Kamat Hotels (I) Limited (KAMATHOTEL) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q4F526 conference call of Kamath Hotels India Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star followed by zero on your touchstone phone. Please note that this conference is being recorded. At this time, I would like to hand over the conference to Ms. Purwangi Jain from Valorum Advisors. Thank you, and over to you, ma'am.

Thank you. Good afternoon, everyone, and a warm welcome to you all. My name is Purwangi Jain from Valorum Advisors. We represent the investor relations of Kamath Hotels, India Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the fourth quarter and financial year 2026. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risk and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to the management. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. I would now like to introduce you to the management team joining us on today's call. We have with us Mr. Vishal Vithalkaman, Executive Director, and Mr. Nikhil Singh, Company Secretary and Compliance Officer. Without any delay, I request Mr. Vishal Wittal Kamath to start with his opening remarks. Thank you and over to you, sir.

Thank you very much. Namaskar, everyone. I would like to welcome you all on the earnings call that we have for the year-ending 2026. So with that, let me just briefly go through that overall, let me give an overall outlook that while the global challenges have been immense for multiple industries, I think at the same time, we find ourselves in a very strange situation where... Supply is a challenge and demand is still there. So many companies are having orders, but they are not able to execute due to supply issues. And when they are supplying, there is a cost escalation. So there is a benefit also indirectly. But that kind of like evens out. But so hence you find that we are in a very unique position where there is still growth. We still have the performance. Expenses and other things are going up, and we need to keep that in mind. I think what Mr. Modi has said, our Prime Minister has said, along with even when you look at Singapore Prime Minister's viral video and Mr. Uday Kotak, it's not about being pessimistic. It's about being cautious and keeping our eye on the ball as to what is happening and preparing for that. And touch wood, I'm very happy that, you know, hospitality in our case, the sector that we are in, I'll talk in more detail about it in more, but broadly, we find ourselves in a position where our existing hotels will continue to have, as per what we see, a good run, or at least what we have been doing, okay? I don't know about the growth, but I definitely know that even if we maintain what we are maintaining and focus on our tightening belt, that itself will still give a good result like we have seen in the last one year. And at the same time, new project executions would be challenging because of material supply availability today because of LPG. It's not only hospitality, but real estate and even simple office renovation, home renovation, any kind of utility for materials because of the tiles being a big challenge because LPG is required for tile manufacturing. So you find that there is a lot of different push and pulls happening, but the good part is we are aware of it and we are ready to weather As I said, there has still been a good demand, a very good demand for weddings. There has still been a very good movement of domestic mice. And because Kamath is an Indian brand, homegrown brand, a strong domestic brand, having majority domestic clients. We particularly have not been affected, which the results show, from the foreign disruptions, foreign travel, and Mumbai as a city being the primary gateway of India has had that advantage, and Navi Mumbai airport opening also is a further boost on this whole. See, you know, whether it is from hospitality or business. So Navi Mumbai and the way Navi Mumbai airports are adding the additional international flights. At least Mumbai as a sector, Pune as a sector, seems to have a robust future with the increasing business. With this backdrop, we also know that overall... We have some upcoming projects which have got delayed, whether it is the Orchid Zairadun, Orchid Gwalior, the Irabai Orchid Bhavnagar, but the good news is that Irabai Orchid Bhavnagar should open by June, though it was envisaged to be much later, thanks to the owners. Again, Orchid Nashik got delayed. So Bhavnagar owners, they were able to do things much more expeditiously and fast. So when we are dependent on the owner, that time, these certain delays happen. So Bhavnagar ERA will open by June. And with that, let me just read a formal, which our CFO who has moved on. So based on that, a new CFO will come, which we can discuss on that later on. I'll just read one of the main passages was basically, on a consolidated basis, revenue for the fourth quarter stood at 110 crore, representing an increase of approximately 19% year on year. EBITDA for the quarter also was at 32 crores, improving the EBITDA margins to 29%, reflecting an expansion of 213 basis points year on year. Profit after tax for the quarter stood at 18 crores, representing 59% year-on-year, while pat margins stood at 15.16%. For the full year FY26, the consolidated revenue stood at 386 crores, reflecting 8% growth. The EBITDA for the year stood at 97 crores with EBITDA margins of 25.1%, while the profit after tax stood at 39 crores, translating into a pat margin of 10.1%. So, looking ahead, we are, like I mentioned, cautiously optimistic. We have to be very pragmatic in terms of the volume that we are looking at in terms of business, focusing more on our domestic line. And after Prime Minister Modi Ji's call on travel in India, I don't think many of the people in India have a choice because foreign airlines are anyways cancelling and reducing the number of flights due to the higher fuel prices, including domestic aviation companies also have reduced their foreign travel, like Air India has cancelled. So, while it will affect... Incoming, but post-corona, again, let me remind everyone, Indian tourism influx of foreigners post-corona was not very robust. It did not reach the pre-corona level. And hence, a lot of our boom has been because of the robust internal economy. So again, this year, this holiday season, we find a lot of movement from within India, and that's how many of our resorts are doing well, even after the 31st of March. So, I think that boasts many of the Indian operators, the Indian hoteliers, the Indian tour operators, many of them will have this advantage. With that, I'll leave the floor open to the question and answers. I have with me Mr. Nikhil Singh, our company secretary also. They have done a very good job in, basically, I must appreciate you and your team, Nikhil, for handling the things in the absence of various things and still getting everything done on time. So, thank you, everyone, and with that, I ask the moderator to open the floor. Thank you. Namaskar.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will read for a moment while the question queue assembles. The first question is from the Lion of Urmesh Shah from Money Visers. Please go ahead. Yeah, I hope I'm audible.

Yes, Namaskar Mr. Shah, you are audible.

Yeah, so my first question is on the ARR, I mean, if I see the YOY numbers for the quarter, then ERA and Fort Jadavgarh both have seen a decline. If you could throw some light on that and also on the occupancy rate for both these properties.

Yeah. So, as you can see, we have had a dip in Jadavgarh last year. There were certain things, but this year we will definitely see much better figures for Jadavgarh in general. There were certain challenges which were there in the middle of the year because of which we did face. And that's why the second half was better than the first half. But we did not, but there was a dip overall. So this year we have changed certain strategies, changed certain things, and based on which there will be a much, much more better performance in terms of the ADR and the occupancy and the overall business. There, especially in Jadavgad, when we do weddings, we do in terms of yield. So, this year, there has been a different change in strategy, and that's how, basically, we will find that result. So, ARR over for the coming... Sorry?

Could you elaborate a bit more on the strategy? Because, I mean, I can understand ERA had a 5% debt, if I see the numbers, but Jadavgad had a 6% debt.

Yeah, so ERA's dip is different and Fort Jadavgarh's dip is different. ERA's dip is because, so basically what happens is when we add new hotels, and this is also a very good question you asked, let me take it on the broader sense of the occupancy also dropped, which holistically as a company we have seen. That's because what happens is when you add new hotels, and since they are under either Orchid brand or under ERA brand, the overall matrix becomes wider, the base becomes wider. For example, we've added 45-room hotel, Ira by Orkid Porvorim. Now, in the first few months, It took time for it to start stabilize. You know, it takes a lot of time for the SEO, which is the search engine optimization to get the algorithm, and then the hotel to start popping up on the top. Then people, when they start booking, that time on the OTA bookings also, the algorithm starts playing. Today, if Orchid Hotel comes in the top page, it's not because of only the money that you spend on ad or banner and all. That doesn't help a lot. What actually helps a lot is when you are popular due to clicks. The algorithm at the back end says, hey, this is a popular hotel. People are liking this hotel. Let me promote this hotel because ultimately what does the agent want, the OTA want, the makemytray, booking.com, they want more clicks through them. So if they show popular hotels first, the probability of the clicks and the conversion is very high because of which the algorithm is set that way. So, when you start a new hotel, it takes time. Even if you are a good brand, it does not matter. It takes time for the algorithm to recognize you to be popular in that area. And then your thing come up. So, today, touchwood, ERA by Orchid, Pore Vodum is doing exceedingly well. But when it started off, the first few months, the first three months, similarly, Orchid Rishi Keshe, our Orchid Rishi one, that also suffered the same challenge that for the first few months, it struggled because the OTA, even though Orchid is popular everywhere else in Rishi, Ishikesh did not know that this orchid is not popular, but now you find the traction happening through the OTA, you find the traction happening through the webpage. So basically this is where your overall ADR and overall occupancy falls because it takes time for that because the base has changed. So that's why basically, so when we talk about ORCID Mumbai as a standalone, there is a ADR. Minor ADR based on the market circumstances, there is no draw. In fact, the occupancy also has a couple of percentages gone up. But when you talk Orchid as a brand, it shows that it has dropped because of the new additions of hotels. So this is a continuing thing which will happen as new hotels will come. And as our Orchid, as our era, as our brand base becomes bigger, these new additions will not affect it so much. It will affect it in minor. So that's how basically then the, so even jumps will not be seen extreme and even the drops will not be seen in an extreme or in a higher case.

Okay, so should we assume that our EBITDA and PAT also will, I won't say suffer, but be on a lower range if this effect happens?

Now, this has already happened. So, whatever PAT and whatever EBITDA you see now is based on already what I've explained. So, next year onwards, you will actually find the gain in the EBITDA and the gain in the PAT, or not PAT, but let's say EBITDA, the PAT being something else, but there is a gain in the EBITDA because the EBITDA will now improve as the hotels start performing. So, orchid Rishi 1, in the first few months, didn't have the kind of traction. It did not have the kind of sale. Why? Because it takes time for a new hotel to get the weddings, get the other things, get this B.O.B. up, get the things done, and because of which, basically, we took time. But after that, now weddings are coming, now corporate movement are coming, now FIT from various OTA channels are coming, even our direct member base, our Orchid reward program people are going, then word of mouth spreads, local agents are there. So this is how basically now Rishi 1 is on. It started off. Today, in Porvorim, we have some airlines also. Today, in Porvorim, Orchid is a preferred group for Indigo and for Akasa. We were for Air India. Now, we get in sporadic. These are the airlines who support us across India. You know, we have a tie-up with them across. Wherever there is an airport and we are near to it, we are a preferred choice because of our, you know, the way we handle the aerostasis, the girls, you know, they feel happy, they feel taken care of, they feel a home away from home. And that's how basically whether it's Bhumneshwar, whether it's Mumbai. So, coming back to the main point is that we basically will have a better EBITDA because now these hotels will perform since they opened last year. Some have opened four months back from the 31st of March. Some have opened three months back, four months back, six months back. So, they take time to perform like Chandigarh. You know, Chandigarh last year did not perform to its expected because it opened in April and when May we had operations in Blue. Correct. So, four months Chandigarh suffered because the airport was, you know, in a hot zone, unlike Mumbai and Delhi, where at least there were some flights happening, there was a traction happening, but in Chandigarh and the entire belt, it was absolutely no aviation happening, you know, so people were stuck, they were going to other places and taking their flights. So, this is basically the difference which we will see this year in the additional improvement of EBITDA by these hotels performing.

Right. So, one question more before I join back. On our upcoming projects, especially the projects which were due to open in June and September, and because of this LPG crisis, and as you explained in your opening remarks as well, because geopolitical uncertainties, we can't, you know, do much. So, you know, are these on track, or, you know, how do you see the landscape revolving?

So I definitely see that not only ours, anybody's projects will have some hiccups. And they will have to manage those hiccups because your availability of imported goods, your availability of, within India also, manufacturing, there are challenges. There are, you know, various issues happening. See, when you make a renovation, you might have the cement. Not a problem. It's in India, it's available. You might have other materials. But one odd material might be there, which is coming from abroad, which as much as you need is not there. Suddenly you needed, say, 10,000 square feet or 8,000 square feet. Now the architect has to go back. Think what can be the alternative. These are practical problems we faced, I'm sharing with you, that these have been challenges we have faced, that, you know, suddenly the availability, the timelines, all are going for a toss, because you earlier were doing just-in-time method, say, about a year back, when everything was hunky-dory, and literally it was like, order karo, and kal maal pocha hai. You know, but now, there is a gap. So, we have to manage it. Now, the plus point is that it is the owner's headache. The negative point is that we are also bound with them, and we want it that we are losing opportunity. Today, our Dehradun, if it was ready, which should have been ready at least a year and a half back, based on certain things that had to be done, if this hotel was ready, it would have been doing exceedingly well, because the Dehradun market was very buoyant, extremely buoyant. By the time it actually comes, I do not know, we estimate it to come in September. By the time, if it comes, actually, what will be the scenario? We don't know. So our also internal planning go for a toss. The only plus point is that it's capex. If it's my own project, it's not that I have unnecessary interest payout, my team's debt. It's not that problem. But the real reason we got into this marriage is for opportunity, not for, you know, saving. Which is not the fact.

Thank you for the love of the time.

Thank you. The next question is from the line of Pankaj from Access Capital. Please go ahead.

Sir, good afternoon. A couple of questions on business and a couple of on the financial side. One is the ERA Mumbai facility, I'm given to understand, it has discontinued since April 1st. So, question is that what contribution it played both on top line and bottom line in FY26, and how are we planning to recover this? Loss on both the parameters. The second question, you did explain the occupancy challenges you're facing right now. And you also mentioned that in Fort Jada, you actually had some more issues. Can you just put more color on that? And at 29% occupancy, is it really breaking even or are we making losses? And whatever the strategy is, you're planning to kind of counter on that. My last question, the financial side is we have seen a compression of almost like 4% on EBITDA from FY25 to FY26. So if you can just put us or help us with more color on that, and are these costs, the increasing costs, because of the Middle East crisis? If yes, then are they sustainable, or are we going to see the impact in FY27 also?

So, let me start off with the easy one for Jadavgarh, okay, in short answer. For Jadavgarh, basically, we had some leadership change, we had some things over there done, and there was basically some sort of strategy change which we have now this year, we have a tie-up with more vendors in terms of the weddings and all, where earlier we had a tie-up with some limited vendors, and that was not performing, okay. So, it's actually, Jadavgarh is an emotionally very high product for us. We have a great affinity being very proud of what we have created over there, having a lot of emotional, but in terms of the financial context, definitely it is making money, and it has done very well in the past, and this year, in fact, it will do exceedingly well, more than previous year or so, but the thing is that it's not a loss or that kind of what you mentioned and all that, And overall, it is there in terms of this thing. And basically, we had to make some more changes in terms of how we are selling it. So basically, that is a major thing. We had done some improvements which did not go into the supply. See, what happens is you have to keep tinkering. If you keep doing the same thing, you will get the same result. So if you want an improvement, you have to do something new. So each time, like example, when we changed our, I'll give you a practical example. When we changed our Orkid Hotel website, because our Orkid Hotel website was, while it was very good, but it was very functional looking. It was not aspirational looking. It was doing the job of what we were, but considering where we are going, the way Puna Orchid has been renovated, we have Fort Jadavgad, we have Orchid Rishiwan, we have already Orchid Mumbai, we have beautiful more Orchid Pasaros. Our Orchid Pasaros initially did not do well for multiple months because it was a child-free resort. It was a, you know, we were taking people under the age of 15. And what was happening was that there was a resistance in the market. And ultimately what happened, once people realized that no, these guys are dead serious, they are sticking to their ethos, their value, that no, if I go with my wife, or if I go alone, whether a single man, single lady, as a single traveler, or if I am not going to be disturbed by... Not that I have anything against them, but I don't want to go to a resort where, it's like if you are vegetarian, sir, you may not want to go to a non-veget restaurant. It is your choice. It is your desire. So accordingly, when the market realized, it has done exceedingly well after that. So this year, we are getting a lot of advanced queries from such groups who are like, you know, ki haa baba, hum logon ka time ho gaya, abhi akde bachche log padai karai abroad. Where are we going? Chalo, apran jate orchid pasaros. So all these kind of products which are positioning themselves in a much different quadrant is basically the aspiration. So we changed our webpage. And what happened when we changed our webpage? Our business dropped drastically. Linkages. So, these are the kind of examples which are not worth for me to take for everyone's time for just one for Jaada Agar. Let me tell you the more important broader issues about like ERA Mumbai. So, ERA Mumbai was contributing top line almost 50 CR. That 50 CR is now not going to be there because this is basically earlier a lease, so the revenue was captured by us. But now, let me come to the EBITDA side. There was an EBITDA neutral. In fact, I would say a marginal, maybe a crore, crore and a half EBITDA draining because of the admin cost when you add. Because on a top line of 50 crore, it was doing a 20 crore almost EBITDA, almost. Okay, because of which the EBITDA will go up because of IRA not being there. So you can say technically EBITDA positive by a crore, crore and a half, two crores at least. Yes, while emotionally we have lost our property which we are already sold. So it's not that it's something new. We already was somebody else's. We were now managing it. And now that person has decided and rightfully he's the owner. So he has said, no, I will do something else or I will do something else. We are peacefully vacated basically the thing in terms of moving out from there in terms of giving our thing of 31st thing. So in the financial impact, 50 crore future may be down. EBITDA will go up anywhere between 1 to 2 CR at least. At least. Okay. Secondly, coming to the financial side, 4%. This is a very pertinent point. I'm glad you asked this because I was anyways going to take it up later on. One of the major costs, if you see, sir, has gone up is our labor cost. Our labor cost has gone up considerably, and for that, there is a very good reason we have, and I will break that reason, and that will solve your problem of the issue on the short-term and long-term or permanent or non-permanent. So, one second, yeah. So, basically, what we see is there is an impact to our labor cost, and one of the major reasons is basically the annual salary revisions based on the new wage code. The new wage code impact which has happened, which I'm sure you must have heard in many other investor calls also, that has basically played a significant impact. So first and foremostly, the wage code impact has been about 4 crore rupees, which is there to stay. But what is not there to stay is approximately, you can say, 2 crore rupees of impact in terms of payout from the closure of ERA. Approximately, again, 175, say, 2 crore, broadly, this is a figure, which basically is a one-month salary which we have paid to those who have not wanted to continue with us. We had offered everybody relocation opportunities based on where they are from. If they are from Gadwal, they could go to Rishiwan. If they are from North, they could go to Irinoida or whatever. We are given an opportunity to, whosoever wants to continue within the Kamath family, as they are our Kamath Khanan members, we are given them first choice. Many of them chose not to relocate because Mumbai has its own charm and they did not want to. So there was a payout. Out of this, whosoever has continued in their service, there has been no payout. That has been regular. But there has been a gratitude payment, I think 0.50 lakhs, 55 lakhs approximately. Between that has been the gratitude payment. There have been various other settlements. There have been other. So that 2 crore ka broad impact is a one-time impact which is there. Apart from this, the new hotels have also increased our payroll cost, which in the coming year will get absorbed in their holistic performance. For example, Chandigarh. We have almost 6 crore impact of Chandigarh salary. But the last year did not perform. It only performed 14 crore rupees. But this year we expected to do 20 crore north. So now the minute it does to a north of 2022 crore, this salary impact will become as per the norms, which is basically that it should be roughly around anywhere between 22, 23%, 22%. We will target in that fashion, you know, in that example, for example. So the same way is Hyderabad, the pre-opening expense and then the full year impact not been. Same way, Orchid Rishi 1. Orchid Rishi 1 also salary has added to our salary cost. So primarily this wage bill of hours. Our target is to bring this down by performance and by rationalization wherever required as per, you know, we don't fire anyone, even in the case of if we find that any automation we've done and people are redundant, as a company policy, as a commerce policy, family policy, we don't kick out anyone, we don't retrench anyone, we re-suit them into some other role. Or we basically parallel move them into another role. So this way basically we do. So these are the main impacts of the financial. Some of these are here to stay, but will get absorbed through performance. Some of them are here to stay because of the wage bill, which are not going to, and then some are one-time impact.

Thank you, sir. I think a fairly detailed clarification. Big thanks for that. There would be a drop by almost like 50-odd crores on top line. So are we expecting a degrowth, at least in terms of top line? You clarified that on EBITDA, it will have a minimal impact.

Okay, on a total company level, that you say, top line, 50 crore or minus crore, and EBITDA, you add at least from 2 crore.

So, effectively, you are saying, we might see even a degrowth, at least in terms of top line, if not in terms of bottom line.

Absolutely, sir. We will add, but then other properties will fill into this gap. Okay, whatever expansions we are doing, whatever the current hotels which have not performed fully last year will perform this year. So, we will find accordingly a replacement in that sense. But yes, that 50 croat or whatever calculation you can take.

Okay, sir. Last question, sir. Is there a target occupancy you are planning for this FI27?

Sir, I think we let us give us, let's give Adar a chance, please. I've been, let's come back, sir, if you don't mind, Pankaj ji.

Thank you, thank you.

The next question is from the line of Guneet Singh from Counter-Cyclical PMS. Please go ahead.

Hi, sir. Thank you for this opportunity. So, firstly, I would like to understand the other income of 10 crores in the P&L, and also why have our finance costs increased to 10 years, whereas our total borrowings have gone down to...

Incomes are basically, we have a lot of miscellaneous incomes also. We have rental income. We have other income from cross, basically, interest from our companies given to each other. Then there are various miscellaneous incomes which don't fall in the bracket of our core operational income. That is basically it. It's basically like, example, in our corporate office, Kill House, we have office space which is given on rent. A few crores. Then we have various other locations also which we have as part of the company from where you get miscellaneous income, rental income, other things. So it's basically that, sir. It's mainly and then there is a fair amount of portion on that which is interest which basically if the company has given. For example, one of the loans which was given at that time was to a company which is a sister concern is Ilex. ILX was having a loan of 5 crore, but ILX has done exceedingly well. It has paid off that loan to Khil, and it has paid interest also. So the interest portion would have come in other income, and that 5 crore loan which ILX has taken, that it has paid back to Khil, Khil is going to utilize that in an FD for future contingency, for future. That's why basically our Kamath Hotel's cash balance has been very robust and gone up. So we have a good... Very good cash in hand, particularly for contingencies such as Corona or Ukraine war or Iran war and all these kind of things that keep happening every six months.

Can you give a breakdown of the other income? Because 10CR is highest. 5CR, the one-time loan repayment.

I will do one thing, sir. Nikiti, sir ka note karlo. I'll send you the detailed breakdown of that, okay, in that fashion. Aap info, de de na.

And what about the finance cost? 10CR seems to be a bit high. Finance cost ka dikhaun?

One second, just one second. So, when you come back to the round of questions, we'll give you the answer. Let me just get back to you on this, sir. Please go ahead.

So, my next question is regarding the outlook for the coming year. So, if we look at the ARR that has been falling across all our verticals, whether it's Orchard or TOEM or ERA.

Sir, I already answered this question. Sir, I answered this question before. I'll just repeat in very short. Because new hotels have come and the base has become bigger, the occupancy area has fallen.

I will just continue my question. It is the coming up, like you mentioned. What are the properties, do you think, which did not mature in FY26, and you expect significant growth in FY27, if you can mention?

Rishi 1, whether it is all. It is the second year running. Whatever pain had to happen, it happened in its first year, and that's why it is now doing exceedingly well. So, it happens for all the hotels. So, you take it for all the hotels that this year will be better, where they will be EBITDA contributing rather than being negative in terms of their pre-opening costs and others becoming EBITDA negative.

Got it. So basically, this era Mumbai is going out of the pictures. So even if we exclude the revenue of era Mumbai from our top line, it comes to about 330-340 CR currently. So, what kind of growth do we expect in FY27, if you would like to give a number in terms of top line?

No, I would not like to speculate anything right now. Okay, we are considering various things. I would not like to speculate on any or give any guidance or give any kind of input on that point. Okay. Let's give someone else a point now, Skrash. Thank you.

Thank you. The next question is from the line of Sagar Tanna from Alchemy Ventures. Please go ahead.

Bye, Richard. Do you quantify how many keys did we open in FY26?

So, we opened approximately...

Okay, what is the next question, sir, while I get the details on this one? If you can quantify how much was the EBITDA drag from the newer properties?

250 keys were added to 260 keys. This is my blessing. In case if I missed out any hotel, but 260 keys we added. That is what we added. And what is the EBITDA drag? The EBITDA drag actually would be, if you see now, there are two ways to look at it. One is basically that these are the sunk cost and one is the operating cost. Broadly, if I have to say that, I would say that you can take 10 crore broadly as the drag in terms of if I was to say this is the labour cost, this is the deployment cost, this is the various other expenses. But out of this, 6 crores will mota mota come back into circulation through the routine operations. So they will get absorbed as part of our GOP. That's the thumb rule which we say that if a hotel is doing 100 rupees, then the thumb rule is that it will do a GOP of 35 percent, suppose. So those expenses will come in next year in that 35 percent. Minram, in that, sorry, in that 65%. So, pre-opening cost was a burden before, but then it becomes part of your operations. So, that's how the EBITDA will improve.

Got it. And how many keys do we think we will be able to operationalize in FY27?

This year, we should be looking at operating additionally, opening at least 150 to 200 keys.

Thank you.

I'm being very modest based on what I see right now in hand, not for the full year. I'm assuming based on only what I have in hand. So, the entire year is left for us to look at our sign-ups. The entire thing further is basically there. So, this is only what we see as of now.

Sure. Thank you and all the best.

Thank you. Before we take the next question, reminder to participants, anyone who wishes to ask a question, may please press start and one. The next question is from the line of Ranit Kapoor from Investor Investments. Please go ahead.

Yeah. Hi. Thanks for the opportunity. I wanted to know that, since you said that you have retained your employees for ERA Ockhead Mumbai, so what will be the additional burden due to this employee cost for that?

Sir, there is no additional burden because wherever the vacancies were there, we opened those vacancies for first-come, first-served basis to our employees of ERA. So they have been absorbed in the hotels where there was a vacancy. So it has not been a forced employment. It has been voluntary where they have said that these are the opportunities who would like to take it west. And based on that, they have either taken the opportunities or they have moved on. So the impact the people who have moved to our various hotels is that they are absorbed in that payroll. The impact of those who have moved out of our system by taking another job, by resigning, they, we have paid them their existing salary and a month's pay. So, when it closed on 31st of March, they obviously got their salary of 31st of March, and then they have been paid one month. Notice period, and whatever additional as per government norms, the dues are there. Gratuity, PF, debt salary, any other additional whatever is there. And the matters have been, because see, we want these people back. It's not their fault that era is too close. So we want their goodwill, and we want that whenever needed, some of them join us back. In fact, some who left us have rejoined us. When the vacancies have opened in our various hotels, one has gone to Panjgani, one has joined in Orkid Mumbai, one has joined, so basically the point is that they have the affection, it's just that since we don't have the space, they've gone somewhere else and then they'll join back to Kamach whenever the opportunity arises. So there has been no financial impact beyond our routine payments which are supposed to be done as per the law and as per what is right to them. And there is nothing as an extra burden on our payroll currently.

Okay, and secondly, so are we looking at any large hotel to overcome this loss of revenue?

Definitely looking at, one is that the current new openings and the old, the first year we take the old hotels we have partially opened, this year will give their full performance. So they will fill this hole. Apart from that, some new hotel openings which are going to happen, they should also fill this hole. And then some tie-ups which are going to happen, which at the appropriate time will be announced, will add to take it up further beyond that.

Okay, and my last question is regarding this ILEX developers. I think the company has only around the 32% stake in this. So are we trying to convert it into the 100% stake because balance is by the promoters only?

Correct. As of now, sir, currently there is no plans. As and when there is, we will inform everybody. Okay, thank you. That's it all.

Participants who wishes to ask a question, please press star and one now. The next question is from the line of Sanjay Spandia from Lanex Infects. Please go ahead.

So, you talked about, you know, income from your surplus assets. It seems to be rather a large number, about 10 crores. So, on the one hand, you seem to be exercised about the excess assets that you're holding. Now, from a debt reduction perspective, we know that a general rule in the market, especially for a company coming out of restructuring, is that for every rupee of debt that you pay, it translates into 2 to 3 rupees of market cap that you get as the risk perception on the company starts to go down. I also heard you say that you are now carrying excess cash. So what would be the return on that excess cash, given that you are already, you know, your interest rate is a little higher than average?

So, sir, our current interest rate from Axis Finance is at 9.75. And we have 86 CR as our total company load. And we have cash in hand approximately, if I have to, I don't know, but between 35 and 40 CR. I think it's around 40 CR. And our EBITDA is 110. And our EBITDA is 110. So we've come out of our problems, sir, thanks to our investors at that time, thanks to people who funded us in 2022. So there is now particularly no company stress and we don't intend to do anything which will unnecessarily create that repeat telecast from the past. We have learnt our lessons, we have done our needful. So I think financially we are quite comfortable in terms of fulfilling our obligations to our lender and we are okay, sir, in that regard. And still expanding and whatever, by the way, expansions we are doing, we are doing from internal accrual using our EBITDA. So, the cash which is there. which is generated is helping us enhance our properties or do the expansion or whatever the things are there.

But it is not going to be used to prepay any debt.

Sir, there is no point in me prepaying 86 crore rupees with this 40 crore and bring it down to 46 because I'd rather have contingency in my hand which is basically the... Now, one of the things, sir, I can like to explain because you asked about this 10 crore which is there. One of the things also is that this also 10 crore has income tax refunds, which is approximately 3 crore worth of income tax refunds, which is there, rent is there. So, like I said, miscellaneous income, sir, which is there, you know, are in this, which you asked 10 crore.

Thank you. Ladies and gentlemen, to ask a question, please press star and 1. Anyone who wishes to ask a question may press star and one now.

If there are no further questions, we can end the conference. Madam, you can ask last, and if no one has, then, and if, by the way, if anybody still does have and does not want to ask on this forum, we have always been more than welcome to have you reach out to me or Mr. Nikhil. Oh, yes, one thing I'd like to mention for everybody, I'm very, very glad to inform everyone, as you may have read on the stock exchange, or if you have not, that we have Mr. Milin Warekar joining us as our CFO. Mr. Milind Watkar is a very seasoned industry professional. He has been a part of Chalet Hotels for 15 years. He was the C.F. of Chalet from which after he moved to Ventiv. Chalet being one of the largest listed companies. Ventiv also is in the top, if I'm mistaken, top five, top eight in terms of market cap. And the main important thing is that we are getting a person whose ethos matches. He's thoroughbred from the industry. He was already the CFO of Leela also earlier before moving to Chalet. So he knows our industry. And we are going to be having a person who will be able to... Present Kamath better, guide Kamath better. He is already a person who is known in the market and is this thing to be cost conscious. So this year, particularly our EBITDA enhancement in terms of improved processes, improved systems. So we are very lucky that we are getting a gentleman from such a stock. A staunch background, a very stalwart from the industry, joining Kamath. And if he's joining Kamath at the stage at which we are, it's because he also sees that where Kamath wishes to go and how he can be an integral part of this journey in the future. So, I think this is something which I would definitely like to have all our listeners note and appreciate, and if there is anything about this, they can reach out to Mr. Nikhil, they can reach out to me. So, I look forward to working extensively, closely with Mr. Milin, and I'm sure all of you will find him also, because he's already doing a lot of investor relations and investor meets and outreach for Ventiv. So he will, in fact, wherever we lack, he will guide us to improve and become better. So, we also will, you know, I think that's something I look forward to. So, this is something I did want to mention. I forgot to mention it before. So, thank you.

Thank you very much. Participants, to ask a question, please press star and 1. As there are no further questions from the participants, I now hand the conference over to management for their closing comments.

So thank you, everyone. I really appreciate the questions. This time were much, much more different. They were more interesting in terms of a much wider and the thing I think if there's still, I would like to repeat that if still anyone has any questions, doubt, queries, please don't hesitate to reach out to Mr. Nikhil or to me. We are more than welcome to answer. Many of you all do tend to come and meet us off and on based on, you know, and it's not only about commerce. We are here in general also. We know that if our sector thrives, we thrive. Only we thriving will not be the thing. So if you have in general also any particular thing, we are open to giving our perspective on whatever it would be. So thank you, everybody. I appreciate the high attendance that we regularly get. And I appreciate all of you taking this one hour time out. Thank you. Namaskar.

Thank you. Ladies and gentlemen, on behalf of Kamath Hotels India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.