Kathmandu. Orchid Holdings Limited, the main promoter of which is Asian Life Insurance, has seen a significant increase of 32 percent in its turnover, but is still in loss. According to rating agency Care Ratings Nepal, despite an increase in turnover in the last fiscal year, the company incurred a loss of Rs 131 million due to an increase in interest expenses.
Orchid Holdings is operating a four-star hotel in Ravi Bhawan. It has been two years since Asian Life purchased the share ownership of this hotel.
The holdings earned an income of Rs 161 million from the four-star Crown Imperial Hotel in Ravi Bhawan in the last fiscal year 2080.81. In the previous fiscal year 2079.80, its income was Rs. 122 million.
Most of the hotel’s income is derived from meetings, exhibitions, and social events. The hotel’s room occupancy rate is lower than other hotels of the same level. According to ratings, its occupancy rate is only 37.04 percent. That is, out of the total 131 rooms rented by the hotel during the year, on average, only 37 rooms were occupied by tourists, the rest were empty. In the previous fiscal year 2079.80, it was even 21.36%.
Although this hotel was launched targeting Indian tourists who come to Soaltee Hotel to gamble but are looking for comparatively cheap accommodation facilities, it has not been able to attract Indians as expected. Nor has this hotel been able to be marketed as a ‘wedding destination’ among middle or lower middle class Indians. is.
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According to the rating agency, despite an increase in operating income, profit before tax and depreciation has fallen to Rs 11 million. In addition, the profit margin is also limited to 7.12 percent in this situation. The company’s net loss has increased due to high interest expenses. Profit after tax was negative Rs. 218 million in the previous fiscal year, but was negative Rs. 131 million in the last fiscal year. That is, there is a loss of Rs. 131 million.
Although the company’s debt and interest burden were small in the early years, the debt burden has doubled in recent times. This has also increased interest expenses dramatically. In the last fiscal year, interest expenses alone reached Rs. 186 million. This amount is more than its annual income.
According to Care Ratings Nepal, Orchid Holdings has increased its debt limit to Rs. 1.459 billion from the previous long-term loan of Rs. 1.32 billion for hotel operation and construction. CARE Ratings has reaffirmed its long-term debt rating of CARE-NP B+.
Asian Life Insurance is the largest investor in Orchid Holdings, owning 43.19 percent of the shares.
