Q2 21/22

Oct 21, 2021

Good day, and welcome to the Indian Hotels Company Limited's Q2 Full Year twenty twenty Earnings Call being hosted by Mr. Pruneesh Chattabal, Managing Director and CEO, IHCL to Mr. Girithar Sanjeevi, EVP and CFO, IHCL. As a reminder, all participants' lines will be in a listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. At this time, I would like to turn the conference over to Mr. Puneet Chathavan. Please go ahead, sir. Good afternoon, everyone. As always, I'm here with my colleague, Greedhar Sanjeevi, our Executive Vice President and Chief Financial Officer, to share with you our Q2 results for the quarter ended on September 30. Let me first begin with the news about Lake Palace, the Taj Lake Palace, the most photographed hotel in the world. It celebrates 50 this year, and we're very proud and we have extended our partnership with the family with Satek Mantas, which we announced and opened a year and a half ago, which is also being renovated. The pool, the spa, the gym have opened there and it is extending this partnership about which you will hear within the next week to ten days. Going on further, I think it would be nice to mention that as per latest IMF forecast, India is expected to grow at 9.5% this year in this financial year and the world economy also at approximately 6%. This is important, especially for our sector, which relies very heavily on the growth of GDP. Not only GDP, but today is a very historical moment and an important day when we completed INR100 crores of vaccinations. Since May, there's a 90% drop in active cases for COVID-nineteen and positivity rate has dropped to less than one point five percent. The air traffic is increasing by leaps and bounds in the last six to eight weeks. The moment, approximately 70% increase is ease in travel restrictions and leisure is driving the revival of room nights in our business. So all in all, some of these factors have been contributing positively in the second quarter. We all know that quarter one was a washout for us exactly like quarter one last year because in the first quarter, and May had serious disruptions because of the second wave. And before travel could start again, we were almost towards June. And the real momentum we saw coming was first in the month of August, very surprised positively in the month of August. We recorded the highest revenue in the month of September as this chart depicts and both at the enterprise level as well as at the consolidated level. And we see this trend continuing in the month of October. So as I speak to you today, if we look at month to date revenue in October, it's experiencing a similar trend as we saw in the month of September. Strong recovery in Q2, this was a bit unexpected because we thought the second wave, the aftermath of the second wave would derail the industry for a longer period. So we are very pleased that in this quarter, we had a significant increase in revenue, getting us back to more than 70% of the pre COVID levels to be precise, 7377% respectively on consolidated and at an enterprise level. The consumer sentiment turned positive in terms of travel and the booking windows were short. But a lot of travel started happening, especially as I mentioned before in the leisure. People really thought about doing the travel right here, right now because there has always been that inherent fear of the third wave and things shutting down again, which is diminishing as we move from week to week in the last few weeks. Further, the outlook has got strengthened through betting and mindset kick started. As I speak today, a large conference is happening at large panels in Delhi. A week or ten days ago, there was a large conference. We made a Taj Palace in Delhi and we did a few more bookings at some of the large properties for larger events of approximately 200 people. But that has got the hotels and the lobby and the restaurants pretty busy. And we are noticing another trend that the brands are benefiting, not just in hotel sector, not just in hospitality business, but generally the COVID impact has been lesser on the brands. So the brands are gaining more and more market share. And definitely with our large brand, we're very well positioned to get a higher market share definitely on the Indian Subcontinent. One picture which was negative for a long time, which is beginning to turn positive is on this chart, if you see the industry recovery and the recovery of IFCN. So on the right, the recovery is low, and I mentioned that a few other times. They move by Delhi and Bangalore are back to 75%, 80% of pre COVID level revenue and the leisure sales at a disproportionate share, we would exceed the pre COVID level. And now we are seeing the RevPAR is coming very close to the industry level and beating the industry level. In one of the other market, you might see that we are falling short, where they performed very well, like Goa. We expect the 50% increase, but we have some new hotels. So it's not like for like comparison. So they're not like for like. It might be showing that we are a percentage point behind, but I don't think such for the water and holiday village in the last decade have performed as well as they perform now, including exotic, they're already above pre COVID levels. So that's a positive news. And also on all India level, it's a good news that we are having the highest share as a result all the percentages on this chart versus the industry level. And the source of this chart is STR Global. Moving on to the next slide is we took the decision not to compare to Q1 and not to compare to Q2 of last year. I think it would be fair to compare to Q2 pre COVID levels. So pre COVID level, we're still down 23% on expenditure and 19% on total fixed costs and 16% on corporate overhead. That's a very healthy decrease because as we start to come back in terms of top level revenue, some of the costs, especially the variable costs are bound to increase And our job would be to keep a strict control, not only on variable costs, but not on our fixed cost to increase that high. But some of the rent payables negotiated with our landlords, some of the other payments negotiated, these will certainly go away. So some of the fixed costs will also climb back to where we were coming from. That's why it's showing a 19% decrease, which is a very healthy decrease because it's compared to 2019 and 2020. Let me move on further, our staff to move ratio, we mentioned that on a few quarterly calls, the industry has had a onetime opportunity, not just on optimization of manpower, but in optimization of all costs. Because of COVID, there was enough time to review each and every cost. And as you will notice, the Taj brand, the manpower ratio reduced from 2.17 to 1.6. I recall very well saying some of you might think that 1.6 is still very high when you compare to other brands, but I don't think no brand in India has the kind of balances we have or have the kind of safaris we have and may definitely require a different room to staff ratio. We've been able to bring down the room to staff across the board in all the brands so that IFCL consolidated is going down from 1.5 to 1.1. Some of this will increase as more and more business comes back, maybe to 1.2 or 1.22 will hire some contractual and some fixed term contract manpower. So it will again go up, which is normal because the business is fully back. But we have been able to optimize this ratio without disturbing the quality of our service, without disturbing the quality of our brands and by eliminating things which were not needed or areas that were not needed. Going further, I think it's very important to us, It is very important for Taj Ness. It is very important for the culture of who we are as we define Taj as a brand that stands for trust, awareness and joy. And our stock magazine, Plasma is one of the hallmarks of demonstrating Plasma at a stock level so that they can deliver the service of Plasma to our customers. We have recently launched an employee app. This was done just ten days ago on MyTash, so that employees can easily communicate with each other. This was done as a task function, which we have in which some great exemplaries are honored and recognized, which we call the Managing Directors Club Award ceremony. And to top this all up, our vaccination drive has been very successful. Eighty two percent of our staff is fully vaccinated and almost 100% partially vaccinated. In terms of unlocking value in new brands and business, this has been our area of focus since last sixteen to eighteen months. Q1 has expanded its presence in 19 cities. Today, there are four lakh app downloads, which are converted into 4x more in orders, so 16 lakh orders. 75% orders are from the top five metro cities in the secondary and tertiary markets. Still the penetration of is not as strong as it has been in the metros. And at an enterprise level, in the first six months alone, Huwim was able to generate INR50 crores of revenue. This of course includes our efforts on Means to Smile, which we thought was a good service to the community in the way our founder had laid down in the philosophy when Tata Group was founded, but also a way to market the brand and taking it into the different distressed areas so that people not only get healthy food and that they get the supply in time, but also get associated with our brand. So that was about Q1. But when we get to our wholesale brand, ARMA, we have almost 60 properties, 59 to be precise in 30 locations across India. This year alone, we have signed in the first half year twenty twenty one new villas and 15 of them have also opened. So our portfolio is 59, of which 34 are in operation today. And we expect to achieve our guidance that we have given of getting as close as possible to 100 ARMA properties before the end of this financial year or immediately thereafter. Moving on, I think ginger is a very important part of our business and our landscape going forward. We have worked a lot on ginger in the last three years. We've communicated consistently on Ginger during our Investor Day, in all our investor meetings. Today, Ginger has a portfolio of 80 hotels. And in Q2, Ginger actually achieved 84% of pre COVID revenue. So that is significant development as far as Ginger is concerned. The EBITDA was not only positive in Q2, but also positive for the entire first half of the year. And very, very important is the Q2 margin of Ginger was higher than pre COVID level. And this is coming to a different mix because the new properties that we have opened are in that category with the new reimagined and repositioned Ginger. And that is driving much higher margins. So that makes the Q2 margin higher. And going forward, we do not see any change in this kind of development, if at all, if we only continue to increase as far as the Ginger brand is concerned. Very important development today, we have got the approval from the Board of Indian Hotels to make Ginger 100%. I mean Ginger was 100% brand, always owned by Indian Hotels, but whose corporation could become 100% subsidiary or wholly owned subsidiary of ICL. We currently hold 60.2%. We'll buy out the remaining 39.8%, and we think it's an opportune moment when the brand is well positioned to grow and has a huge scalable potential in all possible tiers, not only Tier one, Tier two, Tier three, but Ginger can be present in every location and could boast of significant presence in any key metro city with more than 10 properties in one city. Moving further is the financial performance of Q2. We were up 132% on revenue on the top line and 180 per capita from a negative to a positive territory. But I think very important is that July, August and September, all three were EBITDA positive months. Of course, September being the best one. And we expect this trend not only to continue but to exponentially grow in the month of October. And what will happen in November and December should normally be better than October. The only thing we don't know is uncertainties in the macro environment or anything else that may come up, which we are not aware of today. Going on further to the revenue and EBITDA snapshot of IHL consolidated for the first half year, I think it's a bit challenging for the first half because we all know that first quarter was a washout. But still, compared to last year, there was 125% increase on top line and almost INR300 crores or to be precise, INR292 crores improvement at the EBITDA level even when comparing the first half to last year. The same picture we see on the stand alone, the percentage is a little lower in terms of increase in top line, but again, an improvement of crores at the EBITDA level for the first half of the year. And all trends in all these last three charts that we've shown to you are moving in the right direction. I think there is strengthening of balance sheet has been a key priority, and there has been an increase in consolidated debt debt. So it has been up 86% from the pre COVID level. We were at 1,900 and reached $3,500 a marginal reduction from $3,600 to $3,005 but that's where we stand and that's why we will be very focused on strengthening our balance sheet because of the rise in debt levels. Therefore, the Board has today approved an equity issuance to build a healthier balance sheet. And we are not only going to reduce debt, our aspiration would be to bring the debt to zero level, not only through the rights issue or QIP, but also through internal cash flows because this amount is larger. So we are looking at INR 2,000 crore rights issue and INR 2,000 crore QIP. And a part of this money is what we used for consolidation as we just saw a share on Ginger or other companies, which is in line with the strategy of the company to drive simplification of our business model and also provide the necessary CapEx for the growth of our portfolio the renovations, which are needed in the portfolio on an ongoing basis. I think with that, I will hand over to my colleague, Giridhar Sanjeevi. Yes. Thank you, Puneet. I think going into some more details, I think as compared to the same period in 2019. And on international hotels, we were at 176 crores in Q1, 37% recovery as compared to '20 and that jumped to 58%, 6366% in each of the months from July to September. Overall, we did a 62% recovery as compared to 'nineteen, 'twenty. So therefore, I think Q2 has seen a dramatic shift in terms of service. And in and overall being positive In terms of the debt position, I think for the first time, we are seeing a reduction in net debt at consolidated level. I think about INR 3,571 crores marginally as compared to the it is all being uploaded, which is all the consolidated balance sheet details. I'm not going to go into the details. I think is there anything I need to speak? I think it's all there for the analysts to speak. Now I think we are open to questions now. We will now take our first question. Please go ahead caller. Your line is open. Yes. Thank you so much. Good evening. This is Nehal Jamminder from Eagleweiss, and congratulations on the great performance, Mr. Chitwal. Just three questions from my side. First is, obviously, we've seen strong trend of leisure revival, probably to call it, revenge tourism that has happened. I just wanted your thoughts that incrementally as you look forward, maybe till November, as you said, there could be a lot of weddings. But beyond that, is there a possibility that maybe the tourism or the leisure part of it stabilizes and you see a revival in corporate demand potentially taking you back to the recovery? And a related question to that view that is it that, the level at which leisure is happening, it could fall off partially from here, given that there is a one off trend that is currently being seen? So that will be my first question. I'll come to the other two after this if you want. Nehal, good afternoon. I think it would be fair to say, and I mentioned that while presenting that the corporate demand is showing good signs of recovery. All of that is evident in Ginger, which has gone to plus 80%. So it's not Ginger is not a leisure driven brand. And that means travel started happening and there is a direct correlation between the number of vaccinations and travel. People feel more and more secure or less prohibitive when it comes to traveling now. Also, we are seeing a lot of conference bookings are beginning to come in. So there are still some restrictions of number of people in different states and different cities and in terms of timing. But the the positive trend is that every day we hear something which is helping corporate travel recovery, whether it is allowing international travel, whether it is allowance on visa as of a certain date, whether it is people starting to do physical events, you know. So they are combining this physical presence with digital. It's not only digital anymore. And I think tourism is very well positioned as an industry. I'm not talking about leisure now. As an industry in helping build the relationship capital that has got lost, The relationship and social capital that got lost because we have not been to so much of reserve as a as a mankind over the last two years in trying to do whatever we call on a digital basis or a platform so that there will be an extraordinary need going forward for people to meet in person. Because in order to do business for the next five or seven or ten years, you still have to build the results for the future. So you have to build that relationship capital for future. And I think that is what will drive demand besides the normal demand in corporate sector coming back. That's helpful. And would you expect maybe leisure travel slightly moderates from here? And these are obviously trends that a lot of travelers happen together because of the lockdown. It's difficult one to answer. I personally I can say that personally, I feel that it will not. It will only increase. So having myself lived in the Western part the world, I saw a lot of people traveling by road. And it was not happening as much on the Indian Subcontinent as it used to happen. So what COVID has done is it's got people out in their own vehicles or are traveling by road with family far more frequently than it was evident pre COVID. So I think maybe the pleasure and dedication and displacement might happen to some extent as more and more people get back to work. But the private holidays of families and the extended weekends will only increase and not decrease. So my second question was, Mr. Giri, that on the cost saving part of it, I just wanted an update that if you compare to pre COVID level, what is the kind of target that you still expect you'll be able to achieve? And if it's again possible to bifurcate it between the key line items, specifically employees, marketing and maybe other major heads? Yes. So I will answer this at a time level, Neha. I think on the specific line of employees, maybe we can do it offline. And I think and therefore, and for the quarter, it's around, I think, 23%, 21%. So I think we will continue to track it as well as this is a very important number in terms of making sure that the fixed cost per month is kind of kept at a reasonable level and we continue to focus and not allow this to go back. I think just a very simple number at an H1 level, INR $1,164 crores was a monthly run rate on fixed cost, and there is no compound to INR 129 crores in 2021. Go ahead, sir. Very quickly, just last question. Out of the INR 4,000 variance, would it be right to understand INR 3,400 crores just to purely pay down the debt and the remaining INR 500 crores is the Zindr acquisition? Is that the way it will be used in the upcoming twelve months? I think wait for the documents to cover, which will give more clarity. And I think very clearly, the increase is from 3,000 to 4,000 is a combination of the different factors. Number one is to sort of not just the use data they said, but also get the growth capital consolidation and also. India is one of them is what I've seen. For the sake of the industry, not just for Indian hotels. No, no. Absolutely, sir. Pray for the same, man. And I wish you all the best and done from my side. Thank you so much. Thanks. We will now take our next question. Go ahead caller. Hello, can you hear me? Hello. So I just want to find out like the Indian hotel sector moves in cycles, right? Even pre COVID, it was a little tepid. So you think it's a long up cycle from here onwards? Well, firstly, observation is accurate and that it has some correlation with our strategy on going towards zero debt over time because of things that are happening which are beyond anyone's reasonable control. Having said that, there is a unique situation and that is that supply levels are very constrained. So when demand comes back, your denominator is if that's at a constant or at a shrinking level because some of them might shut down permanently or some of the supply might go out of the market, then and then the pricing could be stronger because it's not that easy to build or test that quickly. Definitely not in this part of the world. Okay. So you think it can be a durable long cycle ahead because of what you just mentioned? See that is anybody's guess, but the fundamental point in that direction that whenever you come after the crisis, this industry has bounced back far stronger than it went into the crisis. So if we go to nineeleven, as an example, in different parts of the world, the sector was weakening and then there was two years of a downturn or a year and a half, and then it came on very strong in the years 04/05/1967. Similarly after the other crisis, it has been a very good operation in BlueStar the last quarter, the point crisis, whatever you want to call it. So the sector usually and historically has bounced back always stronger. And the only unknown that we have is the global geopolitical situation as well as the mutation of this virus, how difficult it will be or not, are the vaccinations good enough, are they going to hold, that's but otherwise, yes, I think you might be spot on that during for an uptick in the cycle. Points like why don't like it's a suggestion, you would be knowing better. Like in the Indian hotels company, why don't you form a subsidiary, which has a much wider play and stronger play in weddings, like wedding being what it is in India, like Hadi Ka Kaam. So that's one suggestion. Second is like even the catering part, it can be a much stronger play for you. Can you comment on that? I think we are already active on both of this. So maybe on offline, if you contact us, we will be able to show you all of our new brands on catering, all of our, you know, wedding services, all of our promotions on wedding issues. Even take out the latest book magazine, you will see six different pages addressing that. So I think we have to always make sure that we do not dilute the positioning, especially of the past brand. It is rated as gold's strongest brand. So we cannot be anywhere and everywhere. We have to be careful on how we find the right balance. Okay, okay, okay. Thanks a lot. Thank you. We will now take our next question. Please go ahead, caller. Your line is open. Hi, Puneet. This is Amit Agarwal from Nimelban. My question pertains to what you've just talked about the equity issuance about INR 2,000 crore and the rights issue also. I was reading in the press about some of the hotels of ITDC getting sold off. So firstly, are you bidding specifically for I mean, amongst others, probably for Ashoka Hotel? So could that be one of the reasons where you're kind of putting some money out there? And secondly, is there a possibility that this speed of hotel development could be finally taken up by you instead of having somebody else come in as an equity partner? Amit, firstly on ITC, we are together with LIC, we hold 15% of ITC. So if hotels are sold and we get money back for our shareholding, that will be good news for us. So that's the one thing. The second is show power level is at the moment, we have had no discussions and nothing that we have looked at as far as show power and daily concern. And thirdly, on Sea Dog, we have not changed our strategy. We will not be doing and we've communicated that in the Investor Day presentations and in previous calls. We will do it in partnership with someone who brings in the remaining equity or even buy in a share of our existing investment in CLO to build that property is very large project. And I think we need to have a partner whether we find it within our existing partnership or outside of that, we work very diligently on getting the permissions and once we have that, we will seek a partnership and use capital from not all resources, rather from external sources. Sure. And one last question, probably not focused on this particular quarter results. In terms of human and let's say chambers membership etcetera, as a percentage of total top line, where do you see it in the next two to three years, I may ask? We see that as a percentage of our target for what we call the new age businesses is around 25 of the top line and the contribution of around 35% to the EBITDA. This is the ratio we work on. And today, they are less than 5% to 7%. But as we add more brands, as the previous person had asked some question on catering and other verticals that we have. And as these brands grow and stabilize, we think they can get to 25% of the total revenue mix. Sure. Thanks. That's all from my side. We will now take our next question. Please go ahead, caller. Your line is open. Hi, Puneet and Vinik. Sumant here from Motiyal, Oswal. So my question is, we have seen a good recovery in the month of September and August. And as per the PPT, 86%, 88% of the business has already recovered of the pre pandemic level. So can you talk about the what is the gap of, say, 14%, 15%? How is the F and B recovery at the compared to pre pandemic level? And occupancy side, we are seeing a good recovery. But ARR side, when we can reach at the pre pandemic level in the coming quarters? Thank you. So as and when the occupancies have stabilized at a higher level, the rates will recover. So you see that in the leisure destination. If the demand for leisure is high, most of the leisure destinations are doing higher rate than the pre COVID level. So whether it's, let's say, Taj in Rishikesh or a Taj in corporate or a Taj in Kyog in Shimla or in Goa, we are all in Kund, we are performing at a higher level than pre COVID, both on rate and on RevPAR. When it comes to F and D, this is because of the restrictions. And most importantly, restrictions that we have had in Mumbai and in the state of Maharashtra, also in Delhi in terms of events. So we are still as a as a company, I would say we are still at 50% on food and beverage of the pre COVID level. Just a second. I'm getting in the restaurant. So 50% of the recovery of the pre COVID level in terms of the MICE, the meetings incentive conference, wedding, that kind of business, the restaurants are more or less back. And the more we open up, including in Mumbai, we see that the pent up demand is so strong that the visitation to restaurants is very high. But rather than the norms get relaxed about 50% seating capacity, etcetera, I think these numbers are expected to grow. So the trend is positive. The trend on larger meetings is also positive. It is positive because they are coming almost from zero level. Right? So the the restaurants for a major part of the first half in Mumbai, it will only open till four in the afternoon. Then we will allow to open till nine and eight. Then we will allow to open till ten. So I think once everything opens up fully, this should not take a very long time to come back. So overall, leisure distribution has already crossed the pre pandemic level. And overall, occupancy and ARR side also, we have seen a growth, I think, from the pre pandemic level. And talking about the business destination, what can you talk about the Mumbai and Delhi market? How things are happening in the October month and September month? So October should be better than pre COVID. Why? Because pre COVID October had Diwali and Vishal in the same month. So it's not it's not a real like for like comparison. So but we are expecting that for our portfolio, we would have a better October, then in October, '96. October. Okay. Can we talk about the the New Delhi and Mumbai market? How is the frequency in last two months and ARR? How things are moving? Yeah. The the the market are lagging behind and and also Bangalore is lagging behind, but it is recovering faster than before. So the occupancy rates are increasing rapidly, which will obviously lead to higher rates. So, like, three months ago, in Mumbai, in some of our hotels, we did a rate of 3,000 So suddenly, it is at eight or nine thousand, but it's still far away from the fifteen or sixteen thousand we did, you know, COVID level. So the recovery there from three to six or seven or eight, has been like a three month period of one hundred days. Now we have to see what happens in the next one hundred days. It's very difficult to predict, but the occupancy levels are very high. And the last, what do you think about the MICE activity, how things are happening? So I answered that question a few times. So the MICE activity is picking up. Lot of big events are happening. They're happening in digital and physical format. Both of those formats are happening. The the reason we start in Delhi and Mumbai, which is very good, very encouraging. As I said before, there was a there's an event, which as I speak today, a very big conference is happening in in Delhi in such palace. There is a map call. There is a epic call. There is a lot of such events. Today, there is a former Congress. The other one also former. There's a government delegation that has gone through bananas for foreign delegation that has come in. It is the CII event being held in Delhi for the first time after two years in digital format on the November and one of our guests only. So there is a lot of activity or reservations and inquiries which are coming in and are getting confirmed, which are, you know, incremental because they're not just the wedding. These are actual meetings and conferences happening. They were not happening in the last two years. Thank you so much. We will now take our next question. Please go ahead, caller. Your line is open. Shalin Desai from UBS. Can you hear me? Many congratulations, sir, on on very good set numbers. Really pleased to see them. Few questions. I could notice that, you know, our peer is profitable in second quarter. And when UK business is profitable both in second quarter and first half. So can you talk about the sustainability? So I think so both of these markets, in my view, are strongly sustainable actually. And now in U. K, things like chamber that you've added is also going to add to the, what do you say, the two of them. Second question thanks. My second question is, see, there has been a reasonable amount of cost prudent. Can you hear me now? Yes. Okay. Sorry. I can hear you. I can hear you. Alright. Okay. So there has been a good cost prudence from our side, but do you think that there would be some need of increase in investments towards brand building, maintenance CapEx going forward, you know, which we might not be doing during the pandemic time that may increase bit of a cost from our side? No. I think this I I think the cost prudence we have done in a very clever way is we have not cut into the whole needs. You know, it's just stopping the wastage because we have a an obligation to protect the brand. On the contrary, if you recall, we upgraded 19 of our hotels just before the pandemic broke out from a demand back to last year. We are putting significant amount of money in past one thing. And even the chambers in one thing is a is a model for private membership clubs. If anyone has seen it, they will confirm that to you. And this is going to continue. We are building the flagship ginger with our own money in Santa Cruz and there are two seventy one rooms, which will be ready by December. So there is no and we have upgraded a lot of ginger properties to lean luxe is what we call them in the newly reimagined and repositioned Ginger. As one of the exceptional companies, we not only treated our staff with the care and respect they deserve, when we get our growth going. So of course, we were not using our capital to grow. We were doing it more on an asset light basis, but still there is time and money that gets spent in doing contracts and doing travels to these places to have negotiations with owners. We have been spending money and looking at the mid to long term future of our company and our brand and not doing any short term drastic measures. And I think Gideon had that on the slide, if you would recall, that we have redeployed more than 300 people. We never said we got rid of 300 people. We will redeploy them within these other group companies so that they are more agile and fast and less heavy in the corporate overhead. And finally, if you recall the figure that we had last year, it was a 39% reduction in corporate overhead. We may not be able to maintain 39% because some of the travel and business and all that is back. But we're still very confident to keep that figure at north of 30% even in this financial year. So and that is what you will see also the corporate overhead reported in the first half is more or less the same as at last year level. So so I think some of these cost savings, we're going to keep because they've changed the way we work. And also if we want to get Ginger, the rules corporation integrated into IFC, that does not mean we destroy jobs, but we don't need to have different infrastructures. So it will make us more efficient organization in terms of cooperating with it. On I just want to understand consumer behavior towards cumin. Since I think the quite open up and even, you know so it's also about, experience when when when we go to, premium, restaurant like premium brand of Taj. So how's the month on month trend for cumin? Like, is it I my fear is that it shouldn't reverse. Like, people will start prefer more. So while it will be credit for you, but, you know, they would prefer coming to the restaurant than than ordering. Is is is the reverse happening or, you know, using strong strength in both the places? It's a very good point, Harish. I mean, and we've been very, very aware of that. And that's why we introduced we started with food of the Taj. So they're supposed to be bought, which we are still doing. But we introduced three months or four months ago, human comfort food. So it brings down your average check, but not number of orders. On the contrary, we expect human to stabilize at the level it was. And also, Gary had that on his slide, that the first half, we did an enterprise level revenue of 50 per hour on June. That is not what we did in the last last year, nine months that June was open. So we already crossed the first nine months of revenue in the first six months of this year, And we target to, you know, somewhere anywhere between 80 to 100 for this year. And if we get to that level, it is good because it is built on an incremental cost and incremental revenue and incremental profit. It's not some kind of upfront capital cost building a cloud kitchen, building, you know, taking on a third party app, paying the third party as a commission. We're all doing it on our own. That's what makes it highly profitable. So with the with the revenue of anything north of 50 crores, we expect human to contribute north of 50% in terms of margin. So that's why it is an interesting business. That's why we said even if some of these new edge businesses may not be that big as a portion of the revenue, their contribution to EBITDA would be far higher as a percentage. Understood. Understood. Thank you, Puneet. Thank you, Giri. That's it from my side, gentlemen. Thank you so much. We will now take our next question. Please go ahead, caller. Your line is open. Hi, Puneet and hi, Giri. This is Achal from HSBC. First of all, nice number. Thanks. That's a great result. So congratulations. Sorry. Voice was echoing, so I didn't get much of it. But I'll I'll I'll touch base offline on on some of the questions. But couple of questions here. So first of all, on the human, Puneet, as you said, you've done crores in the first six months. But what is the latest trend? So coming to the last question, the first six months was fine. But then in the month of September and sort of August and September, how the trend looks like in Cumin? It's the same. We have been able to stabilize. Actually, it's not the month of September that is so critical. I think it's whenever we have festivals. So when we have Diwali, when we have a party, New Year, when we have, you know, the share of, then we have, you know, this high mood or whatever, the sales increase more during that time. So there is a direct correlation that we are seeing with human either with the lockdown and people are doing virtual celebrations. And a lot of celebrations were happening virtually. That is slowing down and that is not happening to the same extent. But celebrations of festivals and getting that food at a reasonable cost is still happening. Don't forget one thing, there is a certain trust in the brand where the food is coming from, how it is back and who is delivering it. That trust we enjoy. So we have not seen a big volatility in the human sales. Is more or less stabilized at the level that we have had month on month basis. Of course, as I said, we have to learn to replace virtual corporate celebrations, not the private ones. Also, currently, we expect human food trucks, human trailers, etcetera, to pick up. We had some initial starting challenges in terms of licenses, in terms of getting it passed in different meetings. But I think this time, we have also had our learning and we should be able to exponentially grow also the human shops. We only had one in president, but we expect to open at least five more before the end of this quarter, if not more. So the Canort will open, the ambassador will open in Delhi. There will be we have opened also, as well news as that Cuba has opened, that's already four. And then you're identifying the fifth one. It doesn't take that long of a time to do a 50 square meter shop in a property that we have. Right. And can you quickly talk about the chambers? I mean, had 2,000 members. So what how are you growing? I mean, are you expected to grow at 10% per annum in terms of number addition of number of members? I mean, how are you doing on the chamber? Sorry, go ahead. We will be adding the chambers in Bangalore and eventually also in a year, a year and a half in New York. So I think this whole proposition of chambers will keep becoming more and more important and critical as it is again a very high margin business when it comes to the business. Right, right. Fair enough. Darvil, I wanted to understand Puneet, last time I think you said that the the average length of the stay has increased because, you know, people are actually driving down, so they are spending more time on the road. And hence, they are spending more time in the hotel. So the average stay length has increased. So how how the trend looks like now? Is the trend continued? Or do you see there's a change in the the the length of the stay has come down? How do you see that? And similarly, booking window, has that squeezed? Or do you think or still the passengers are really sorry, has that expanded? Or the passengers are still booking at the last minute? I mean, very close to the date. I mean, how the trend looks like? So very good question. So that has changed in terms of the booking window. It's starting to increase because especially the leisure properties, as they're getting fuller and fuller, People are not trying to book in advance because the last one that deals work more very expensive and people want to plan the Christmas, New Year, etcetera. So that window has increased in the last two weeks. Before the pickup was, you know, very it was a very short booking window. In terms of length of stay, I think that will there are there are there are two trends. One is the QTA flight, the quick turnaround flights that you go from Mumbai to LA to sign a contract and come back. They will not happen at first because it's still with all the vaccination, with all the checks, there's a quarantine or no quarantine, it's also a health issue. I think those kinds of travels have gone on by maybe 90%. Only ten percent would be I I even think ten percent would be an overstated figure out there. It would be almost anything between zero and ten percent as we speak today. So not many people are traveling for, a two day trip, three day trip as as it's still considered risky to travel. So if people travel, they will try to combine other businesses whether they do it in different countries. Let's say, if you were traveling to Europe or if you were traveling to US, you would combine the East Coast, West Coast, and not do it in two different ships. So that makes your length of stay in a country or in a continent longer. When it comes to domestic, that is getting balanced out because on leisure, you are staying longer, but the vacations will go down. Why will they go down? Because there is a call by a majority of companies post Diwali for people to come back to work. They cannot just work from wherever they are. I think it's not just Diwali, it's a global trend where people are being asked to come back. So I think that will that will balance out that thing. But because people will come back to work, there'll be more meetings, conferences, and business travel. So it will be one segment replacing the other. Right. Fair enough. Finally, I, sorry. Finally, I also wanted to understand, on the point which you raised, last time about the loyalty members and, you know, that could actually increase your business significantly. So how are we doing on that? I mean, know, so so super app is still yet to be launched. But otherwise, how are doing? And then now, of course, being Air India holding to Tata, I mean, I think Air India itself has 1,000,000 members. So how do you see the loyalty program playing in this? And then how when do you expect some to see some results from that? I think as a hospitality company and one of the largest players, I think we are very well positioned to benefit both from the the digital initiatives of the group as well as the airline business. We already benefit because of Vistara and Air Asia as in when Air India comes in. It will be very beneficial for our airline catering business. We already do almost, like, in Delhi, we do 50% of Air India flights already before even such a new scheme. So but but getting other businesses of delayed flight, canceled flights, you know, cruise phase, I think and and we are hopeful that we'll be able to synergize that. So, yes, of course, as as at the group level, we hope and we will do everything possible that we are well positioned to benefit from, such possibilities. What is what is your timeline in terms of the super app? Are you do you have any timeline? See, I we we are I have seen we don't have a timeline on this. That is a question to be rescued a different company. But we are one of the members that are very keen for this to come as soon as possible. And I am sure it will be communicated by the right people in the right time in the right fashion. It has been lost for the staff. It is coming out every day in the press for the internal people to do it. So that's a test. And why and and and that is important test so that when we go to market, everything works seamlessly. So but I would prefer if you ask this question to the CEO of that. Okay. Perfect. Thank you so much, and and good luck. We will now take our next question. Please go ahead, caller. Your line is open. Yes. Hello. Good evening. Am I audible? It's Mahesh from PGIM Mutual Fund. Hello? Yes, Mahan. Yes, Mahan. Yes. So my one question was on the capital raise what we have, okay? And we plan to be debt free, okay? Generally, the way we look at hotel industries, the return on capital employed is across the cycle if we average five years and ten years, it is high single digit and low double digit. Okay? And if we even do not keep any debt on the balance sheet, will not be the return on equity will be also in the similar fashion. And is it is it right for us? Because so we have seen a very tough period. But do you think you will be happy between for an ROE to be between high single digit and low double digit? What is your sense and what are your thoughts on that? Something you can share your thoughts. No, that's very very much. I think you will have to look at our overall steps in multiple different ways. So number one is that, as we highlighted in the beginning of the presentation, I think because of the cyclicality of the business, basically coming down to the to see the the We're We're it is not just about this capital raise. I think we're also focused on simplification, which means Cinjal is one of them. But I think you will see monetization kick start now. You will see some more simplifications kind of hopefully happening in the next starting to happen in the next few months. So the next one is that if you take all of this together, I think you will what we really see is that we don't expect a challenge to return on capital. In fact, in the seventh July investor call also, we segmented the balance sheet And those we are addressing on a systematic basis. It could be a monetization of a property in San Francisco. It could be a statement that we are not bringing in new investors I mean, bringing in more capital to the third CEO. We will be doing it through partnerships. So I think the whole approach to P and L and balance sheet and growth has to be viewed in totality. And I think what we are doing in terms of this increase of INR 4,000 crores to come down to zero debt is really one part of the picture. And as Puneet said, the that we don't want to be subpar in terms of our senior ROVs. See, I take your point because if you see last ten years history or the best years, even 2010, 'eleven, the numbers were not very high or significantly higher than 13%. Okay? And so that that is the reason this whole question and the thought is. Yeah. Secondly, we have this Ammas and cumin and all those ventures which we are doing. But for our size of revenue, okay, do you think all these measures can be significant EBITDA or bottom line contributor? Even if we have 100 a month, and what type of service standards will we be able to deliver? Okay? And with those service standards, can they be cheap? Can we make significant amount of money which can change our ROCE profile or keep our ROCE profile higher? So some of these measures and how are you focusing on those measures, if you can put some light on them? Okay. No, okay. I think the new age business is what we call the new initiatives. So if you take Lumin as an example, I think we are not speaking which delivers the food at a rock bottom rate and a rock bottom, the margins, of course, in Q1 will be high, really. It is not going to be low. So that's number one, without capital investment. Similarly, Aama is a completely asset light model And as this grows, and we have and in terms of service delivery, to your question, we are now placing them close to a high tier hotel. We're not staying in touch, and we are now located in 90 odd locations. So therefore, there will be supervision from the nearby hotels actually. So Cuban will be high margin. AVA will be completely asset light. Chambers is high margin in terms of what we're adding. So all of these, really speaking, I think it's very important to understand that the new initiatives And one thing, we had properties where a large number of foreign tourists used to be there on the tourism space, okay? Have you seen domestic tourists taking over those places or the occupancy has reached with what we were having even with foreign tourists was allowed? Some of the premium properties or do you think there is still like you know in those properties, but others are doing well and hence tourist is looking better. So some light if you can throw on that. No, that's a very good question because and I will also add to the previous question, but let me first answer this one. There were around 25,000,000 people also traveling out of India who were unable to travel as much as they traveled before. So if you look at one of the slides where we showed Rajasthan, they saw much better in this first half and also the last year. Recently the Secretary of Tourism or one of the government officials of Udaipur was seeing a new saying that the number of room nights was the highest in the last ten years, right? Gora saw a very big recovery and at very good rates. So that's also what we have said consistently. The same is true for most of the leisure destinations. The ones which has suffered is really are still having a need to come back up is Delhi, Mumbai, Bangalore, this kind of big metros. But the trend there is positive. And the people who are not able to travel out, they definitely more than compensated for the lack of foreign travel that was happening. So for us, our balance properties in Jodhpur, in Udaipur, in Jaipur, in Hyderabad have done relatively well and have exceeded our expectations also. Now the other question which you had asked before, see, when we talk about our 50% of that portfolio is coming from our own group companies. So this is Tata deal, Tata Coffee here. They've also taken on the role of an internal aggregator. So your capital investment so it's a it's a model based on zero CapEx. It's a model based on the same general manager of a hotel looking after a few bungals. So if we not go at the six villa, it's the same person who's running Agwara and auditor village who also looks after these villas and his team. There is of course a charge which is put on each of the villas from a P and L perspective. So we're not adding a huge corporate overhead or other kind of a cost structure to it, which makes this business very attractive and also very powerful. And we are not going to stop at 50 or 100 because you're absolutely right. If we stop at 50 or if we stop at 100, the four or five rooms on an average that is like doing a 500 room of it. But our fixed stop that we have thought of ourselves is around 500 over the next three to five years. And if you are having 500 villas, I think this is correct, my colleague, Gideon, I think you look at the revenue per villas on an average going forward post pandemic of a group. Why post pandemic? Because during pandemic, even villas were shut. The effective revenue might have been 50 lakhs, but it was for four months or five months or seven months. I'll say the twelve month operation, I think it will get get to work or more. And if you have 500, and then you take your fees out of it, it becomes a substantial amount of business without any big capital cost which you are incurring upfront or any other kinds of risks that you are taking on. So I hope it answers both your questions. I think the domestic demand on the Indian Subcontinent is strong enough and our new initiatives and new brands, these are supposed to complement what we have been doing well for one hundred years. Then one last follow-up, okay. So on the Ammas type of property, where till last year because of COVID, people wanted exclusivity, okay. And want to be at a place which was less crowded, okay. But if something but do you think once the fear of COVID reduces, people will move back to hotels instead? How how do you look at that? Or is there any fear or just some understanding? No. We don't have a fear. I think what has happened is that this home state business is nothing new. What is new is a company like us, Vasanti. So that is the only new thing overall all around the world. This has been a very strong business model, including in in India. There are different other companies which have been running this business very successfully. So home stays or having these villas, you know, if you if you live in Frankfurt and you want to go to Spain, your first choice is not to go to all this. It's to go and book a villa with family or two families sharing a large villa together. Or even within Germany, to say, I will go to the West Coast, the East Coast, or West Coast. This is what you do. So because of hotels in such locations are sometimes are not sustainable because it's a very seasonal business. And so people use that as a real estate play. If they build a villa, use it for renting, use it for themselves and their family also for a month in a year or two months in a year, and rent it out for the rest. What we are doing is just taking away the hassle of security from them, the hassle of, you know, sales, marketing and distribution, same type provider brand, which helps them in their capital appreciation and still provide them a month of save or free. And whatever else comes out of it, we make our fee or money or what we are charging is 18% of the top line. So that's why this model is a good model and it's a very futuristic model. It is definitely there. And actually, it will grow exponentially in India even after COVID is over. Yes. Thank you from my side. It was a pleasure speaking to you. Thank you. Should we hear the last couple Okay. Questions We will now take our next question. Please go ahead, caller. Your line is open. Hi, This is Deepika from JPMorgan. Sir, congratulations on a great set of numbers. Just two questions from me. You mentioned zero debt target. Any time line for that? I think what will happen is that I think very clearly you will see that with the completion of the capital raise, we will use it planlessly to reduce it along with Ginger, we announced and a few other end users like the completing the balance of the zero acquisition, all that is complete. So my own sense is that the substantial debt will come down by March. And in relation to the subsidiaries and other entities, I think it will probably take us maybe another eighteen months, I would say, in twelve to eighteen months in terms of going to that level. I think we have worked through the details, but definitely it's an aspiration to that in terms of doing that. Got it, sir. And on the new initiatives, you mentioned about 25% of your revenue as an aspiration. I mean, that seems like really substantial if you had to look at some of the pre COVID numbers. Which of these, I mean, do you think is the most management fees, actually. Those are the five streams. The 25 in terms of drug management. Okay. And so just one last one from my side again. In do you worry about corporate demand not coming back to full and like the metro city hotels basically lagging and needing to source demand from, let's say, lower ADR sort of segments? Or do you think that all of this should basically sort of normalize with the kind of traffic that you're seeing? No. We don't worry at all. Actually, we have seen a lot of this coming back and faster than any one of us thought. I think it shows in the numbers. All this that we are showing is not coming only from measure. There is already some corporate in there. And whatever the gap is, you will see that at the end of quarter three, unless there is some bad news as I said before in the month of November or December, you will see that a lot of this demand is coming back because it will not be just leisure doubling further. That's not what happened. So there is no capacity available. What is this there if you've taken all of it? It will come to hundred and twenty percent and eighty percent of business comes back, then you are back to 100% of pre COVID levels. So so while presenting, I gave different examples of conferences happening, foreign delegations coming back, you know, that is the government business, which needed to kick start activity in Delhi and Mumbai. It was typically they come to both the cities. National days of embassies have started. You know, a lot of national days never happened. But if they happen, they happen digitally. So, okay, Cuban was a beneficiary. But now twenty seventh of this month, we are the first one of Spain being celebrated in the Armenia Parastrama. So so this is another activity because there are other concerts that will come, then they will also start doing So so I think it's it's more like people I don't believe in the thing that people will not only work digitally and only from home. This is not phenomenon that mankind is grateful. We will now take our next question. Please go ahead, caller. Your line is open. Complimentary rate, mister Lee. Sorry. Sorry. I think you're not you're not very clear. You're not very clear. Hello? We can't hear you. Your voice is not clear. Hello? Yes. Yes. So can you tell me the occupancy rate for the last quarter and what's the current rate? I mean, what is expected occupancy? It is it is there in the presentation. You see what has been uploaded. You can see in the end of the presentation, the NHS. So we have given the occupancy and error status as well. So you can Okay. Okay then. It appears there are no further questions at this time. Mr. Sanjeev, I would like to turn the conference back to you for any additional or closing remarks. Yes. No, thank you. Thanks a lot for participating in today's call. I think and for the enthusiastic response to the questions. We remain available. I think in terms of any further questions that you may have, please Thank you very much. This concludes today's call. Thank you for your participation. You may now disconnect.