it's a liability in terms of companies having valid agreement with another brand. So we will not go and poach them unless they terminated their relationship and today don't have a brand and are allowed to negotiate with us, only then we will do that. And we hope the rest of the industry will respect the same with us. But there is a natural and normal consequence of this pandemic in a asset-light growth model is that there will be some that we will lose and some that we will gain as well as a gain, is higher than the loss, and it's more profitable and brand enhancing, then it can be even a good thing. Sorry, Giri, you can add.

No, that's correct, actually. And I think you've answered it, I think that's exactly the case. And of course, some owners beyond the ethics has fully said, some owners will have some of the single property owners that we have -- have their own challenges on leverage. So I think, I think some those people will be [indiscernible]. So it's possible that we see not just for us but for the others there could be more IBC type cases on single property ownership. So we'll see and that also creates the other opportunities to our platforms in that -- to these stress tests whether which will come up in the market, give us opportunity to look at some acquisitions through the GIC platform as well. So I think, yes, we will see some changes -- interesting changes in the next 1 year.

And sir, if I may, the F&B segment of yours, does that get damaged more structurally in the current environment? I mean, the revival may lag, the revival in the room business? Is that a fair assumption to make?

No, I don't think so. In the short term, yes, because of the number of people allowed by the government for functions like mostly it's limited to 50. So as we said, this too shall pass. It doesn't mean that there will be no weddings happening in 6 months or 1 year from now for more than 50 people or no meetings or no conventions. I mean once there is a life during COVID, then they will be a behavior pattern post-COVID, and then there will be an era post-vaccine. And I think we have to treat these phases differently. So of course, in the interim, that is affected. That is the truth. But if we are able to launch this kind of home delivery and other food businesses, microbreweries, I think it is a new source of F&B income also. It may not compensate for 500, 1,000 people wedding, but it is a new line of business. So when that business comes back, this will add on top and improve the F&B revenue. But in the short term, both room revenue, F&B revenue, other revenue, everything has been affected negatively. Sorry, Giri?

No, that's correct. And I think one other factor to note is that what we believe will happen is that the high-street restaurants would definitely suffer more in terms of the trust factor. And I think, therefore, we believe that restaurants in the 5-star hotel or bigger hotel would probably benefit because of this perceived trust in terms of social distancing and hygiene. So I think -- let it span out. That's all we have for today. Yes, that's all we have for today. Thank you all for your time. And in any case, our teams we are kind of engaged with investors as we go forward. So we're more than happy to do specific investor calls, in fact, some have already been set up in the next couple of weeks. So thank you all for your time.

Thank you, everyone. Thank you for joining. We can close the call now?

Yes.

Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect your lines.