IHCL to buy remaining stake in Roots Corp, raise ₹4,000 crore

IHCL board also approved the plan to increase ₹2,000 crore by selling shares to existing investors and others ₹2,000 crore by selling shares to financial institutions, total ₹4,000 crores.

The money will be used to fund capital expenditures and become a zero-debt company.

The stake purchase in Roots Corporation is expected to be completed by December 31, making it a wholly owned subsidiary of IHCL.

In a statement to the stock exchanges, IHCL said its board has approved the 39.84% purchase of Roots Corp from Omega TC Holdings, Tata Capital, Tata Investment Corp and Pim Hotels.

Established in 2003, Roots operates 55 Ginger Hotels across the country and has 26 more under development.

IHCL reduced the losses for the September quarter ₹to 121 crore ₹230 crore a year ago, while revenue grew 132% ₹752 crores.

The company operates hotels under various brands like Taj, Selections, Vivanta and Ginger.

Puneet Chhatwal, Managing Director and Chief Executive Officer, IHCL said that the overall recovery after the second wave has been stronger and faster.

The company has given positive EBITDA ₹97 crore in this quarter. In line with IHCL’s objective to further its growth and market leadership, the Board approves raising equity ₹4,000 crores will enable us to become a zero-debt company in future and help fund the company’s expansion as well as its capital expenditure plans.”

The company said it has opened four new hotels during the year under different brands, including three selections hotels – one each in Kolkata, Bhubaneswar and Nainital; and Vivanta in Ahmedabad and Ginger in Udaipur.

Earlier this year, IHCL opened four new hotels across different brands, including the Taj Lakefront in Bhopal and the Pilibhit House-an IHCL Selections hotel on the banks of the Ganges in Haridwar. It also launched two Vivanta hotels in Bhubaneswar and Goa. The company’s members-only club opened its new outpost in London.

IHCL, which added a homestay division to its portfolio in 2019- Amã Stays & Trails- now has 59 bungalows in India.

Jehangir Aibara, director, hospitality consultant Mahajan & Aibara, said Ginger is currently operating as a separate vertical and has limited synergies with IHCL’s operating structure.

“Its newly rebranded identity is aesthetically very similar to other IHCL operated hotels and could potentially benefit both companies if it falls under one umbrella business. Routes can also probably take advantage of IHCL’s sales network and other hotel management technologies.”