Clarks/ANK&Pride M&A noise faded.

Just to understand the financials, the projected financials which you're putting out. So if I take whatever FY '28 or FY '30 numbers, we are talking about INR40 crores EBITDA and INR20 crores fee. So INR60 crores console. So is it right to understand that, let's say, in FY '30, the INR20 crores fee belong to us, also that 51% of that INR40 crores will also belong to us?

Yes, that's right. But essentially, as you know, we will consolidate the full EBITDA, not the 51%. So as far as the IHCL consol EBITDA, it will go up by INR60 crores.

So Ankur, the enterprise value we have given is, what, INR408 crores roughly or INR405?

INR204 crores of total investment side, which is about INR160 crores in primary and the rest being secondary. If we do the math on that the enterprise value is about INR240 crores.

So INR240 crores of enterprise value and whatever, like FY '27, '28 or '30. So we are on FY -- I mean, on FY '30, it looks like a very good deal. But even on FY '27, we are calling out INR20 crores, so 12x EBITDA?

That's right. Basically, the transaction has enabled two things. One is obviously getting into a partnership with ANK and Pride and the promoter group there, and which will obviously enhance the portfolio itself, which is all the synergies, which Mr. Chhatwal referred to and deploying the Ginger playbook on that. And that's why the right number would be actually FY '28, because FY '27 will still be a year of transition. But even if you look at FY '27, there is actually a trajectory for upliftment on EBITDAR margin and then consequently on EBITDA itself. So that is a INR10 crores number, if you see the numbers I've given out. And then the incremental fee, which is also enabled because of the transaction. So -- and the INR10 crores is after paying the fee. So effectively, there are some parts of the business, which are going to have, where it will obviously be an expense, and therefore, the EBITDA number is after the fee. And then there are, for example, Brij Hotels is actually not something which we have a stake in the company right now. So that fee will straight away come to us. So this is -- and this is on the enterprise revenues of the company and not the top line number, which is only INR60 crores here. But if you look at the enterprise revenue, it will be much higher as is the case in FY '25 itself.

Second thing, so how are we thinking about the brand here like why -- so a very basic question, like why would we put it a Ginger? Why would this management would like to have a Ginger and not Clarks? Like is it because Clarks is not getting enough traction? What were the possible reasons for them to move into Ginger?

Shaleen, very good question. One of the reasons is traditionally, this company is known for full-service Clarks Hotel, because that's what their grandfather had created. So the iconic Clarks Amer in Jaipur and Clarks Avadh in Lucknow or Clarks Shiraz in Agra, etcetera. These were the five key assets. And by doing these Clarks in and Clarks suites and Clarks in and suites and Clarks, whatever, other connotations actually diluted the Clarks brand equity. That's from their side. From our point of view, we are not interested in another new brand in mid-market until we get to 300 to 500 hotels with one of the brands. So in the mid-market, scale is very important. And just having 10, 15, 20, 30 hotels here or there, as you've seen with Ginger does not help. It's only of late in the last 2.5 years that Ginger has pivoted, and this was another opportunity for it to go another notch higher and definitely support all our other ventures that we have undertaken and shared with all of you like MOPA Airport, like Kolkata Airport, like opening of Ekta Nagar in the next 6 to 8 weeks, plus the opening of Bangalore Airport next year. So all these things will give an absolute boost to the brand awareness of Ginger brand, and that's why we'd rather have it in one brand. Exactly what we did with Taj and continue to do with Taj, make one brand clean and pure instead of being all over the place.

Just one more question in continuation is like INR163 crores primary, so --if can we understand like what's the usage of that? Will it be to uplift the current property, or it will be for the expansion, because we do not know what's the condition of these assets right now, right? So just some color on that?

So some of it will go to -- like you know, most of the portfolio is actually management contracts. So the responsibility of incurring capex actually lies largely with the owners. So essentially, our approach here will be to say that there is a war chest available to expedite this upgradation. Essentially, this is obviously a conversation to be had once the transaction closes. But the idea is to see how can we use this capital, which is available at disposal to bring most or if not all the hotels onto the Ginger platform as quickly as possible with the same similar sort of standard, which is deployed by Ginger Lean Luxe model so that the unlocking of value and upliftment on occupancy and ARR happens quickly. And so that's where the bulk of the capital will go. And then the other opportunity, which is basically also which I mentioned -- alluded to earlier was the moving from management contracts to revenue share. And typically, this could be a couple of crores to INR5 crores kind of investment, which may happen depending on, let's say, if an owner has got -- wants to expand and he has already got the FSI in his property, but doesn't have the funds to sort of expand. And then the conversation for moving from a management contract to revenue share becomes a much more easier conversation. So we have identified already about 8 to 10 properties, which we will sort of start acting once the transaction closes. So that's the second use of capital. And the third could obviously be kind of replicating the Ginger big box model, which is something which we've also -- it's been also our journey over the last 7 years, and we've realized how Ginger Big Boxes have delivered in the last few years. And as you know, Ginger Mumbai Airport is a classic example of delivering close to INR100 crores revenue and INR50 crores plus EBITDA in the first full year of operations. So I think that's the third opportunity where some of the capital could go, where the management team, which is the current management team, the promoter group will continue to run the business, and it's up to them to then source opportunities, which can fit into their sort of the kind of hotels they would want to want. So big box also opens up the third sort of use of capital.

Just last bit, you only have a Ginger in mind or do you think there is a scope for gateway as well here?

There could be, Shaleen, one or the other, because we have to drive the best value. So I don't think 100% of the hotels will fit into Ginger. But we do believe that the majority -- significant majority, anything between 85% to 90% for Ginger is fine. The rest we will take a call during this period of completion of the deal and find the best value proposition. Of course, there will be opportunity for the Clarks Exotica can obviously become a gateway. Or on the selection's platform, yes. Other questions you can take offline with us later.

Another question is, so all the Clark Hotels in India are under these two groups and all of them will migrate to Ginger eventually? And are there more Clarks Hotels under any other group in the country, for clarification?

There are within the same family. This is like a legacy issue. They have several companies. I think almost all the asset-light hotels are actually covered in this and maybe a few assets heavy are actually not covered in this. That probably single digit, maybe less than 10, so like 4 to 5 kind of number. And this is the beginning of a relationship. So we'll see how the relationship there is going forward.

Sure. And one question on your expanding room number of hotels, this is a great news. And so -- more like a theoretical question on management bandwidth. So does this kind of scaling of management contact -- contract, which is kind of a global module for other companies like Marriott, etcetera. So how should we think of management and bandwidth and the hiring, which you would require to manage too many hotels?

Thank you, Prateek for this question. The job done by these three young cousins and brothers was so phenomenal in making 150 hotels that, that is one of the reasons we have integrated them in the journey forward. So they will continue to drive growth and management. We will obviously give them the required support of the bandwidth that IHCL has. And maybe a couple of our people will also go there in the management, and we will run it through a proper governance structure. And we have a lot of experience in doing that even with publicly listed entities. As you know, we have OHL, we have Taj GVK. We have Banaras Hotels, we have PM Hotels. So it's in a similar kind of a way, this will be run by the current ownership. They just get diluted, and we will give them a few of our stalwarts. And that way, the skill sets will get complemented and will not put any kind of strain on our existing talent pipeline or on our bandwidth, rather enhance it. Because seeing these growth opportunities, you should not underestimate how many people in the last 5, 7 years have had the opportunity to grow with us. And that means all these new brands, all these high growth of our portfolio has given a growth platform and a growth mindset to the entire company. So I think they are following the same formula, and we are very confident that what these people have been able to do without any capital or without any big company backing behind them that with our help, they will even be able to perform at much higher level and a faster rate.

My first question is around conversions to the revenue share. You've been talking about there is an opportunity to convert the revenue share model. Just want to understand, is it like straight away at your will, where you can convert, or is there a condition in that, how easy be it is to convert from the management contract with the venue share. So if you could please give us a bit of a color on that, that will be helpful?

So Achal, thanks for the question. It's not straightforward. And that's why if you see our projections, which we gave out, we haven't really included that portion. We have just talked about this as a potential upside. And that's the reason why we think it's real and not something imaginary is because the current management team has already demonstrated success on this front by actually converting a hotel in Rajasthan, in Ajmer from a management contract to revenue share. So it is very much a real opportunity, and it requires hotel-by-hotel discussion, because every owner will need some kind of support as he has to sort of either expand or he needs some kind of -- he's not able to sort of manage the payroll, et cetera. So this is how this typically happens. We've also had that thing in our portfolio also in the past. So -- it will evolve over a period of time. But we are confident that in the next -- I mean, if you look at the portfolio, we're talking about 135 hotels, even if you get 10%, we're talking about 13 hotels, which can easily give you INR60 crores to INR75 crores of top line itself, right? So I think -- and then obviously, much higher contribution in terms of EBITDA as well. So I think that's the opportunity set. And I think it's a real set, but we can only give you more color when we sort of close the transaction and sit down and do a more granular exercise on the portfolio, but pretty much something which we are focused on.

Puneet firstly, if you look at the Clarks portfolio, Clarks has presence across many brands, and you acquired just 3 of them. Could you highlight the thought process behind the same? And as a follow-up, will you look to acquire the remaining 49% stake in these brands at a later stage and perhaps acquire or integrate the remaining brands in your portfolio as well?

Which are the -- see, actually, this Clarks brand -- these two companies have all the Clarks brands, which includes Clarks Suites, Clarks Inns, Clarks Exotica. All of them come under the -- they've kind of run under different brands, but it is very much part of these two companies, okay? So I think that's something which is already part of the transaction. And over time, the whole idea is that we sort of migrate them to a sort of a brand architecture, which is reflective of the positioning of the hotels, which is what we said 85% to 90% should be in the mid-scale category and should get to a ginger stage. The rest, depending on the brand, could be a gateway, could be a selection. And that is to be an exercise, which we will do as we move forward. As far as the 49% goes, there is no plan as of now to purchase the 49%. We are, like I said, entering into a strategic partnership. And this is not because they are pure financial investors, they're also going to be driving the business, which is very critical for the success of this partnership that we continue with the management and they kind of integral to this transaction.

Sure. And just a clarification, Ankur, I think earlier on in the call, you mentioned that the enterprise was being valued at around INR240 crores. So help me reconcile that. If I'm looking at Slide # -- I think this is Slide #8 or 9 -- sorry, Slide #7, where you're buying 51% and investing INR204 crores. So is the enterprise value INR400 crores or just help me reconcile that INR240 crores number that you're mentioning earlier on in the call?

INR240 crores is the enterprise value. And if you look at the math, it's INR160 crores of primary, which basically goes into the company and the balance is secondary. So the money going in the company obviously increases the equity value, right, because you've put enterprise value and cash goes into the business. So if it was a pure secondary bill transaction, we would have bought the business for INR240 crores, right? Does that answer the question, Karan?