KOCHI: The Thrissur-based Lulu International Convention Center Private Ltd (LICCPL) continues its losing streak with the company having closed the financial year 2023-24 (FY24) with a net loss of Rs41.08 crore.
Now, Hyatt Regency is also part of LICCPL. LICCPL or Lulu Convention Centre Thrissur had reported a higher loss of Rs46.57 crore for the previous year when the company earned a total operating income of Rs34.94 crore.
The Lulu Convention Centre Thrissur had earned a marginally higher operating income of Rs35.67 crore for FY24.
More seriously, the interest coverage ratio for the financial year 2023-24 (FY24) was just 0.19 times which means the revenue was just sufficient to cover 19 per cent of the interest expenses during the said period.
Challenges
The company faces the challenges of modest scale of operations, leveraged capital structure, weak debt coverage indicators and cyclic nature of the industry, according to Care Ratings.
Lulu Group is fast expanding its presence in India with scores of malls and hypermarkets are said to have been lined up for opening in the next few years. Lulu Group’s India entry was spearheaded through the opening of Lulu Mall Kochi in March 2013.
This was followed by malls in Bengaluru, Thiruvananthapuram, Lucknow etc. While the Calicut mall will open shortly, work on a few others including the one in Ahmedabad has already commenced.
Strong promoters
Notwithstanding the current poor show by the Thrissur operations, the company is able to derive strength from the vast experience of promoters, strong presence of the group, demonstrated support from the promoters, locational advantage with proximity to tourist places and operating service agreement with the Hyatt Group
The net worth of the company stood at negative Rs57.74 crore in FY24, due to the losses incurred over the past four years on account of higher depreciation for the newly commenced operations of hotel (Hyatt), which opened in January 2020.
Cash loss in FY24
Talking to businessbenchkark.news, a finance expert said the Thrissur Lulu Convention Centre has a long way to go before it could show signs of financial recovery as the company has incurred cash losses of Rs19.14 crore in FY24 against debt repayment obligation of Rs29.01 crore in FY25 .
“This is serious .This simply means that Rs19.14 crore is the amount by which the outflows exceeded the inflows, indicating the company’s inability to generate enough cash to cover its costs during that period,” the analyst added.
This also highlights the financial stress or inefficiency in managing cash flow, which can impact a company’s ability to meet obligations or fund future growth unless addressed.
Support from group
However, the liquidity crunch was majorly offset by the inter-corporate demand loan from the group company. The inter-corporate demand loan increased to Rs84.92 crore at the rate of 8 per cent as on March 31, 2024, according to Care Ratings.
The promoter of LICCPL, Yusuff Ali is the Managing Director of the Emke Group (Lulu International). Emke group is a large, diversified conglomerate having varied business operations including retailing, imports & exports, trading, shipping, IT, travel & tourism, and education sectors.
The group has operations in the Gulf Cooperation Countries (GCC), Egypt, India, Indonesia, Thailand, Hong Kong, China, Kenya, Tanzania and Benin.
