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Benares Hotels registered 16% growth in sales for the quarter ended Sep 2019. Higher sales together with 120 bps expansion in operating profit margin to 16.4%, the operating profit was up by 26% to Rs 1.84 crore. After accounting for lower other income (down 81% to Rs 0.01 crore), higher interest (up 142% to Rs 0.27 crore) and depreciation (up 25% to Rs 1.50 crore), the PBT was down by 58% to Rs 0.08 crore. Higher depreciation and interest cost is partly due to adoption of INDAS 116. But the PAT jumped up by 359% to Rs 0.65 crore spurred by lower taxation (a write-back of Rs 0.57 crore against a provision of Rs 0.06 crore in Q2FY19). Lower tax for the quarter was largely as the company adopt the new lower corporate tax as per the recent ordernance.
The Company has elected to exercise the option permitted under Section 115BAA of the Income -Tax Act, 1961 as introduced by the Taxation Laws (Amendment) Ordinance, 2019. Accordingly, the Company has recognized Provision for Income Tax for the six months ended September 30, 2019 and re-measured its Deferred Tax Liability basis the rate prescribed in the said Section. The full impact of this change has been recognized in the statement of Profit & Loss during the quarter.
Effective April 1, 2019, the Company has adopted Ind AS 116 "Leases" and applied to lease contracts existing on April 1, 2019 by electing the Modified Retrospective option ( Para C5(b) of the Application Guidance of this Standard) and has taken the cumulative adjustment to retained earnings, on the date of initial application. Accordingly, comparatives for the year ended March 31, 2019 have not been retrospectively adjusted. On transition, the adoption of the new standard resulted in recognition of Right-of-Use asset (ROU) of INR 130.00 lakhs and a lease liability of INR 341.43 lakhs. The cumulative effect of applying the standard resulted in adjusting retained earnings net of taxes of INR 152.61 lakhs (including the impact of deferred tax created of INR 58.82 lakhs) as at April 1, 2019.
Half yearly performance
Sales for the quarter was up by 17% to Rs 23 crore and the OPM expand by 300 bps to 17.3%, the operating profit was up by 42% to Rs 3.98 crore. After accounting for hither OI, higher interest cost and higher depreciation, the PBT was up by 12% to Rs 0.63 crore. The taxation was a write back of Rs 0.40 crore against a provision of Rs 0.15 crore in the corresponding previous period. Thus spurred the PAT was up by 155% to Rs 1.03 crore.
Other developments
Taj Nadesar Palace will add four rooms to its inventory which are likely to open before the end of this year.
A new tented Jiva Spa opened at the Taj Nadesar Palace. Jiva - the unique Indian Spa brand expertly blends ancient Indian healing traditions with all the comforts of a modern luxury spa experience.
Management Comment
Dr. Anant Narain Singh, Chairman, Benares Hotels (BHL) said, "In line with Aspiration 2022, the Company has shown a heathy growth across all parameters for the second quarter & half year ending 30th September 2019."
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