New Delhi: Seeking support of shareholders of Indian Hotels Co Ltd (IHCL), ousted Tata Group Chairman Cyrus Mistry has said several steps taken to turnaround the hospitality chain will bear fruit only in future.
Without specifying a time-line, Mistry, who will face a vote of IHCL shareholders in an EGM on December 20 following a special resolution moved by Tata Sons to remove him as director, said the company was facing many challenges in 2012 with expensive oversees acquisitions, including Pierre, were bleeding and the Sea Rock project had capital blocked and losing value.
"As capital was stuck in cash guzzling assets, there had been almost no investment to support the domestic market — which was at a critical juncture, being flooded with MNC competition with very aggressive expansion plans," he wrote.
In addition, there was litigation risk on several flagship assets including the Taj Mansingh in Delhi, Mistry added.
Explaining steps taken by the company's management under his stewardship, Mistry said the strategic priorities involved setting the leadership and strategy right.
"... this involved bringing a leader having strong domain experience having served with a global hotel chain for 35 years. It also involved redefining and re-energising the apex leadership team of the company," he said.
It also involved developing a long-term pragmatic view of assets that continued to generate negative returns with no turnaround in the sight.
Notable was the sale of Taj Boston for $125 million while retaining a management contract to ensure brand presence. The company also divested Blue (Sidney) for AUD 32 million and shareholding in Orient Express for approximately $50 million, Mistry said.
"The divestment proceeds were used to retire debt and infuse liquidity in the company. This money would help in renovation and upgradation of flagship properties in India," he added.
The management also recently launched 'Tajness' a brand philosophy touching all aspects of business. At a consolidated level for IHCL, these efforts resulted in — strengthening of the balance sheet, reducing risks of further losses and future impairments, strengthened operations and quality of assets, improving profitability and dividend paying capacity, creating assets and options for building some of the best hotels in future, he wrote.
"I therefore urge all you to think beyond the here and now. I urge you to have your voice heard loud and clear. I ask you to be a part of defining the future," Mistry said.