"One of the best years in the company’s history": chairman
Taj Lanka posts "exceptional year" with modest net profit after many years

Taj Lanka Hotels Limited has reported what its Chairman Zubin Dubash called "an exceptional year – one of the best in the history of the company" with the watershed achievement of a net profit – albeit marginal - after depreciation and finance charges.

The operating profit was up to Rs. 146 million from the previous year’s Rs. 8.25 million and a modest net profit of Rs. 0.5 million after depreciation and finance charges was posted compared to a net loss of Rs. 174.9 million the previous year.

The company has succeeded in restructuring its crippling debt which was dragging it down on two occasions – the first in 1988 when the lenders wrote-off US $ 11 million in consideration of part settlement and then again last year with a waiver of US $ 19 million also in consideration of part settlement.

In August this year the company once again restructured its debt paying off its NDB loan with a loan of US$ 3 million from HSBC and a loan of Rs. 280 million from HNB.

"These loans were obtained at very competitive interest rates which will reduce the finance cost substantially during the current year enabling improved results," Dubash confidently predicted.

Taj Lanka’s average cost of funds now is down to 8% according to its Director Finance and Corporate Affairs, Mr. Lakshman Ekanayake.

Dubash pointed out that although tourist arrivals were low during the first quarter of the year under review, the efforts of the Sri Lanka Tourist Board, SriLankan Airlines and the travel and hotel industry targeting non-traditional regional travellers yielded positive results.

"The tourist arrivals increased from July onwards with India being the biggest partner. The corporate business from India also increased yielding higher room rates," Dubash said.

"The Taj Group made use of this opportunity to target the Indian holiday and conference market by using its large network and marketing thrust in India.."

Dubash said that the Taj Samudra was able to attract about 70% of the Indian corporate segment and a larger share of the Indian conference market.

The hotel had also succeeded in securing a large slice of traffic from China, Malaysia and Hong Kong "which showed phenomenal growth levels."

This was the major contributory factor that helped the hotel to achieve high growth against competition and post excellent results.

Dubash noted that with the peace process on track, tourist arrivals during the first seven months of the current year had topped 260,000 and there was a promise of an all-time high 500,000 by year-end.

"With this high demand for hotel accommodation, investors both foreign and local, have shown interest in new projects and the industry is poised for robust growth," he said.

Dubash also noted that the "significant increase" in the Taj share price during the last few months seeing it as an indication of the investor confidence in both the industry and the company. This has been achieved despite nearly Rs. 2 billion accumulated losses against an issued capital of Rs. 1.4 billion.

"We look forward to the successful conclusion of the peace talks and the total revival of the tourism industry, heralding the dawn of a new era," he said.

India’s Taj Group has 82% control of Taj Lanka and it was the support of this controlling shareholder infusing fresh capital on two occasions to part-settle the banks and reduce the debt burden enabling interest and capital waivers.

The company owns almost 12 acres of prime land overlooking the Galle Face Green and the sea and is considered to be among the best located hotels in Sri Lanka.

The Taj Lanka board comprises Messrs. Z. Dubash (chairman), C. L. B. Ekanayake, U. L. Kadurugamuwa, R. Gujral, B. K. Chaudhary, A. K. Chaudhary, C. S. Jalan, Tilak de Zoysa, D. M. Harris, Dr. G. Sunderam and V. P. K. Nair.