Background :
- Royal Orchid was incorporated as Universal Resorts Ltd on January 1986. Its name was changed to Royal Orchid Hotels Ltd (ROHL)in April 1997.
- ROHL is engaged in business and management of hotels, holiday resorts and related services.
- The Company currently operates four hotel properties- Hotel Royal Orchid, Royal Orchid Harsha, Royal Orchid Central in Bangalore and Royal Orchid Metropole, a heritage property in Mysore.
- ROHL has two subsidiary companies, Icon Hospitality Private Limited and Royal Orchid Hyderabad Private Limited. Shareholding in the subsidiaries is 51.22% and 51% respectively.
- Capital expenditure for operating hotel in Pune under lease for Rs.17.3 crore
- Investing in its subsidiary Royal Orchid Hyderabad Private Limited which would operate a hotel in Hyderabad for Rs.11.86 crore
- Purchase of 51% equity capital in Maruti Comforts and Inn Private Limited and further investments for renovation of the hotel property in Bangalore for Rs.16.34 crore
- Capital expenditure for modernization and renovation of existing hotel properties in Bangalore for Rs.29.68 crore.
- Future acquisitions and general corporate purposes.
- Meeting Issue expenses.
- The company operates four hotels in Bangalore and Mysore. Hotel Industry has been doing well especially in the city like Bangalore, which happens to be IT capital of India. The plan to extend its services to IT booming cities like Hyderabad and Pune will be an added advantage.
- The company has purchased 26% stake of Maruti Comforts and Inn Private Ltd., which runs Dominion Club, located near proposed Bangalore airport for Rs.3 crore. ROHL had retained its right to buy further 25% of the share capital in Maruti Comforts and Inn Private Ltd. from the shareholders within 3 years from the date of the agreement.
- ROHL has been continuously expanding its capacity to cater to the growing demand. It has increased its capacity by 9% from 349 rooms in FY2004 to 380 in FY2005. The same have been increased to 435 rooms as on 30th September 2005.
- The operating income of the company has increased at a CAGR of 78.67% from Rs.5.6 crore in FY2002 to Rs.57 crore in FY2005.
- West Bridge Ventures II Investment Holdings, a foreign venture capital investor from Mauritius, has infused a cash of Rs.15 crore for 8% stake in ROHL.
- Revenue from food and beverages has increased at a CAGR of 46.38% from Rs.2.56 crore to Rs.11.75 crore during FY2002 to FY2005. However, expenses under this head have grown at a CAGR of 57.26% during the same period.
- ROHL has acquired 26% stake in Maruti Comforts and Inn Private Ltd., which has accumulated loses of Rs.4 crore at the end of FY2005.
- All the hotels are operated on leased premises excepting one.
- Sales of ROHL as on 31st March 05 is Rs.57 crore. The company's most of the properties are un-rated and competing with renowned and multi star establishment in these cities are of great challenge ahead.
- Book Value per share as on 31st March 2005 is Rs.29.09. Net-worth of the company was Rs.28.2 crore. The issue is priced at Rs.150 to Rs.165, much higher than the book value.
- The EPS of the company as on 30th September 2005 is Rs.6.15. Post issue PE is in the range of 24.4 and 26.8. Industry PE is 34.2.
- Return on Net worth is 46.05% based on FY 05 results.