Mahindra Holidays & Resorts India Limited (MHRIL) has reported robust financial results for the first quarter, showcasing significant growth in profitability and operational performance.

Financial Highlights

The company's standalone profits, representing its India operations, surged by 69% year-on-year. The PAT (Profit After Tax) margin expanded impressively by 680 basis points. On a consolidated basis, MHRIL reported an 18% growth in PAT, reaching INR 7.20 crores, despite facing a forex impact of INR 28.00 crores due to Euro-INR movement.

Operational Performance

MHRIL maintained strong resort occupancy levels at over 85%, even with the addition of new inventory. Resort revenue grew in double digits, reaching INR 114.00 crores for the quarter. The company added 1,524 new members with an average unit realization (AUR) of INR 8.30 lakhs, representing a substantial 69% increase year-on-year.

Member Acquisition and Digital Initiatives

The company has made significant strides in its digital transformation efforts:

• 65% of new member additions now come through digital channels and referrals
• Implemented a digital engagement tool to enhance membership buying experience
• Piloting contactless check-in processes at two resorts

Inventory and Expansion Plans

MHRIL remains committed to its target of adding 1,000 rooms by March 2026. The current inventory stands at 5,800 keys. Key developments include:

• Commenced a new expansion project at the existing Puducherry resort
• Five ongoing Greenfield and Brownfield projects in progress
• Focusing on a capital-light growth strategy with only 30% owned inventory in future expansions

Sustainability Initiatives

The company continues to prioritize sustainability in its operations:

• Completed biodiversity assessments at four new resorts
• Increased solar installation to 41% of total demand
• Achieved a cumulative solar installation of 15 MW

Holiday Club Resorts Operations (HCRO)

The HCRO business, based in Finland, showed improved performance but continues to face challenges:

• Occupancy increased by 10% to approximately 55%
• Performance affected by geopolitical tensions and Finnish economic conditions
• Management is developing a new business model focused on capital efficiency and enhanced member experience

Future Outlook

MHRIL is evolving its business model to focus on room and experience as central assets, with an emphasis on enhancing member experience. The company is working on simplifying member plans and improving market alignment in terms of realizations.

Manoj Bhat, Managing Director and CEO, commented, "We have delivered a strong quarter operationally and financially, with significant progress on our strategic initiatives. Our focus remains on capital efficiency, profitability, and enhancing customer experience as we continue to evolve our business model for the next stage of growth."

As Mahindra Holidays & Resorts India Limited continues to adapt to changing market dynamics and customer preferences, it appears well-positioned to capitalize on the growing demand for leisure travel experiences in India and beyond.

Mahindra Holidays & Resorts India Limited (MHRIL), a prominent player in the hospitality sector, has recently come under regulatory scrutiny. The company has disclosed receiving a significant GST demand notice from the Tamil Nadu tax authorities, raising concerns about potential financial implications.

Details of the Demand Notice

The State Tax Officer in Chennai, Tamil Nadu, has issued a Show Cause Notice (SCN) to Mahindra Holidays, demanding a substantial sum of ₹33,28,74,524. This amount includes interest and penalties under the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017 and the Central Goods and Services Tax (CGST) Act, 2017 for the financial year 2021-22.

Reasons for the Demand

The tax demand stems from several adjustments identified by the tax authorities:

1. Adjustments in turnover
2. Supply differences
3. Trade payable discrepancies
4. Disposal of assets
5. Addition of assets

Company's Response

In response to this development, Mahindra Holidays has stated that it does not expect the notice to have any material financial impact on the company. This assessment is based on the company's internal evaluation and advice from its legal counsel.

Next Steps

The company has announced its intention to pursue appropriate legal remedies before the relevant authorities. Mahindra Holidays is taking steps to address the issues raised in the SCN and defend its position.

Disclosure and Compliance

In compliance with regulatory requirements, Mahindra Holidays has promptly disclosed this information to the stock exchanges. The company filed the disclosure under Regulation 30 of the Securities and Exchange Board of India (SEBI) Listing Obligations and Disclosure Requirements Regulations, 2015.

Investor Considerations

While the company maintains that the financial impact will not be material, the substantial amount involved in the tax demand may raise concerns among investors and stakeholders. The outcome of the legal proceedings and any potential adjustments to the company's financial statements will be closely watched by market participants.

As the situation develops, Mahindra Holidays & Resorts India Limited is expected to provide further updates on the progress of its legal remedies and any material changes in the status of this tax demand.