Muthoot Hotels still in Red; gets Rs190cr promoter funding push

KOCHI: The ailing MPG Hotels and Infrastructure Ventures Pvt Ltd and subsidiary (MPG/the group) – Muthoot Hotels, a hospitality entity from the Muthoot Pappachan Group, has received Rs190 crore funding push recently.

MPG continues to be in the Red posting Rs18.1 crore loss for the financial year 2023-24 (FY24), compared with a loss of Rs27.7 crore the company logged for the previous year (FY23).

In fact, the company has generated a decent operating income of Rs157 crore during FY24, down from Rs161.3 crore it has earned during the previous year.

Though the details of MPG’s performance in the earlier years are not available with businessbenchmark.news, according to ICRA, the leading rating agency, MPG has been sitting on a sizeable accumulated loss incurred during the previous years.

MPG has a diversified business mix with 60 per cent of its revenue coming from hotels (in FY2024).

It has management tie-ups with established international hotel operators such as Hilton, Accor, and The Indian Hotels Company Ltd for operating its three hotel brands such as Hilton Garden Inn, Novotel and Taj.

Performance set to improve

However, ICRA believes that the company is likely to achieve a sustained performance in the near to medium term, aided by favourable demand for domestic hospitality industry.

MPG’s diversified business mix, the tie-ups forged with established international and domestic hospitality brands, and continued need-based funding support from promoters are factors that can work towards an improved performance of the company in the coming years

Unit of Muthoot Pappachan stable

MPG is part of the larger Muthoot Pappachan Group, a Kerala-based conglomerate with diverse business interests in non-banking financial services, hospitality, infrastructure development and automobile dealership to name a few.

The recent Rs190 crore funding support from the promoters in the form of equity (Rs80 crore) and unsecured loan (Rs110 crore) has resulted in MPG having an equity share capital of Rs245 crore and unsecured loans to the tune of Rs256.5 crore as of March 31, 2024.

Bank borrowings at Rs201.4cr

The fund infusions from the promoters have been partly utilised to reduce bank borrowings by Rs163.1 crore  – to Rs201.4 crore as of March 31, 2024, from Rs364.5 crore a year earlier.

MPG has a commercial real estate asset – Technopolis ITpark in Kakkanad, Kochi, with 3.55 lakh square feet of office space, which houses several IT/IT enabled services majors as tenants.

However, Technopolisthis has failed to generate the desired results as a commercially venture. While the occupancy was over 90 per cent in FY2022, it dropped to 60 per cent in FY2023 and 50 per cent in FY2024, due to competition from neighbouring office assets.

The group has a lease rental discounting (LRD) loan of Rs 81.6 crore as on March 31, 2024 against lease rentals from this property, and the debt obligations (Principal+ interest (P+I)) are likely to be over Rs17 crore per year for FY2025-FY2027, according to the estimates of the rating agency.