Ladies and gentlemen, good day, and welcome to the fourth quarter and year ended FY 2023 earnings conference call of Chalet Hotels 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 then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Sethi, MD and CEO, Chalet Hotels Limited. Thank you, and over to you, sir. Thank you so much, ma'am. good afternoon, good evening, ladies and gentlemen, and welcome to the earnings call of Chalet Hotels Limited for the quarter, for the last quarter of the financial year 2023. It has been an exceptionally good year. We ended the financial year on a strong note with historical highs in our financial performance. Our earnings call presentation has been uploaded on our website for your records. Do take some time to look at the details there. Very quickly to summarize the year that's gone by, to begin with, we signed our first asset in North India with the proposed new hotel at the Delhi Airport. We marked our debut in leisure with the acquisition of The Dukes Retreat in Lonavala. We made strong inroads towards our sustainability goals and very importantly, cracked the INR 5 billion EBITDA ceiling for the year. We also made substantial progress towards unlocking value from our new projects in hospitality, residential, and office real estate at Hyderabad, Bengaluru, and Mumbai. The acquisition of the iconic resort property in Lonavala region, The Dukes Retreat, marks our foray into leisure segment. The Dukes Retreat has built a very deep connection in with its guests over the last 40 years. With its breathtaking views serving as a backdrop, our vision for the retreat involves repositioning it through renovations and expansions, transforming it into a luxurious wellness destination that embodies a strong commitment to sustainability. We will be expanding the room inventory by approximately 50 rooms over there. At a macro level, the hospitality industry in general in U.S., select European nation regions has been moving in a very strong and positive direction, with some regions touching record average room rates. The same momentum has also been seen in the Indian industry, with average room rates touching decadal highs, with occupancies also at very healthy levels. Air traffic in the country has touched a new peak in March 2023, fueled by double-digit growth in domestic travel and recovery of international traffic. International passenger traffic recovery was around 90%, to the pre-COVID levels in the month of March. Despite new supply, office space occupancy in the top six cities remained strong at around 84% as reported by Colliers during the quarter ended March 2023. For Chalet, the robust pickup in demand seen in Q3 of FY 2023 continued in Q4 of FY 2023, largely led by corporate travel, MICE, weddings, and other social events. Q4 recorded new highs in average room rates at INR 11,304, which is up by 11% over the previous quarter. Portfolio average room rates crossed INR 12,000 levels in the month of February. Occupancy improved 9 percentage points Q on Q to 74%, leading to a highest ever quarterly RevPAR of INR 8,363. Hospitality segment revenue grew by 17% sequentially to INR 3.1 billion. Room revenue grew by 23% over the pre-previous quarter, while costs remained well under control, resulting in high flow through during the quarter. The portfolio F&B revenue was about INR 1 billion, which is again, higher by 6% over the previous quarter. EBITDA hospitality division was INR 1.5 billion, with the highest ever EBITDA margin of 48%. Consolidated revenue for the quarter was at INR 3.5 billion with an EBITDA of INR 1.6 billion. The EBITDA margin was 46%. This is the highest revenue and EBITDA for the company in a single quarter till date. For the full year, average room rates were again at a decadal high of INR 9,169, with an occupancy of 72%. Hospitality revenue and EBITDA were at a lifetime high of INR 10 billion and INR 4 billion, respectively, with EBITDA margin at 42%. Ladies and gentlemen, I'm delighted to share that on a consolidated level, EBITDA for the company crossed the INR 5 billion mark with an EBITDA margin of 43% for the year. Coming and sharing with you a quick update on our project pipeline. In the hospitality side of the pipeline are additional 88 rooms at Novotel Pune, are ready, and we are awaiting the final OC of the building to start commercial use. The new Westin Hyderabad Hitec City, with 168 rooms, is in the process of being handed over to the operator this month and will be operational from next month. At Westin Mumbai Powai, the newly renovated rooms have been handed over to the hotel team in January, and I'm happy to share that the response has been extremely positive over there. The response at Westin Powai has been very positive and it sort of confirms our belief in that asset, which is the largest asset in the country. It has reaffirmed the position that we took of changing the brand from Renaissance to Westin around three years back. The project work at the luxury hotel at Delhi Airport with about 400 rooms is as per schedule with expected completion in the financial year 2026. The 140-room expansion at Bengaluru Marriott is in final design stage. We'll be submitting a plan for approval later this month. On the commercial office real estate that we have, our commercial tower Cignus complex provides in the final stage of completion. We should be able to hand it over sometime early next quarter to the leasing team for leasing of the space after those fees received. However, we already have a reasonably strong pipeline of interest for almost about 300,000 sq ft on this asset. At the commercial tower in Bengaluru in the Marriott complex, handover to tenants has commenced, and for the mall that has been converted to the office building, the handover to tenants is likely to commence late next quarter. For the residential project at Bengaluru, I think that's a key element of our, you know, project work that we are having, and it's gonna make a material difference to our P&L for the next few years. The RERA registration has been received, construction work is on schedule, and the market rollout is scheduled to commence from July of this year. We are happy to share that we have significantly improved our score this year on the Dow Jones Sustainability Index to 43 from last year's score of 31. This, by the way, is a 39% improvement, and we are well above mean scores of the hospitality industry in the DJSI Index. We are also proud to share with you that 75% of our power sourced was sourced through renewable resources for the month of March 2023. When I say 75% of the power, I'm talking about full hotel portfolio is included in that, and none of it was through any green certificates. This is genuine third-party green power that we're using. Ladies and gentlemen, at present we have multiple projects in final stages of completion with capital spend of over INR 1,200 crore till date. These assets will start contributing to our P&L in the next few months. In particular, the new hotel in Hyderabad, the residential asset in Bangalore, and the office assets in Mumbai and Bangalore are likely to make material improvement in our financial numbers. As we enter the new financial year, we remain committed to enhancing our operational efficiencies, execution of ongoing projects, and sustaining momentum through both organic and inorganic growth opportunities. On that positive note, I'll now hand over the baton to Milind, who will take you some more financial highlights. Milind? Thank you, Sanjay. Good evening, ladies and gentlemen. As Sanjay mentioned, the company thrived in post-pandemic world and crossed INR 5 billion EBITDA milestone in the financial year FY 2022. The EBITDA and EBITDA margins will improve further with the operationalization of all new investment in commercial office building and hotels. These investments of about INR 12 billion today are likely to generate a stabilized return of approximately 20% on invested capital. Most of these assets are getting operationalized in FY 2024. As Sanjay has covered most of the financial numbers, let me give you key financial highlights. Hospitality segment reported the highest ever EBITDA margin for the quarter at 48%, setting a new industry benchmark. Margins were higher by 7 percentage points from previous quarter, led by resilient ADR and prudent cost management. Hospitality EBITDA for the quarter increased by 36% sequentially. Hospitality revenue crossed INR 10 billion mark for the year FY 2023. Three of our properties, that is JW Sahar, Westin Hyderabad, and Novotel Pune, reported highest ever revenue and EBITDA for the quarter and financial year. Hospitality EBITDA for the year was INR 4.3 billion, led by efficiency in two major cost saves, that is payroll at 12% of revenue and utilities at 5.8% of revenue, creating new industry benchmark. Consolidated revenue for the year was INR 12 billion. PAT of INR 1.9 billion for the financial year FY 2023 is a strong recovery from the cumulative losses of INR 2.1 billion in the previous two years. EPS was at INR 9.06 for the financial year FY 2023. The net worth of the entity is back to pre-pandemic level at INR 15.5 billion. Net debt of the company increased by INR 2 billion in the last financial year to INR 24 billion as at 31st March 2023. The company spent INR 6 billion, which includes CapEx of INR 4.4 billion and acquisition cost of The Dukes Retreat of INR 1.6 billion. This was largely funded by internal accruals and working capital management. Out of the total debt of INR 24 billion, half is allocable to new investments in office buildings under construction, new hotel projects and hotel expansion. The cost of finance as at March 2023 is at 8.75% against 7.5% at the beginning of the year. This is in the backdrop of an overall increase in repo rate of 250 basis points in the same period. The company is expected to convert INR 12 billion to NRV in FY 2024, which will reduce the average cost of finance for the company. The company has CapEx plan of around INR 6 billion for FY 2024 for the projects that have been announced till March for the projects that have been announced. This includes CapEx of INR 2.8 billion on commercial projects, including second commercial tower at Powai. The balance, INR 3.2 billion, includes spillover CapEx of new Westin Hotel at Hyderabad, hotel expansion at Pune, CapEx on new hotel in Delhi and expansion of Marriott Hotel in Bengaluru. Business is well funded with internal accruals and available lines of credit. This is the first phase of multiyear high growth cycle for the hospitality industry. Let me give you few updates on Koramangala residential project. The promoters are committed to fund project cost. There has been no new subscription from promoters on 0% non-convertible redeemable preferences during the quarter under review. The total subscription stands at INR 2,000 million, the promoters have given INR 450 million as interest-free ICD as at March 2023. We have received RERA approval for the modified development plan. Based on the internal market assessment done by our residential team, the selling price per sq ft is seen upward of INR 16,000 per sq ft of sellable area. The cash generated from sale is expected to be cash and EBITDA accretive to Chalet. With this, let me open the floor for question and answer. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Vikas Ahuja from Antique Stock Broking. Please go ahead. Hi. thanks for the opportunity. I hope, you can hear me. Vikas, we can hear you. Go ahead. Yes. My first question is regarding the occupancy of southern markets, Bangalore and Hyderabad. That is, you know, although we have seen a stronger pickup in Mumbai and Pune, but those two markets still remain below the average. You know, how should we look at going forward into FY 2024? Where do you think, you know, this number can go? That's my question number one. Vikas, thank you. Thank you for your question. Look, Mumbai has done exceptionally well with the occupancies in Q4 at 77%. Bengaluru and Hyderabad are markets which are sensitive to holidays and holiday seasons. Therefore, in Q4, the start of the quarter was little slow because foreigners take a little while after the New Year's to come back to travel. Subsequently in the second half of January and then February were extremely good. In fact, February turned out to be brilliant in all our hotels. Having said that, I think you'll see marked improvement in occupancies both Bengaluru and Hyderabad. Especially Bengaluru has seen a significant improvement in the last couple of months. We're very excited about the demand pickup and back to recovery in Bengaluru. Sure. Thank you. My second question is regarding the seasonality. When we go from Q4 to Q1, we normally see a 15%-20% decline in RevPAR, and it's, as I said, it's largely because of seasonality. You know, because we are in a different times now and, just trying to understand whether we will see the same seasonality this time as well, or you think, you know, demand continues to remain very strong and this time the drop won't be that much. Vikas, I don't wanna comment on forward-looking numbers, but look, the seasonal trends that are typical for India for both business and leisure travel will continue. The difference could be less this time around. Do expect Q1 and Q2 to be always lower than Q3 and Q4. Sure. Sure. Thank you. My final question is on the F&B revenue, which came around mid-single digits, while the overall RevPAR growth was 25% above on sequential basis. I mean, what was the reason for lower growth in F&B revenues? Look, your the growth in F&B revenues between Q3 and Q4 is still at 6%. Remember, Q3 came off a high base because that was the period for several weddings, et cetera, that happened. It's unfair to compare Q4 to Q3. The fact that Q4 managed to report 6% growth on Q3, where the banquet season was at its peak is itself commendable. I see this as a positive. Okay. I think that same applies to the ADRs as well, right? Which was around INR 10,200, and it moved to INR 11,300. ADR is driven by rooms, room demand. Yeah. Yeah. Driven by business travelers. F&B was driven by social events, which are basically locals, who use the auspicious days of weddings to host the events. Both the JW Marriott at the airport in Mumbai and the Westin Powai did exceptionally well with weddings during the quarter three. Coming off a strong base, I think the fact that quarter four has managed to improve the revenues by another 6% is quite commendable. Okay. Sorry, if I can squeeze in one last question. As we already in the middle of May, are we seeing any difference now in terms of, you know, the occupancies or the pricing in different markets, whether, you know, Mumbai has dropped or Bengaluru has improved? Are we seeing any stark differences from the trend we have been seeing in past two, three quarters? That's about it. Thanks a lot. Vikas, thank you for your questions. Look, we're not in a position to share numbers at this time with you because we've not really released those numbers to the market in general, so we're restricted. As I said, expect Q1, Q2 to be lower than Q3, Q4. My sense is that the gap is not gonna be 15%, it should be a little more balanced than that. We can move on to the next. Sure. Sure, sir. Thanks a lot. Thank you. Thank you. We have our next question from the line of Karan Khanna from Ambit Capital. Please go ahead. Yeah. Thanks for the opportunity and congratulations on the best ever quarter. You spoke, Sanjay, you spoke about the hospitality outlook for, you know, FY 2024 and beyond, but from a strategic perspective, while most of the hoteliers are expanding in tier two and tier three cities and beyond, with smaller hotels, Chalet's pipeline is focused on tier one, big box hotels. If you could help us understand more in terms of, you know, your current model with, will that work better than expanding in smaller cities, but with scale? Hello? Sorry, Karan, I was on mute. Thank you for your question, and thank you for the congratulations. Let me just remind you that the last two hotels that we've commissioned or acquired are in Tier two locations. Pune Novotel was in a Tier two city, and the recent acquisition, the Dukes Retreat, is indeed in a secondary or tertiary market. We believe there is strength in some Tier two and tertiary cities. But we'd like to be very, very careful not to go and increase supply in some of these cities because they come off a low base, and if you continue to increase supply, the city itself could suffer. In both cases, we've actually picked up existing supply as against adding supply to these Tier two tertiary locations. To answer your questions, are we looking at Tier two and tertiary cities? Absolutely. The outcome is in front of you. Sure. Thanks for the clarification. Just continuing on the Dukes acquisition, which has been an opportune acquisition for Chalet, it also marks your entry into the leisure segment through a smaller hotel. Is it fair to assume that, you know, right now you're testing the waters in the leisure market and hence you've gone with a smaller hotel compared to your rest of your portfolio? Inherently, as you start witnessing potential turnaround or possible success in the leisure segment, you look to add further hotels in this segment? If so, which are the markets that you're actively evaluating at this point? Karan, we are gonna stay consistent with our stated strategy that we'd like to be in leisure destinations which are in drivable distance from Mumbai and a couple of other big cities around the country. We'd like to look at Goa and Rajasthan as the two other leisure destinations that we'd like to focus on. I don't think this strategy has changed for the last three, four years now. What we've done at Dukes is consistent with that. We continue to look for opportunities in Goa and Jaipur, et cetera. As and when we have some opportunities, we'll look at them. This is not by design that we got Dukes first, and we wanted to test waters. It's just that we were able to execute this first. Sure. On commercial real estate, you have closer to 2 million sq ft that's hitting the market in FY 2024. If I look at the outlook for commercial real estate, doesn't seem as positive when we look at some of the incumbents in Bengaluru even suggesting possible extra exits than contractual in the year. In that context, I wanted to understand your standpoint on CRE demands for Chalet and visibility in terms of leasing potential tenants, opportunities that you're seeing. Milind, if you could also talk about the pending CapEx for the four Cignus towers in Bengaluru and Mumbai. Karan, I don't think we have any major concern on the, it's 1.5 million that's coming in play in this year. Not 2 million. Roughly around 1 million or 0.95 in Bengaluru and 0.78 in Mumbai. I don't know whether you've seen a recent report, I'm trying to dig that out whilst we speak, which had given. It was, I think, a TV report that had come out from the television in CNBC, where they've given the leasing fraction of big cities in India. You'd be surprised to know that Bengaluru was the highest in the lot, with the absorption as high as, I think, 17% increase on the year, which is very strong. I think we've positioned our office assets at the right location because BengaluruBangalore was number one, followed by Delhi and followed by Mumbai. Within the top three cities that are listed as with the most demand in office space, two of the cities are where we are launching these office assets. You had a question from Milind. Karan, to add further to what Sanjay said, Whitefield is connected on Metro now, so demand for commercial office space is expected to go up in Whitefield. On pending CapEx on these two projects, I mean, commercial tower is almost ready at Bengaluru, and we have some spillover CapEx to be spent. Repurposed mall will be ready in quarter or so. Powai, commercial tower will be ready in one quarter. All put together, including spillover CapEx, we'll be spending around INR 250 crore. Sure. Last question. You exited FY 2023 with an annual EBITDA of INR 500 crores and a debt at INR 2,000-INR 2,300 crores. Internally, while thinking about expansion and, you know, greenfield asset acquisition, what sort of a debt EBITDA multiples or metrics are you comfortable with while evaluating first projects? That would be my last question. Thank you. Karan, we are aware of the fact that the investment community prefers debt EBITDA ratio to be not too much north of 3.5x. We are conscious, and we are working towards that. You see a lot of the CapEx that we put in play, as I mentioned in my opening statement, is coming to fruition in the next few months. It's INR 1,200 crores of CapEx that we've already spent. I think INR 200 crores more to be spent on these assets. We are targeting 20% EBITDA by capital employed numbers on these assets. Clearly there's enough return that they're gonna generate, enough EBITDA to sustain their costs. You got to remember that because a couple of these assets are office assets, the debt will convert to LRD from there, where the cost of capital will re-reduce significantly for us. We see a lot of comfort in where we stand today. The accrual that we are creating now will give us headroom for growth going forward beyond the 1,000, 1,100 rooms that we have in the pipeline right now as we speak, and the 2 million sq ft office space that we have, 2.5 million sq ft office space that we have as prospective office growth. Karan, out of INR 2,400 crore debt today and INR 1,200 crore is for assets which are not yet operationalized. We have to compare INR 500 crore EBITDA with debt of INR 1,200 crore. Sure. Thanks for the clarification. Thank you, and all the best. Thank you. We have our next question from the line of Jinesh Joshi from Prabhudas Lilladher. Please go ahead. Yeah, thanks for the opportunity. I have a bookkeeping question on this inventory write down of INR 18 crores, which has happened in this quarter, due to revision in the project completion cost. If I look at the. Sorry, I'll have to request you to repeat that because your voice is not coming through clear. Am I audible now? Yeah, better. Yeah, yeah. Basically, I had a question on this inventory write down of INR 18 crores, which has occurred in this quarter due to revision in the project completion cost. If I look at the current PPT, we have stated that the cost of completion is about INR 425 crores, which is similar to what we had reported in the last quarter as well. Just wanted to understand this aspect on write down a bit better. Jinesh, this is one of the accounting requirement. Whenever these flats, write down, write off pertains to flats which were sold five, seven years back, and those were sold at very low rate. Now the cost per sq ft based on revised budget is slightly higher than the selling price. Hence, as per accounting standard, we have created this provision for impairment. This is called NRV, net realizable value provision. Sure. Got that. Secondly, with respect to the commercial assets, I mean, I believe in the PPT we have stated that the project in Bengaluru of about 0.65 million sq ft, the handover has already been commenced. The question is, how much area have we been able to lease out so far? Secondly, the other asset which was repurposed very recently, in the last PPT we had stated that the handover might begin in one to two. Apparently now it seems to have got postponed to Q2 FY 2024. Any specific reason out there? One follow-up on this part is pertaining to the LRD debt of about INR 1,200 crores, which will get converted in FY 2024, which you mentioned in the opening remarks itself. What kind of interest cost reduction will we get because of this? Jinesh, to answer your first part of the question, and we might have missed something because your voice is still breaking up. The Bengaluru leasing that you were asking for is roughly about INR 1.5 lakh sq ft that we've done with the anchor client. They may be looking at another 40,000 sq ft more. We've got interest from another three, four clients for taking up the balance, majority of the balance area in the new IT tower. There is the mall which is getting converted to office. We haven't started the leasing activity as yet. There's still some work that is getting completed, and once that is completed, we will open this out to potential tenants. To answer your LRD question, Milind will come in on the cost of capital there. See, I mean, LRD entitlement is to the extent of 6.5-7 x of EBITDA or rentals earned. The cost arbitrage ranges between 50-75 basis points. Sure. One last bookkeeping question from my side. In the opening remarks, you had guided for a CapEx of about INR 600 crore in FY 2024, out of which roughly INR 280 crore will be on the commercial project in Powai, which is tower two. Can you just highlight what will be the total CapEx for this project and the operational timeline, an indicative operational timeline if you can share? That is the last question from my side. I'll cover the operational timelines. We've actually just had some updates on that. We expect to start work on site in the middle of this calendar year, and we're expecting to complete this project in roughly around 33 months. Milind, total project cost. Total CapEx for commercial office buildings will be around INR 280 crores, which includes Powai, Bengaluru, both phases, I mean, commercial tower as well as repurposed mall. We'll be spending INR 40 crore on Powai commercial tower, new commercial tower at Powai. We'll be spending. Just one minute. He wants to know the total project cost for the new second commercial tower in Powai. Second commercial tower, including interest and approval costs, will be in the range of INR 700 crores. Sure, sir. Thank you so much. Yeah. That's over three years. That's over three years. Yes, yes. Got it. Thank you. Thank you. We have our next question from the line of Sakshi Chhabra from Swan Investments. Please go ahead. Hello, sir. Congratulations on a great set of numbers. My first question was, I wanted to understand that, what would be the trajectory for the average room rates for the coming year? Sakshi, I think the average room rates have been doing extremely well. If you look at the history of the average room rates on a month-by-month basis, we have a fair amount of traction building up. If I was to break it up on a your quarter four numbers, January we hit INR 10,462. February we hit INR 12,239. In March we were at INR 11,160. Average for the quarter was INR 11,304. As we said earlier, quarter one and quarter two, we do traditionally see dips and expect some dip on this going forward for the first two quarters of the year. The growth in quarter three and quarter four will be higher than what we did in quarter three and quarter four of FY 2023. Okay. like, can you give, I mean, approximately can the price increase made by around 10%? Price increase has already come in in the January to March numbers, Sakshi. Right. The next increase will happen in January next year. Okay. Understood. I do not want to give any forward-looking average room rates right now. Okay. Also I wanted to understand that, in Bangalore and in Powai, what would be the commercial rates that we could expect? Bengaluru we are targeting about INR 60-INR 62 a sq ft. Okay. Powai around the 120-125 mark. This is on leasable area, the efficiency of the leasable area is what, 70%? Okay. The carpet will be- We have leasable area of around 1 million in Bangalore and 0.8 million in Powai. Okay. Understood. The 88 rooms in Pune, I understand that you are awaiting for the OC. By when do you think that those rooms can be operational? Within this month. Okay. All right. Thank you. We have our next question from the line of Hrishikesh Bhagat from Kotak Mutual Fund. Please go ahead. Hi. Thank you for the opportunity. A few questions. Firstly, when I look at the foreign tourist, clearly that still is at 37%, fairly below our usual trend. Now, clearly one thing I want to understand whether, when do you expect normalization of the same? Secondly, is it 37% have you seen across the most of the markets? Or probably some markets have already reached to the normalization level and some are lagging significantly? Some insight on that front. Yeah. I don't have the exact breakup, but Powai typically or Westin Powai typically has a lower foreigners to Indian ratio. Indians are higher because of the nature of the banquet events that we have there, conventions, et cetera, which are largely domestic. Hyderabad, Bengaluru typically have higher percentages of foreigners in our hotels. I think that's picking up very rapidly. In In fact, the reason Bengaluru took longer than most of the markets to pick up was because the foreign business travel took time to come back. Now we see that Marriott's Whitefield is doing extremely well, and that's being driven by foreign travelers coming back. There is a bit of variation across properties, and I think it's not even It is not city-specific, it's more hotel-specific. clearly with 772 rooms in Westin Powai, which is a significant part of the inventory, if that is lower, that tends to bring the average down. Marriott Whitefield will continue to have, more, majority of the book, guests as foreigners over there. Okay. Okay. I think it will be great if you continue to publish this information in your investor deck. It really helpful. Hrishikesh, just one more input I want to give you that what's happened is, since the pre-pandemic time, we've also acquired the Novotel Pune. Now, the Novotel Pune has primarily domestic guests. The ratio, if we look at it, we'll have to then look at it from the like-to-like or apple-to-apple hotel set. Right. looking at a combined portfolio. Okay. Okay. Yeah. Okay, thanks. The second question is, you spoke about additions of rooms to Dukes also. Can this addition happen by continuing the operation, or do you think we'll have to shut down the operation when this addition happens? Hrishikesh, we are also planning to reposition the hotel, or the resort through major renovations. The way we've planned it is that we'll take 60% of inventory out. At that time we'll renovate this inventory of 60% in some F&B areas and use that same time to add the rooms, additional rooms. If we take 60% out, which means 48 rooms will be out of action, but when they come back, they'll come back as 48 + 40, 48. That's 96 rooms, which is significantly higher, 20% higher than what we have current inventory. That's when the balance 32 rooms will go into renovation. Okay. The last question on the INR 600 crore CapEx guidance. Does it capture your any CapEx or likely CapEx on Airoli as well as Delhi, or do you think that could be further upside on the CapEx as and when that comes in? Yeah. Hrishikesh, I mean, our INR 600 CapEx also includes Airoli, Dukes renovation as well as some capital expenditure on New Delhi hotel. Okay. Thank you. Thank you. Thank you. Ladies and gentlemen, in order to ensure management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow-up questions. We'll take our next question from the line of Rajiv B from DAM Capital. Please go ahead. Yeah. Good afternoon, sir, and thanks for the opportunity, and congratulations on great set of numbers. Sir, on your CapEx bit, if I remember it right, your CapEx for FY 2023 was planned to be close to INR 500 odd crores, right? You have done something like INR 587 odd crores. Have we, have we shot higher on some of these or, you know, this Powai tower two is basically has got some CapEx in FY 2023 done as well. No. We haven't. We all our CapEx or projects are in within their defined cost budgets. I'll let Milind give you the breakup of the increase, if any, is what. The difference what? INR 50-INR 60 crores? That could be on account of acquisition Dukes. Yes. You wanna explain that? Total CapEx of INR 600 crore for financial year 2023 includes INR 160 crore for Dukes acquisition cost. Sure. The balance was for projects. If you look at slide, 20 in your presentation, you will actually find the sum of the parts and the debt over there, where you'll find that the CapEx, that we put in for Dukes is INR 158-INR 159 crores, and then there's INR 440 crores towards, other growth projects. That sort of, will, give you the breakup. Rajiv, I mean, the difference of our guidance of 500 and actual INR 440 crores spent, and something is lying as creditors, which will be paid in next few days. Sure. Also on the DIAL thing, have we finalized the flag there in the sense whether it'll be domestic or an international? We should have that in place in the next few days. Sure. In one of your slides, the timeline of Powai second tower is FY 2026 it shows. Yeah. You said, you know, the CapEx is three years. Initially I was, it will be three years because FY 2024 is also getting consumed, right? It's 2024, 2025 and 2026. 33 months is the total project time. We might start around October of this year, looks like we'll be able to start around two or three months earlier. We are, we believe that in 33 to 36 months time we'll complete this project. End of FY 2026 is when we see this completion. Thanks a lot. That's what I'm gonna say. Thank you. We have our next question from the line of Siddesh, an individual investor. Please go ahead. Hi. Congratulations on the revenue. I would like to inquire about the breakdown of our capital expenditure by project and property for the current year. Also request information on the anticipated timeline for when we can expect to see the effects of this expenditure reflected in the EBITDA levels. I'll let Milind first give you the break of the CapEx expenditure, and he'll give you completion dates also, so that you can get a sense of that. Siddesh, INR 240 crore we'll spend on Powai commercial and Bangalore commercial, and both are expected to be operational in first or second quarter of FY 2023. 2024. Sorry, FY 2024. INR 200 crore we'll spend for hotels, which includes DIAL, Dukes Airoli and some spillover CapEx for our Westin Hotel and Novotel Hotel. We will undertake some renovation at our existing properties and we'll spend around INR 65 crore on that. All put together our CapEx plan is for INR 600 crore for the year. Milind that's for this year. He wants to know what's the project-wise CapEx plan. Okay. See, our total CapEx plan for next five years is around INR 2,000 crore. Out of INR 2,000, INR 1,000 crore is for commercial office buildings, which includes new commercial tower at Powai. INR 750 crore for hotels, which includes DIAL, Dukes Airoli, an addition of 140 keys in Bengaluru. We'll spend around INR 125 crore on renovation of existing properties. Okay. While doing renovation at The Dukes Retreat, are we expecting any effects on the existing room capacity? Sorry, I missed that. Could you repeat your question please? While doing renovations at the Dukes property, while expanding the capacity at Dukes, are we expecting any restrictions on the current room capacity available over there? As I explained earlier, we will take 60% of the inventory out in phase one and operate 40% of the inventory. When that 60% comes back, which is 48 rooms, it'll also come back with the expected 48-50 additional rooms that we're planning there. It'll come back as 96-98 rooms, which will be 20% higher than the total capacity right now. Subsequent to that, the 32 rooms will get renovated. We're going to do this in two phases, Siddesh. This is still being worked out. We're on the drawing board stage. Let us come back to you with a far more firmer plan by the end of this quarter. Perfect. Thank you. Thank you. Thank you. We have our next question from the line of Vikas Ahuja from Antique Stock Broking. Please go ahead. Hi. Thanks for taking my question again. just one bookkeeping question. This is for Milind. Milind, this 1.8 million sq ft commercial we are planning to add in FY 2024 and FY 2025 another. What is the occupancy assumptions we could work with? Because you talked about in Q1, Q2, you know, the Powai and Whitefield, Bengaluru will come. For the whole year, what kind of occupancy assumption should we work with? Vikas, in our financial modeling, and group has more than INR 33 million commercial office space. we. He's asking more about the buildup, how this is occupancy gonna build up there. Okay. Bengaluru we expect in next six months, Bengaluru commercial tower, next six months we'll lease out around 85%. by March, I mean, we should have revenue kicking in. Bengaluru repurposed mall should start from next six months, more than 75% of that will be leased out in next six months. Powai build up will be 25% in March 2024. 25% I mean this is revenue earning. After fit out period, 25% You should give the leasing timelines, not the revenue timelines here. You anyway straight line your accounting, right? Leasing timelines by September 2023, we should lease out more than 25% in Powai. By December additional 25% and balance 47% by March also. Okay. Thank you. One lastly, I mean, do we have any land parcel left to add any more commercial or we have exhausted all with, you know, adding 3 million sq ft by end of FY 2026? Largely it will take care of all the land parcel we have. Am I correct on that? Yeah. Before we go to the end of this question with you, I just want to clarify on page seven, whilst Milind was reading out the timelines, I realized there's a typo. That 0.8 million sq ft of Cignus, Powai Tower two, says FY 2025. That's an error. That'll actually get completed as you said- FY 2020. In three years from starting of middle of this year. Please factor that in. So- Please go ahead with your new question, please. The next one was regarding the land parcel for adding any other commercial. We have exhausted all, right? So- Any more? Vikas, as you know, this commercial assets that we are developing are all on existing land parcels where our hotels exist. The whole idea was to sweat the real estate of that particular hotel land parcel, and build complementary assets that complement the hotel in terms of demand expansion. That's worked very favorably wherever we have looked at it. We expect this to contribute significantly as these offices get operationalized. Coming to your question whether we have any more land parcels. Look, as things stand right now with the FSI that is available in hand, once we complete the second tower in Powai, we are likely to sort of exhaust all FSI that would potentially be available. I've also shared in the past that we don't have any desire to acquire a land parcel to build a standalone office asset. I must, however, add that in Koramangala, which has residential towers, we were able to carve out one extra land parcel where we're building an office tower. Not very large, INR 1.5 lakhs sq ft only, which is the own asset that we will build and sell at an strata basis. Beyond that, nothing else as we stand right now. Sure, sure, sir. Thanks, and best of luck for Q1. Thank you. Thank you. Thank you. We have our next question from the line of Paresh Shah from Prernatirth Investments. Please go ahead. Sir, I have one question about the debt which is required for CapEx. Are you planning to do any QIPs to reduce either the debt or for the CapEx plan you envisage? I'll let Milind. Are you planning to bring in equity to reduce the risk element going forward? I have been hearing a lot of, you know, concerns or rather, little bit of anxiety for debt related to our company. Paresh, thank you for the question. I'll let Milind come in with the exact numbers, but let me give you an overview. Our debt is gonna go down very rapidly in the next two years, because of the operationalized assets that we have, the LRD effect, and the fact that a lot of the projects are coming to culmination as we speak now. Having said that, right now there is no plan to raise any fresh equity in the company because we really don't need it. You've got to remember, equity is far more expensive than debt for any company. From that perspective, we'd like to optimize the balance sheet for most optimal returns, and we'd like to leverage to an extent that is most efficient. That's our thesis, and we continue to stick to that. So Paresh- Okay. We have debt of around INR 2,400 crore today. We expect it will peak out to INR 2,650, and then it will start reducing. We have Koramangala residential project, which we'll starts open it for sales, and this is expected to generate cash of INR 600 crore in next three years, which will be used to fund our CapEx in the future years. We believe internal accruals, which we are expected to generate in next three, four years, will take care of our CapEx. From this reply, one more question which comes to my mind is the commercial leasing part, what we have, are you exploring to, you know, get a good value for the shareholders in terms of putting it in REIT kind of an instrument? Paresh, I think as an opportunity, it exists. At this point of time, we see no need to do that. These are going to be high-yielding assets for Chalet Hotels. Absolutely. There's no reason to pass, you know, transfer them to a REIT, when we are getting very good returns from them. Right now, no such plans. At any point of time, suppose there's an opportunity for a large platform acquisition in hospitality space, this remains as a available currency for us to monetize at the given time. Okay. do you think that you are looking for a proper, kind of a lease rental, then it kicks in? As of now, you have not, thought on this? No, no, we are expecting a significant amount of EBITDA contribution to come from these assets. As we shared earlier, I mean, you've got to remember that out of the total 3 million sq ft, 2 million sq ft lies in the high rent-yielding city of Mumbai, and 1 million in Bangalore in Whitefield. If you really do the math on it, you will realize that the returns are extremely healthy on the investment over here. There's no reason for us to look at them adversely from any angle. No, I'm thinking from the value creation for the shareholder. Many times when it is captured in a company in consolidation, the value doesn't get discovered for this kind of instrument. That was my only concern. No, no. EBITDA flow through is gonna create shareholder value for sure. It's significantly better flow through. If you just do the math at the numbers that we've shared with you. You must remember, why did we do this? There's a genesis to this. The genesis to this is that, number one, we wanted to de-risk the cyclical facility of the hospitality industry. Rental and annuity business tends to de-risk that. In fact, during the COVID period, the fact that we were able to report EBITDA positive results in our company for every quarter during that year, it was on the back of rental yields that we were getting from assets on the annuity business. I think this is a good hedge to any risk that we may have in hospitality. People diversify in various forms. This is our form of diversification. Not only are we diversifying and hedging the risk, we're also creating significant value for shareholders in form of EBITDA earnings. Okay, sir. Thank you, sir, for your reply, and wishing you very best. We are really happy with the strategies what you have put in play for the shareholders. Thank you, sir. Thank you so much. Thank you. Ladies and gentlemen, kindly restrict your questions to two at a time. We have a question from the line of Sumant Kumar from Motilal Oswal. Please go ahead. Yeah. Hi sir. Can you talk about G20 benefit to Chalet Hotels in past couple of quarters? Hi, Suman. look, I think every hotel company has the benefit of G20 business. It comes in two forms. One, direct bookings that come to your hotel, and the second form is where other hotels get sold out, creating compression in the market, which leads to your hotels enjoying the benefit of other bookings being diverted to you, and typically at a much higher rate. We've had the benefit on both counts, at all cities, whether it's Hyderabad, Bengaluru, Pune, or Mumbai. Any quantification or some, the occupancy rate or any market dynamic change in, say, Mumbai and? I can go around quantifying it, you know, it won't serve the purpose because even if my competitor takes the G20 business, this spillover effect to me is very positive. How do you quantify that? Therefore, I would rather not quantify. All I can say is it has helped all cities. I want to highlight one thing here. G20 is not about just this year. You know, having these few events across the country over the year is the smaller benefit of G20. I think the bigger benefit of G20 is the mileage that India is getting from the investor community and the global community to see India in a different light, in a more positive way, which is gonna be beneficial to us in long term. Can you talk about, is there any decline or some slowdown in foreign customer mix for, in Q4? Not at all. In fact, it's gone up. Okay. Okay. Thank you. Thank you. We have our next question from the line of Nihal Jham from Nuvama. Please go ahead. Yes. Thank you so much, and congratulations on this performance. My first question was on the foreign mix that you've given also. The number, as you said, is 37% for Q4, but this includes the impact of maybe no hotel getting commission, which is mainly a domestic-driven, hotel. Would it be possible to give a ballpark sense of how this number is if we do it on a like-to-like basis versus pre-COVID? I'm afraid I don't have that number, it is lower. As we said, the foreign airline traffic or passenger load is only 90% recovery to pre-pandemic times, there will be a reduction. Look, at the end of the day, we are not looking at whether it's foreign or Indian. Our preference is for anyone who gives us a premium on our room rates. If today the domestic market is giving us a premium to the room rates, we would go in favor of them. It's not as if it is 37% only because that was the only business available in the market. It could also be that you displaced some of the foreign business, which with the higher yielding domestic business, that's what led to our growth. I can give you a clear example on that. The airline crew that we used to have earlier were significantly higher than what we have now. These two typically come at a lower rate. Yeah. They were in large volumes, large numbers. From that perspective, I think we've been able to optimize our average room rate and thereby the RevPARs. A quick number that we were looking for earlier, Bangalore is actually back to 66% of its guests being foreigners in the month of March 2023, and Hyderabad is at 50%. was this the number pre-COVID also, 66 and 50 for Bangalore and Hyderabad as well? At the 66%, Hyderabad was marginally higher. Got it. I think it was at 55 or so. Just one clarification here was that even the earlier participant asked that the number moved from 41 to 37 from Q3 to Q4. Ideally, the January to March period, if you look at the India FTA calendar, sees more foreign arrivals. Not sure how it works out for you, but is there anything worth noting there that the 41 moving to 37 in terms of the mix of customers? I think what has happened is the occupancy has gone up in general, therefore you're seeing that ratio is skewed. If you look at the occupancy has gone up about what, 700 basis points? 700 or 900 basis points? INR 900. 900 basis points is the occupancy improvement. That could have led to this change. I don't think the absolute number has gone down. It's actually probably stayed slightly above only. Point taken, Sanjay. One final question only. By, my colleague that the absolute number is 62,000 room nights for both quarters, which is exactly the same. Okay, that's helpful. Just one final question, Sanjay, was that on the cost base, how do you see FY 2024? Is this a normalized cost base only because if we are in a strong cycle, is there a case for higher than expected inflation in a lot of line items or just your sense of the same? I don't see any reason why the costs will go up from where they are today. I think we must highlight here that in the last quarter, our variable costs as a percentage to revenue were 3% lower than Q3. If anything, I think inflation is cooling off a bit. And similarly, fixed costs were also 300 bits lower than Q3. In both fronts, cost percentage to revenue seems to be more efficient in Q4 than it was in Q3. We don't have any significant insight into any further inflationary pressure on us. Nihal, to add further, I mean, our two major cost saves, payroll, we were at 12% against, as a percentage to revenue against 15% pre-pandemic, and HLP heat light power, it was at 5.4% against 7% pre-pandemic. These major costs, we are bringing it down. These are two largest costs that we have operating costs that we have in the business. Understood. That was it from my side. Wish you all the best, Sanjay. Thank you so much. Thank you. Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Sanjay Sethi for closing comments. Over to you, sir. k you everyone for joining us for the call. I want to sort of reassure you that we are extremely excited about Chalet Hotels, especially by the fact that we've got a significant amount of CapEx work in progress, which is now coming to fruition, which will now contribute to our operating numbers. In addition to that, we've got some more projects that are coming online, which will again add, you know, create value for our shareholders. And we are excited for that for everyone around, all around. We wish you all the best. Happy times to everyone. On behalf of Chalet Hotels, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.