In the first ever valuation exercise in the country’s hotel industry, Indian Hotels Co Ltd, promoters of the Taj group of hotels, has been valued at Rs 2,100 crores by global consultant Panell Ker Forster. PKF, which was retained by IHCL, valued the business based on Discount Cash Flow i.e. interests, both direct and in subsidiaries and associates.

"The valuation arrived at by PKF is Rs 2,100 crores for 61 properties. The value of equity interests in associate hotel companies is estimated at Rs 600 crores and non-hotel investments (including land) at Rs 385 crores, including holdings in Tata Sons, Tata Industries and Taj SATS Air Catering Ltd, a 51:49 joint venture with Singapore Airport Terminal Services Ltd," a senior company official said.

According to the official, PKF made a detailed analysis of 27 key properties (in terms of revenue and profitability) while the valuation of overseas hotels were done based on reports prepared by experts. IHCL has equity interests in a number of associate hotel companies such as Oriental Hotels Ltd, Piem Hotels Ltd, Taj GVK Hotels & Resorts Ltd, Indian Resort Hotels Ltd, etc both listed and unlisted.

"PKF has done the valuation of all such associates based on the economic interest of IHCL in such entities," the official said. The Taj group consists of hotels under three categories, those owned by IHCL and its subsidiaries, hotels owned by associate companies, and those on management contract from third party owners in which IHCL has no investment. IHCL owns six luxury hotels, six business hotels, and seven leisure hotels. Its subsidiaries own four hotels, while 13 associate companies own 29 hotels.

There are another nine hotels, which come under the management contract framework. IHCL at present is on the restructuring mode and as part of the restructuring, IHCL will reorganise the hotel ownership pattern of the Taj group companies to reflect a clear segment focus. "IHCL’s focus will be luxury hotels, some associate companies will have business hotels as their focus, while others will have leisure hotels as their area of operation.

This process will also involve specific asset transfers and sale," the official said. Among direct investment companies, the group has completed restructuring of Taj Investment & Finance Co Ltd, Taj Trade and Investment Ltd, Taj Holdings Ltd, Taj Services Ltd, and Taj Trade and Transport Co Ltd, which has reduced the number of companies by three, he added.