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Apeejay Surrendra Park Hotels Ltd

Apeejay Surrendra Park Hotels Ltd IPO

Status:

Overview

IPO date
05 Feb 2024 to 07 Feb 2024
Face value
₹ 1 per share
Price
₹ 147 to ₹155 per share
Issue Size
59,354,839 shares
(aggregating up to ₹ 920 Cr)
Allotment Date
08 Feb 2024
Listing at
NSE
Issue type
Book Building
Sector

Objectives of Apeejay Surrendra Park Hotels Ltd IPO

Initial public offering of 59,385,351* equity shares of face value of Re. 1 each ("Equity Shares") of Apeejay Surrendra Park Hotels Limited (The "Company" or the "Issuer") for cash at a price of Rs. 155^^ per equity share (including a share premium of Rs. 154 per equity share) aggregating to Rs. 920.00 crores (the "Offer"), comprising a fresh issue of 38,740,191* equity shares aggregating to Rs. 600.00 crores by the company (the "Fresh Issue") and an offer for sale of 20,645,160* equity shares aggregating to Rs. 320.00 crores, comprising 19,096,774* equity shares aggregating to Rs. 296.00 crores by Apeejay Private Limited (the "Promoter Group Selling Shareholder"), 1,483,870* equity shares aggregating to Rs. 23.00 crores by Recp IV Park Hotel Investors Ltd and 64,516* equity shares aggregating to Rs. 1.00 crores by Recp IV Park Hotel Co-Investors Ltd (together referred to as the "Investor Selling Shareholders" and together with the promoter group selling shareholder, referred to as the "Selling Shareholders" and such equity shares offered by the selling shareholders, the "Offered Shares") ("Offer for Sale"). The offer included a reservation of 675,675* equity shares, aggregating to Rs. 10.00 crores (constituting 0.32%* of the post offer paid-up equity share capital of the company for subscription by eligible employees (the "Employee Reservation Portion"). The offer less the employee reservation portion is hereinafter referred to as the "Net Offer". The offer and the net offer constitute 27.83%* and 27.51%*, respectively, of the post-offer paid-up equity share capital of the company. The company, in consultation with book running lead managers ("brlms"), offered a discount of 4.52% (equivalent to Rs. 7 per equity share) of the offer price to ligible employees bidding in the employee reservation portion ("Employee Discount"). The face value of the equity share is Re. 1. The offer price is 155 times the face value of the equity shares.

Apeejay Surrendra Park Hotels Ltd IPO Strategy

  • Continued focus on the development of existing land banks and strategic allocation of capital.
  • Optimise capital efficiency through the adoption of its asset light model with an optimal portfolio of owned, leased and managed hotels and to further strengthen, develop and expand its existing brands.
  • Improving operational efficiency to achieve superior performance.
  • Further develop and strengthen the `Flurys' brand in the retail food and beverage business through expansion plans.

About Apeejay Surrendra Park Hotels Ltd

Apeejay Surrendra Park Hotels Limited was formerly incorporated on November 27, 1987, as Budget Hotels Limited, issued by the Registrar of Companies, Bangalore at Karnataka. Subsequently, pursuant to an Acquisition Agreement dated May 5, 1999 entered into between Apeejay Hotels Delhi and the Erstwhile Shareholders of the Company, entire Issued and Paid Up Equity Share Capital of the Company, of the Company constituting 571,940 Equity Shares of Face Value of Rs. 100 each was acquired by Apeejay Hotels Delhi and Company became wholly owned subsidiary of Apeejay Hotels Delhi. Subsequently, Apeejay Hotels Delhi, and Gemini Hotels and Holdings Limited (a wholly owned subsidiary of Apeejay Hotels Delhi) amalgamated with Company, on April 1, 2001. And thereafter, name of the Company got changed from Budget Hotels Limited to Apeejay Surrendra Park Hotels Limited, on March 29, 2004 vide Certificate of Incorporation issued by the RoC. The Company is a part of the Apeejay Surrendra Group which is a leading Indian conglomerate. The Group's business is spread across industries such as hospitality, shipping, tea, real estate, retail brands such as Oxford bookstores, and education. The Company own and manage hotels, with its first hotel launched under brand 'THE PARK' at the iconic Park Street in Kolkata. It operate hotels under 3 brands, 'THE PARK, 'THE PARK Collection' and 'Zone by The Park'. At present, it operate 38 outlets in Kolkata, and 1 outlet each in Navi Mumbai and New Delhi. The Company has a pan-India presence in metros such as Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, Delhi - NCR as well as in other major cities such as Coimbatore, Goa, Jaipur, Jodhpur, Jammu, Navi Mumbai, Raipur and Visakhapatnam. It operate a retail food and beverage business segment under the brand Flurys', which possesses a distinctive track record since it was first established as a tea room and confectionery shop in Kolkata. Pursuant to the Scheme of Amalgamation of Apeejay Hotels Delhi (the then Holding Company) and Gemini Hotels (a wholly-owned Subsidiary of Apeejay Hotels Delhi) with Company, the entire shareholding of Company held by Apeejay Hotels Delhi was cancelled from the effective date of the Scheme , November 28, 2003. Pursuant to the Scheme of Amalgamation sanctioned by the High Court of Bombay, High Court of Andhra Pradesh and High Court of Karnataka, Skylight Hotels Private Limited, Skylight Properties Private limited, Rooshna Hotel Private Limited, Rooshna Estates Private Limited, Oak Park Hotels Private Limited, Orchard Park Hotels Private Limited, Chelsea Hotels Private Limited, Lake Park Hotels Private Limited, Innsignia Hotels Private Limited, Lake Plaza Hotel Private Limited, Vizag Sea Park Hotel Private Limited, and New Bombay Park Hotel Private Limited, which were wholly owned subsidiaries of Company, got amalgamated with the Company, and as a result, the Scheme became operational from April 1, 2008, as a going concern, and was made effective on June 4, 2010. In 2019, pursuant to the Business Transfer Agreement executed between Flury's Swiss Confectionery and the Company, the Confectionery Business of Flury's Swiss Confectionery was demerged/ transferred to the Company on a going concern basis, which became effective from October 1, 2019. In 2021-22, the Company opened a restaurant in the name of 'Someplace Else' at Mumbai. In February 2024, the Company came up with a Public Issue by allotting 59,385,351 Equity Shares by raising funds from public aggregating to Rs 920 Cr, comprising a Fresh Issue of 38,740,191 Equity Shares aggregating Rs 600 Cr and an Offer for Sale of 20,645,160 Equity Shares aggregating Rs 320 Crore.

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Strengths vs Risks of Apeejay Surrendra Park Hotels Ltd

Know the pros & cons

Strengths

  • arrowThe Company has built successful hospitality brands through product innovation and service excellence to attract customer through a diversified and holistic offering.
  • arrowA diversified Pan India portfolio of owned, leased and managed hotels that are strategically located across metros and emerging cities.
  • arrowHigh occupancy rate and REVPAR with a strong financial and operational track record.
  • arrowHigh F&B and Entertainment contributions which adds to stable and non-cyclical earnings while complementing the hotel business.
  • arrow"Flurys" is an iconic brand with a successful and profitable track record of industry leading EBITDA margins.
  • arrowDedicated and experienced leadership team with high standards of corporate governance.

Risks

  • arrowThe company is exposed to risks associated with the delay in development of its hotel properties and land banks. Any delay in the construction of new hotel buildings or expansion of its existing properties may have an adverse effect on the company's business, results of operations, financial condition, and cash flows.
  • arrowThe company is exposed to risks associated with the construction and development of serviced apartments at EM Bypass, which is a one-off project of the Company and of which the Company has no prior experience.
  • arrowThe company wes not in compliance with certain covenants under certain of its financing agreements in the past and had delays in repayment of certain long-term rupee loans and working capital loans. In case of any breach of covenants or delay in repayment of facilities in the future, such non-compliance, if not waived, could adversely affect its business, results of operations, cash flows, and financial condition.
  • arrowThere are certain instances of delays in payment of statutory dues or non-payment of statutory dues on account of certain disputes. Any delay in payment of such statutory dues or non-payment of statutory dues in dispute may attract financial penalties from the respective government authorities and in turn may have an adverse impact on its financial condition and cash flows.
  • arrowMajority portion of its hotel bookings (approximately 49% of the company total room bookings contributing about 49% of its total room revenue for Fiscal 2023) originate from online travel agents and intermediaries. In the event such online travel agents and intermediaries continue to gain market share compared to its direct booking channels, they may be able to negotiate higher commissions for services provided, or demand significant concessions or reduced room rates causing an adverse effect on its margins, business, and results of operations.
  • arrowThe company has had restated losses in the past. Any losses in the future could adversely affect its financial condition, results of operations and cash flows.
  • arrowIts Statutory Auditors have included an emphasis of matter and other matters in their audit reports and other audit qualifications in the annexure to the auditors' reports issued under the Companies (Auditor's Report) Order, 2016 for Fiscal 2021, and the Companies (Auditor's Report) Order, 2020 for Fiscals 2022, and 2023.
  • arrowThe company derives a significant portion of its room revenue from corporate accounts and from leisure customers, contributing approximately 80% of the total room revenue comprising approximately 40% each from corporate accounts and leisure customers in Fiscal 2023. Changes in travellers' preferences due to increased use of telepresence equipment, cost of travel, spending habits, and other factors may adversely affect the demand for hotel rooms leading to adverse effect on its business, results of operations, financial condition, and cash flows.
  • arrowCredit rating downgrades may increase its cost of capital and future fund raising may cause a dilution in your shareholding or place restrictions on its operations.
  • arrowThe company has incurred indebtedness which requires significant cash flows to service, and this, together with the conditions and restrictions imposed by its financing arrangements, fluctuations in the interest rates may limit its ability to operate freely and grow its business.
  • arrowThe Company, its Subsidiaries, its Directors, and its Promoters are involved in certain legal proceedings. An adverse outcome in any of these proceedings may adversely affect its profitability, reputation, business, results of operations, financial condition and cash flows.
  • arrowIts funding requirements and proposed deployment of the Net Proceeds towards repayment and/ or prepayment of all or certain portion of outstanding borrowing are based on management estimates and have not been independently appraised by any bank or financial institution. Variations in the utilization of the Net Proceeds would be subject to certain compliance requirements, and its inability to comply with such requirements may cause an adverse impact on its business and operations.
  • arrowIts Statutory Auditors have included paragraph on material uncertainty on going concern in their audit reports and other audit qualifications in the annexure to the auditors' reports issued under the Companies (Auditor's Report) Order, 2016 for Fiscal 2021.
  • arrowCertain of its hotels are mortgaged with lenders, out of which the title deeds of certain immovable properties are not held in the name of the Company. Failure to comply with the terms of the mortgage agreements or inability to enforce its rights effectively in the event of any dispute or adverse action in relation to properties where the title deeds are not in the Company's name may result in adverse impact on its business, results of operations, financial condition and cash flows.
  • arrowA large portion of its revenue (approximately 75% of the Total Income in Fiscal 2023) is realised from its top five owned hotels with THE PARK Kolkata contributing 21.75% to the Total Income in Fiscal 2023. Any adverse development affecting these hotels or the regions in which they operate, may adversely affect its business, results of operations, cash flows and financial condition.
  • arrowCertain of its hotels are located in buildings and lands which have been leased to it by third parties. If the company is unable to comply with the terms of the lease agreements, renew its agreements or enter into new agreements, the company's business, results of operations, financial condition and cash flows may be adversely affected.
  • arrowLiquidity ratios of the Company for six months ended September 30, 2023, September 30, 2022 and Fiscals 2023, 2022, and 2021 have been less than 1, which may have an adverse impact on its ability to meet short term financial obligations of the company's business and operations.
  • arrowThe company has experienced negative cash flows from investing and financing activities in the past. Any negative cash flows in the future could adversely affect its results of our operations and financial condition.
  • arrowDelays in the constructions of Serviced Apartments by Developer or inability of Developer to construct the residential project as per required specifications in a timely manner may have an adverse effect on its business, results of operations, financial condition, and cash flows.
  • arrowIts Promoters, certain of its Directors, Key Managerial Personnel and Senior Management have interests in the Company other than reimbursement of expenses incurred and normal remuneration or benefits.
  • arrowThe company is subject to extensive government regulation with respect to safety, health, environmental, real estate, excise, property tax and labour laws. A non-compliance with, or changes in, regulations applicable to it may adversely affect its business, results of operations, financial condition and cash flows.
  • arrowCertain of its Promoters and the company's Directors are engaged in business activities which are similar to those undertaken by the Company and Subsidiaries, or have interests in other companies, which are in businesses similar to its, which may result in conflicts of interest. Further, the company has not entered into any non-compete arrangements with its Promoters.
  • arrowIts Non- Executive Director and Promoter, Karan Paul has entered into an arrangement with the Company for providing certain consultancy services, and may be deemed to be interested in the Company to such extent which may be over and above his interest in the Company as a Promoter and Non-Executive Director.
  • arrowMajority of its Flurys outlets (approximately 88% of the total outlets) are located in Kolkata and rest of West Bengal. Any adverse development affecting these outlets or the regions in which they operate, may adversely affect its business, results of operations, cash flows and financial condition.
  • arrowMajority of the loans that the company proposes to repay from Net Proceeds (amounting to Rs. 3,674.19 million and constituting 61.67% of the total outstanding borrowings of the Company as on September 30, 2023) have been obtained from the ICICI Bank Limited, which is an affiliate of one of the Lead Managers to the Offer.
  • arrowIts business is subject to seasonal variations that could result in fluctuations in its results of operations and cash flows.
  • arrowIts operations and management agreements contain certain restrictive provisions, which may hinder the company's ability to operates such managed hotels and may cause an adverse effect on its business and operations. Further, certain operations and management agreements were terminated in the past, pursuant to commercial disputes between the parties, and such terminations result in loss of management fees to the Company.
  • arrowThe COVID-19 pandemic or any future pandemic or widespread public health emergency, could affect its business, financial condition, cash flows and results of operations.
  • arrowThe company has availed or may avail certain loans that are recallable by lenders, at any time, which may have an adverse impact on its cash flows, business and financial condition.
  • arrowThe Developer or Company may not be able to obtain or renew necessary approvals and consents required to commence or complete construction and development of the Serviced Apartments, resulting in an adverse effect on its business, results of operations, financial condition, and cash flows.
  • arrowThe average price/earnings ("P/E") ratio of the listed industry peer set was 73.60 in Fiscal 2023 while its P/E ratio will be at premium of [.] times at the higher price band and [.] times at the lower price band. The trading price of its Equity Shares may fluctuate based on a comparison of the P/E ratio of the listed industry peer set and the Company.
  • arrowThe company is exposed to a variety of risks associated with safety, security, and crisis management including risks associated with natural or man-made threats and accidents, which causes adverse impact on its business and operations.
  • arrowThe success of its business is dependent on its ability to anticipate and respond to customer requirements. Its business may be affected if the company is unable to identify and understand contemporary and evolving customer preferences or if its unable to deliver quality service as compared to its competitors.
  • arrowIf the company pursues a strategy of expansion through acquisition of new hotels, its may be exposed to increased risks from future acquisitions, which its may not be able to successfully consummate or such acquisitions may not yield intended results leading to an adverse effect its business prospects, results of operations, financial condition, and cash flows.
  • arrowThe company has certain contingent liabilities in its financial statements, which, if they materialize, may adversely affect its financial condition.
  • arrowIts inability to provide required quality of service including service provided by third parties may lead to adverse impact on the reputation of its hotels or a failure of quality control systems at the company hotels could result in an adverse legal action against the Company leading to an adverse effect on its business, results of operations, financial condition and cash flows.
  • arrowThere has been certain statutory dues in respect of value added tax, which were outstanding for a period of more than six months from the date they became payable in the past, and accordingly certain modifications have been included in the annexure to the auditors' reports issued on the standalone financial statements of the Company and Subsidiaries. Non-payment or delay in payment of statutory dues may result in an adverse action against the Company by relevant statutory or regulatory authorities.
  • arrowSome of its corporate records are not traceable. Non availability of such records may result in regulatory actions against the Company by regulatory or statutory authorities, which may an adverse impact on its financial condition and reputation.
  • arrowLand title in India can be uncertain and its may not be able to identify or correct defects or irregularities in title to the land which its own or intend to acquire in connection with the development or acquisition of new hotels or properties, which could have an adverse impact on its business and operations.
  • arrowThe company relies heavily on its existing brands and its inability to protect brand recognition or guard the value of its intellectual property rights may adversely affect its business.
  • arrowThe company does not own the trademark and logo associated with the "Apeejay" and "Apeejay Surrendra" brand name and derive right to use from the Brand Usage and Service Agreement. In the event such agreement is terminated or not renewed, its may not be able to use these brand names and associated mark, which may adversely affect its business, financial condition, cash flows, and the results of its operations.
  • arrowThe company also face competition from home stays, individual small hotels, cottages, guest houses, local aggregators, and its inability to compete effectively may adversely affect its business, results of operations, financial condition and cash flows.
  • arrowThe company is reliant on effective marketing and branding strategies and any negative publicity on its brands could have an adverse effect on its reputation, business, results of operation, cash flows and financial condition.
  • arrowHospitality industry is cyclical in nature and any change in demand and supply of hotel rooms could result in fluctuations in its results of operations and cash flows.
  • arrowIts may have entered into, and will continue to enter into, related party transactions. Its cannot assure you that the company could not have achieved more favorable terms had such transactions not been entered into with related parties.
  • arrowAny failure to maintain the quality and hygiene standards of the food products that its offer will adversely affect its business. The company is further exposed to risks of slow-moving perishable stock, and any failure in maintaining quality standards may have an adverse effect on its business and operations.
  • arrowCertain of its operations and management agreements contain non-compete provisions, which may restrict its ability to pursue development or acquisition opportunities that could be beneficial to its and which may cause an adverse effect on its business, financial condition, cash flows and results of operations.
  • arrowIts may be unable to successfully grow the company's business in new markets in India, which may adversely affect its business prospects, results of operations, financial condition and cash flows.
  • arrowThe hotel industry and retail food and beverage industry are intensely competitive and its inability to compete effectively may adversely affect its business, results of operations, financial condition and cash flows.
  • arrowThe company is exposed to risks associated with food delivery which includes inter-alia food safety, fragility of product, dependence on technology. If its unable to maintain quality and efficiency of food delivery or manage operational challenges, it could reduce demand for its products resulting in an adverse impact on the company's business.
  • arrowConsumer preferences on bakery products is fast changing, and its inability to anticipate, respond to and meet the tastes, preferences, or quality requirements of its consumers for bakery products could reduce demand for its products and may have an adverse impact on the company's business and operations.
  • arrowIts operations entail certain fixed costs and recurring costs, and its inability to reduce such costs during periods of low demand for its services may have an adverse effect on the company's business, results of operations, financial condition and cash flows.
  • arrowThe company intend to refurbish, renovate, maintain, repair or further develop its existing hotel properties and resorts or retail food and beverage outlets which could result in cost and time overruns or disruptions of its hotel and retail operations.
  • arrowIts insurance coverage may not be sufficient or may not adequately protect its against all material hazards, which may adversely affect its business, results of operations, financial condition and cash flows.
  • arrowQila Mubarak Hotel is a protected site under Punjab Archaeological Sites Act, and any restrictions imposed by government authorities in upgradation, operation or maintenance of such premises may cause an adverse impact on business and operations of Apeejay North and the Company.
  • arrowIts ability to pay dividends in the future will depend on its earnings, financial condition, working capital requirements, capital expenditures and restrictive covenants of its financing arrangements, and its may not be able to pay dividends in future.
  • arrowThe company is subject to risks relating to owning real estate assets including changes in local markets or neighbourhoods, lack of liquidity of real estate assets, uncertainty of market conditions, legal proceedings or regulatory actions by statutory authorities, which may have an adverse impact on its business and operations.
  • arrowAny interruption or failure of its information technology systems could impair the company's ability to effectively provide its services, which could damage its reputation.
  • arrowIf the company fail to stay current with developments in technology necessary for its business, its operations could be harmed and its ability to compete effectively could be diminished.
  • arrowCompliance with data privacy norms may requires it to incur significant expenditure, which may adversely impact its financial condition and cash flows. Further, failure to maintain the integrity of internal or customer data could result in harm to its reputation or subject it to costs, liabilities, fines or lawsuits.
  • arrowThe company is reliant on key members of its senior management team and its operations are dependent on its ability to attract and retain qualified personnel and any inability on its part to do so, could adversely affect its business, results of operations, financial condition, and cash flows.
  • arrowThe company is dependent on a constant flow of key supplies and any disruption to supply could affect its business. Any such increase in their costs will adversely affect its profitability and financial performance.
  • arrowDisruptions or lack of basic infrastructure such as electricity and water supply could adversely affect its operations.
  • arrowThe company has a large number of personnel deployed across our hotels. Consequently, its may be exposed to service-related claims and losses or employee strikes, disruptions and work stoppages that could have an adverse effect on its reputation, business, results of operations, financial condition and cash flows.
  • arrowThe Company will not receive the entire proceeds from the Offer. The Selling Shareholders in the Offer for Sale will receive proceeds as part of the Offer for Sale.
  • arrowThe company relies on various contractors or third parties in developing its hotels, and factors affecting the performance of their obligations could adversely affect its projects.
  • arrowThis Red Herring Prospectus contains information from industry reports from certain agencies commissioned by it, including Horwath HTL, CRISIL, and Anarock which has been exclusively commissioned and paid for by the Company solely for the purposes of the of confirming its understanding of the industry exclusively in connection with the Offer and reliance on such information for making an investment decision in the Offer is subject to certain inherent risks.
  • arrowStatements as to the period in which its properties under development are expected to commence operations and the number of rooms or leasable area expected in such properties are based on management estimates and have not been independently appraised and reliance on such information for making an investment decision in the Offer is subject to certain inherent risks.
  • arrowThis Red Herring Prospectus contains certain non-GAAP financial measures related to its operations and financial performance. These non-GAAP measures may vary from any standard methodology that is applicable across the hospitality industry, and therefore may not be comparable with financial or statistical information of similar nomenclature computed and presented by other company engaged in hospitality sector.
  • arrowNon-resident investors are subject to investment restrictions under Indian laws, which limit the ability to attract foreign investors, which may adversely impact the market price of Equity Shares.

Apeejay Surrendra Park Hotels Ltd Peer Comparison

Understand the company’s industry standing

Apeejay Surrendra Park Hotels Ltd
Chalet Hotels Ltd
Lemon Tree Hotels Ltd
Face Value
1
10
10
Standalone / Consolidated
Consolidated
Consolidated
Consolidated
Total Income Rs. Cr.
506.13
1128.467
874.99
EPS-Basis
2.75
9.06
1.45
EPS-Diluted
2.75
9.06
1.45
NAV Per Share
31.81
75.2
10.78
P/E-Basic EPS
---
79.78
92.34
P/E-Diluted EPS
---
---
---
RONW(%)
8.65
12.03
16.46
Latest NAV Period
---
---
---
Latest NAV
---
---
---
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The IPO opens on 05 Feb 2024 & closes on 07 Feb 2024.

Apeejay Surrendra Park Hotels Limited was formerly incorporated on November 27, 1987, as Budget Hotels Limited, issued by the Registrar of Companies, Bangalore at Karnataka. Subsequently, pursuant to an Acquisition Agreement dated May 5, 1999 entered into between Apeejay Hotels Delhi and the Erstwhile Shareholders of the Company, entire Issued and Paid Up Equity Share Capital of the Company, of the Company constituting 571,940 Equity Shares of Face Value of Rs. 100 each was acquired by Apeejay Hotels Delhi and Company became wholly owned subsidiary of Apeejay Hotels Delhi. Subsequently, Apeejay Hotels Delhi, and Gemini Hotels and Holdings Limited (a wholly owned subsidiary of Apeejay Hotels Delhi) amalgamated with Company, on April 1, 2001. And thereafter, name of the Company got changed from Budget Hotels Limited to Apeejay Surrendra Park Hotels Limited, on March 29, 2004 vide Certificate of Incorporation issued by the RoC. The Company is a part of the Apeejay Surrendra Group which is a leading Indian conglomerate. The Group's business is spread across industries such as hospitality, shipping, tea, real estate, retail brands such as Oxford bookstores, and education. The Company own and manage hotels, with its first hotel launched under brand 'THE PARK' at the iconic Park Street in Kolkata. It operate hotels under 3 brands, 'THE PARK, 'THE PARK Collection' and 'Zone by The Park'. At present, it operate 38 outlets in Kolkata, and 1 outlet each in Navi Mumbai and New Delhi. The Company has a pan-India presence in metros such as Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, Delhi - NCR as well as in other major cities such as Coimbatore, Goa, Jaipur, Jodhpur, Jammu, Navi Mumbai, Raipur and Visakhapatnam. It operate a retail food and beverage business segment under the brand Flurys', which possesses a distinctive track record since it was first established as a tea room and confectionery shop in Kolkata. Pursuant to the Scheme of Amalgamation of Apeejay Hotels Delhi (the then Holding Company) and Gemini Hotels (a wholly-owned Subsidiary of Apeejay Hotels Delhi) with Company, the entire shareholding of Company held by Apeejay Hotels Delhi was cancelled from the effective date of the Scheme , November 28, 2003. Pursuant to the Scheme of Amalgamation sanctioned by the High Court of Bombay, High Court of Andhra Pradesh and High Court of Karnataka, Skylight Hotels Private Limited, Skylight Properties Private limited, Rooshna Hotel Private Limited, Rooshna Estates Private Limited, Oak Park Hotels Private Limited, Orchard Park Hotels Private Limited, Chelsea Hotels Private Limited, Lake Park Hotels Private Limited, Innsignia Hotels Private Limited, Lake Plaza Hotel Private Limited, Vizag Sea Park Hotel Private Limited, and New Bombay Park Hotel Private Limited, which were wholly owned subsidiaries of Company, got amalgamated with the Company, and as a result, the Scheme became operational from April 1, 2008, as a going concern, and was made effective on June 4, 2010. In 2019, pursuant to the Business Transfer Agreement executed between Flury's Swiss Confectionery and the Company, the Confectionery Business of Flury's Swiss Confectionery was demerged/ transferred to the Company on a going concern basis, which became effective from October 1, 2019. In 2021-22, the Company opened a restaurant in the name of 'Someplace Else' at Mumbai. In February 2024, the Company came up with a Public Issue by allotting 59,385,351 Equity Shares by raising funds from public aggregating to Rs 920 Cr, comprising a Fresh Issue of 38,740,191 Equity Shares aggregating Rs 600 Cr and an Offer for Sale of 20,645,160 Equity Shares aggregating Rs 320 Crore.

Apeejay Surrendra Park Hotels Ltd IPO will close on 07 Feb 2024.

  • The Company has built successful hospitality brands through product innovation and service excellence to attract customer through a diversified and holistic offering.
  • A diversified Pan India portfolio of owned, leased and managed hotels that are strategically located across metros and emerging cities.
  • High occupancy rate and REVPAR with a strong financial and operational track record.
  • High F&B and Entertainment contributions which adds to stable and non-cyclical earnings while complementing the hotel business.
  • "Flurys" is an iconic brand with a successful and profitable track record of industry leading EBITDA margins.
  • Dedicated and experienced leadership team with high standards of corporate governance.

S.No Promoters Name Pre Issue Shares Pre Issue Percentage Post Issue Shares Post Issue Percentage
1 Karan Paul 100 --- --- ---
2 Priya Paul --- --- --- ---
3 Apeejay Surendra Trust 30002400 17.18 --- ---
4 Great Esatern Stores Pvt Ltd 52500000 30.06 --- ---

  • The company is exposed to risks associated with the delay in development of its hotel properties and land banks. Any delay in the construction of new hotel buildings or expansion of its existing properties may have an adverse effect on the company's business, results of operations, financial condition, and cash flows.
  • The company is exposed to risks associated with the construction and development of serviced apartments at EM Bypass, which is a one-off project of the Company and of which the Company has no prior experience.
  • The company wes not in compliance with certain covenants under certain of its financing agreements in the past and had delays in repayment of certain long-term rupee loans and working capital loans. In case of any breach of covenants or delay in repayment of facilities in the future, such non-compliance, if not waived, could adversely affect its business, results of operations, cash flows, and financial condition.
  • There are certain instances of delays in payment of statutory dues or non-payment of statutory dues on account of certain disputes. Any delay in payment of such statutory dues or non-payment of statutory dues in dispute may attract financial penalties from the respective government authorities and in turn may have an adverse impact on its financial condition and cash flows.
  • Majority portion of its hotel bookings (approximately 49% of the company total room bookings contributing about 49% of its total room revenue for Fiscal 2023) originate from online travel agents and intermediaries. In the event such online travel agents and intermediaries continue to gain market share compared to its direct booking channels, they may be able to negotiate higher commissions for services provided, or demand significant concessions or reduced room rates causing an adverse effect on its margins, business, and results of operations.
  • The company has had restated losses in the past. Any losses in the future could adversely affect its financial condition, results of operations and cash flows.
  • Its Statutory Auditors have included an emphasis of matter and other matters in their audit reports and other audit qualifications in the annexure to the auditors' reports issued under the Companies (Auditor's Report) Order, 2016 for Fiscal 2021, and the Companies (Auditor's Report) Order, 2020 for Fiscals 2022, and 2023.
  • The company derives a significant portion of its room revenue from corporate accounts and from leisure customers, contributing approximately 80% of the total room revenue comprising approximately 40% each from corporate accounts and leisure customers in Fiscal 2023. Changes in travellers' preferences due to increased use of telepresence equipment, cost of travel, spending habits, and other factors may adversely affect the demand for hotel rooms leading to adverse effect on its business, results of operations, financial condition, and cash flows.
  • Credit rating downgrades may increase its cost of capital and future fund raising may cause a dilution in your shareholding or place restrictions on its operations.
  • The company has incurred indebtedness which requires significant cash flows to service, and this, together with the conditions and restrictions imposed by its financing arrangements, fluctuations in the interest rates may limit its ability to operate freely and grow its business.
  • The Company, its Subsidiaries, its Directors, and its Promoters are involved in certain legal proceedings. An adverse outcome in any of these proceedings may adversely affect its profitability, reputation, business, results of operations, financial condition and cash flows.
  • Its funding requirements and proposed deployment of the Net Proceeds towards repayment and/ or prepayment of all or certain portion of outstanding borrowing are based on management estimates and have not been independently appraised by any bank or financial institution. Variations in the utilization of the Net Proceeds would be subject to certain compliance requirements, and its inability to comply with such requirements may cause an adverse impact on its business and operations.
  • Its Statutory Auditors have included paragraph on material uncertainty on going concern in their audit reports and other audit qualifications in the annexure to the auditors' reports issued under the Companies (Auditor's Report) Order, 2016 for Fiscal 2021.
  • Certain of its hotels are mortgaged with lenders, out of which the title deeds of certain immovable properties are not held in the name of the Company. Failure to comply with the terms of the mortgage agreements or inability to enforce its rights effectively in the event of any dispute or adverse action in relation to properties where the title deeds are not in the Company's name may result in adverse impact on its business, results of operations, financial condition and cash flows.
  • A large portion of its revenue (approximately 75% of the Total Income in Fiscal 2023) is realised from its top five owned hotels with THE PARK Kolkata contributing 21.75% to the Total Income in Fiscal 2023. Any adverse development affecting these hotels or the regions in which they operate, may adversely affect its business, results of operations, cash flows and financial condition.
  • Certain of its hotels are located in buildings and lands which have been leased to it by third parties. If the company is unable to comply with the terms of the lease agreements, renew its agreements or enter into new agreements, the company's business, results of operations, financial condition and cash flows may be adversely affected.
  • Liquidity ratios of the Company for six months ended September 30, 2023, September 30, 2022 and Fiscals 2023, 2022, and 2021 have been less than 1, which may have an adverse impact on its ability to meet short term financial obligations of the company's business and operations.
  • The company has experienced negative cash flows from investing and financing activities in the past. Any negative cash flows in the future could adversely affect its results of our operations and financial condition.
  • Delays in the constructions of Serviced Apartments by Developer or inability of Developer to construct the residential project as per required specifications in a timely manner may have an adverse effect on its business, results of operations, financial condition, and cash flows.
  • Its Promoters, certain of its Directors, Key Managerial Personnel and Senior Management have interests in the Company other than reimbursement of expenses incurred and normal remuneration or benefits.
  • The company is subject to extensive government regulation with respect to safety, health, environmental, real estate, excise, property tax and labour laws. A non-compliance with, or changes in, regulations applicable to it may adversely affect its business, results of operations, financial condition and cash flows.
  • Certain of its Promoters and the company's Directors are engaged in business activities which are similar to those undertaken by the Company and Subsidiaries, or have interests in other companies, which are in businesses similar to its, which may result in conflicts of interest. Further, the company has not entered into any non-compete arrangements with its Promoters.
  • Its Non- Executive Director and Promoter, Karan Paul has entered into an arrangement with the Company for providing certain consultancy services, and may be deemed to be interested in the Company to such extent which may be over and above his interest in the Company as a Promoter and Non-Executive Director.
  • Majority of its Flurys outlets (approximately 88% of the total outlets) are located in Kolkata and rest of West Bengal. Any adverse development affecting these outlets or the regions in which they operate, may adversely affect its business, results of operations, cash flows and financial condition.
  • Majority of the loans that the company proposes to repay from Net Proceeds (amounting to Rs. 3,674.19 million and constituting 61.67% of the total outstanding borrowings of the Company as on September 30, 2023) have been obtained from the ICICI Bank Limited, which is an affiliate of one of the Lead Managers to the Offer.
  • Its business is subject to seasonal variations that could result in fluctuations in its results of operations and cash flows.
  • Its operations and management agreements contain certain restrictive provisions, which may hinder the company's ability to operates such managed hotels and may cause an adverse effect on its business and operations. Further, certain operations and management agreements were terminated in the past, pursuant to commercial disputes between the parties, and such terminations result in loss of management fees to the Company.
  • The COVID-19 pandemic or any future pandemic or widespread public health emergency, could affect its business, financial condition, cash flows and results of operations.
  • The company has availed or may avail certain loans that are recallable by lenders, at any time, which may have an adverse impact on its cash flows, business and financial condition.
  • The Developer or Company may not be able to obtain or renew necessary approvals and consents required to commence or complete construction and development of the Serviced Apartments, resulting in an adverse effect on its business, results of operations, financial condition, and cash flows.
  • The average price/earnings ("P/E") ratio of the listed industry peer set was 73.60 in Fiscal 2023 while its P/E ratio will be at premium of [.] times at the higher price band and [.] times at the lower price band. The trading price of its Equity Shares may fluctuate based on a comparison of the P/E ratio of the listed industry peer set and the Company.
  • The company is exposed to a variety of risks associated with safety, security, and crisis management including risks associated with natural or man-made threats and accidents, which causes adverse impact on its business and operations.
  • The success of its business is dependent on its ability to anticipate and respond to customer requirements. Its business may be affected if the company is unable to identify and understand contemporary and evolving customer preferences or if its unable to deliver quality service as compared to its competitors.
  • If the company pursues a strategy of expansion through acquisition of new hotels, its may be exposed to increased risks from future acquisitions, which its may not be able to successfully consummate or such acquisitions may not yield intended results leading to an adverse effect its business prospects, results of operations, financial condition, and cash flows.
  • The company has certain contingent liabilities in its financial statements, which, if they materialize, may adversely affect its financial condition.
  • Its inability to provide required quality of service including service provided by third parties may lead to adverse impact on the reputation of its hotels or a failure of quality control systems at the company hotels could result in an adverse legal action against the Company leading to an adverse effect on its business, results of operations, financial condition and cash flows.
  • There has been certain statutory dues in respect of value added tax, which were outstanding for a period of more than six months from the date they became payable in the past, and accordingly certain modifications have been included in the annexure to the auditors' reports issued on the standalone financial statements of the Company and Subsidiaries. Non-payment or delay in payment of statutory dues may result in an adverse action against the Company by relevant statutory or regulatory authorities.
  • Some of its corporate records are not traceable. Non availability of such records may result in regulatory actions against the Company by regulatory or statutory authorities, which may an adverse impact on its financial condition and reputation.
  • Land title in India can be uncertain and its may not be able to identify or correct defects or irregularities in title to the land which its own or intend to acquire in connection with the development or acquisition of new hotels or properties, which could have an adverse impact on its business and operations.
  • The company relies heavily on its existing brands and its inability to protect brand recognition or guard the value of its intellectual property rights may adversely affect its business.
  • The company does not own the trademark and logo associated with the "Apeejay" and "Apeejay Surrendra" brand name and derive right to use from the Brand Usage and Service Agreement. In the event such agreement is terminated or not renewed, its may not be able to use these brand names and associated mark, which may adversely affect its business, financial condition, cash flows, and the results of its operations.
  • The company also face competition from home stays, individual small hotels, cottages, guest houses, local aggregators, and its inability to compete effectively may adversely affect its business, results of operations, financial condition and cash flows.
  • The company is reliant on effective marketing and branding strategies and any negative publicity on its brands could have an adverse effect on its reputation, business, results of operation, cash flows and financial condition.
  • Hospitality industry is cyclical in nature and any change in demand and supply of hotel rooms could result in fluctuations in its results of operations and cash flows.
  • Its may have entered into, and will continue to enter into, related party transactions. Its cannot assure you that the company could not have achieved more favorable terms had such transactions not been entered into with related parties.
  • Any failure to maintain the quality and hygiene standards of the food products that its offer will adversely affect its business. The company is further exposed to risks of slow-moving perishable stock, and any failure in maintaining quality standards may have an adverse effect on its business and operations.
  • Certain of its operations and management agreements contain non-compete provisions, which may restrict its ability to pursue development or acquisition opportunities that could be beneficial to its and which may cause an adverse effect on its business, financial condition, cash flows and results of operations.
  • Its may be unable to successfully grow the company's business in new markets in India, which may adversely affect its business prospects, results of operations, financial condition and cash flows.
  • The hotel industry and retail food and beverage industry are intensely competitive and its inability to compete effectively may adversely affect its business, results of operations, financial condition and cash flows.
  • The company is exposed to risks associated with food delivery which includes inter-alia food safety, fragility of product, dependence on technology. If its unable to maintain quality and efficiency of food delivery or manage operational challenges, it could reduce demand for its products resulting in an adverse impact on the company's business.
  • Consumer preferences on bakery products is fast changing, and its inability to anticipate, respond to and meet the tastes, preferences, or quality requirements of its consumers for bakery products could reduce demand for its products and may have an adverse impact on the company's business and operations.
  • Its operations entail certain fixed costs and recurring costs, and its inability to reduce such costs during periods of low demand for its services may have an adverse effect on the company's business, results of operations, financial condition and cash flows.
  • The company intend to refurbish, renovate, maintain, repair or further develop its existing hotel properties and resorts or retail food and beverage outlets which could result in cost and time overruns or disruptions of its hotel and retail operations.
  • Its insurance coverage may not be sufficient or may not adequately protect its against all material hazards, which may adversely affect its business, results of operations, financial condition and cash flows.
  • Qila Mubarak Hotel is a protected site under Punjab Archaeological Sites Act, and any restrictions imposed by government authorities in upgradation, operation or maintenance of such premises may cause an adverse impact on business and operations of Apeejay North and the Company.
  • Its ability to pay dividends in the future will depend on its earnings, financial condition, working capital requirements, capital expenditures and restrictive covenants of its financing arrangements, and its may not be able to pay dividends in future.
  • The company is subject to risks relating to owning real estate assets including changes in local markets or neighbourhoods, lack of liquidity of real estate assets, uncertainty of market conditions, legal proceedings or regulatory actions by statutory authorities, which may have an adverse impact on its business and operations.
  • Any interruption or failure of its information technology systems could impair the company's ability to effectively provide its services, which could damage its reputation.
  • If the company fail to stay current with developments in technology necessary for its business, its operations could be harmed and its ability to compete effectively could be diminished.
  • Compliance with data privacy norms may requires it to incur significant expenditure, which may adversely impact its financial condition and cash flows. Further, failure to maintain the integrity of internal or customer data could result in harm to its reputation or subject it to costs, liabilities, fines or lawsuits.
  • The company is reliant on key members of its senior management team and its operations are dependent on its ability to attract and retain qualified personnel and any inability on its part to do so, could adversely affect its business, results of operations, financial condition, and cash flows.
  • The company is dependent on a constant flow of key supplies and any disruption to supply could affect its business. Any such increase in their costs will adversely affect its profitability and financial performance.
  • Disruptions or lack of basic infrastructure such as electricity and water supply could adversely affect its operations.
  • The company has a large number of personnel deployed across our hotels. Consequently, its may be exposed to service-related claims and losses or employee strikes, disruptions and work stoppages that could have an adverse effect on its reputation, business, results of operations, financial condition and cash flows.
  • The Company will not receive the entire proceeds from the Offer. The Selling Shareholders in the Offer for Sale will receive proceeds as part of the Offer for Sale.
  • The company relies on various contractors or third parties in developing its hotels, and factors affecting the performance of their obligations could adversely affect its projects.
  • This Red Herring Prospectus contains information from industry reports from certain agencies commissioned by it, including Horwath HTL, CRISIL, and Anarock which has been exclusively commissioned and paid for by the Company solely for the purposes of the of confirming its understanding of the industry exclusively in connection with the Offer and reliance on such information for making an investment decision in the Offer is subject to certain inherent risks.
  • Statements as to the period in which its properties under development are expected to commence operations and the number of rooms or leasable area expected in such properties are based on management estimates and have not been independently appraised and reliance on such information for making an investment decision in the Offer is subject to certain inherent risks.
  • This Red Herring Prospectus contains certain non-GAAP financial measures related to its operations and financial performance. These non-GAAP measures may vary from any standard methodology that is applicable across the hospitality industry, and therefore may not be comparable with financial or statistical information of similar nomenclature computed and presented by other company engaged in hospitality sector.
  • Non-resident investors are subject to investment restrictions under Indian laws, which limit the ability to attract foreign investors, which may adversely impact the market price of Equity Shares.

The Issue type of Apeejay Surrendra Park Hotels Ltd is Book Building.

The minimum application for shares of Apeejay Surrendra Park Hotels Ltd is 96.

The total shares issue of Apeejay Surrendra Park Hotels Ltd is 59354839.

Initial public offering of 59,385,351* equity shares of face value of Re. 1 each ("Equity Shares") of Apeejay Surrendra Park Hotels Limited (The "Company" or the "Issuer") for cash at a price of Rs. 155^^ per equity share (including a share premium of Rs. 154 per equity share) aggregating to Rs. 920.00 crores (the "Offer"), comprising a fresh issue of 38,740,191* equity shares aggregating to Rs. 600.00 crores by the company (the "Fresh Issue") and an offer for sale of 20,645,160* equity shares aggregating to Rs. 320.00 crores, comprising 19,096,774* equity shares aggregating to Rs. 296.00 crores by Apeejay Private Limited (the "Promoter Group Selling Shareholder"), 1,483,870* equity shares aggregating to Rs. 23.00 crores by Recp IV Park Hotel Investors Ltd and 64,516* equity shares aggregating to Rs. 1.00 crores by Recp IV Park Hotel Co-Investors Ltd (together referred to as the "Investor Selling Shareholders" and together with the promoter group selling shareholder, referred to as the "Selling Shareholders" and such equity shares offered by the selling shareholders, the "Offered Shares") ("Offer for Sale"). The offer included a reservation of 675,675* equity shares, aggregating to Rs. 10.00 crores (constituting 0.32%* of the post offer paid-up equity share capital of the company for subscription by eligible employees (the "Employee Reservation Portion"). The offer less the employee reservation portion is hereinafter referred to as the "Net Offer". The offer and the net offer constitute 27.83%* and 27.51%*, respectively, of the post-offer paid-up equity share capital of the company. The company, in consultation with book running lead managers ("brlms"), offered a discount of 4.52% (equivalent to Rs. 7 per equity share) of the offer price to ligible employees bidding in the employee reservation portion ("Employee Discount"). The face value of the equity share is Re. 1. The offer price is 155 times the face value of the equity shares.