More clarity needed to gauge the impact of Kamath Committee recommendations
ETHospitalityWorld spoke to experts in the industry on their view of the Kamath Committee recommendations and the RBI’s move to accept them. The general view is that the document needs to be examined carefully, but many think that the hospitality industry may not be able to make full use of the measures.
“The RBI notification on restructuring of debt for Covid impacted sectors based on the recommendations of the Kamath Committee is a welcome measure for the hospitality sector, in terms of the ability for this severely impacted sector to find relief through a revised debt repayment plan, aimed at overcoming the cash flow shortages that have emerged and are likely to remain over at least the next 12 to 18 months.
“However, based on the information so far available, the qualifying financial ratios provided as a guideline for restructuring existing debt which take into account the debt to equity ratio and the debt to EBITDA ratio appear to be restrictive for most debt holders and may not bring the desired relief to a majority of the sector. We await for more information and clarity on the restructuring process including the fine print for the hospitality sector to be able to comment on a more definitive basis,” said Mandeep S Lamba, President (South Asia), HVS ANAROCK.
“It’s going to be a relief for the hospitality sector as there is a possibility of further moratorium on case-to-case basis. But debt tenure extension as per policy is allowed for maximum up to 2 years, extension of tenure for up to 5 years could have been more effective for hotels which are moderately or highly leveraged as hotels will take 3 to 4 years to fully recover to reach its Pre-Covid performance levels in terms of ARR and occupancy,” said Nandivardhan Jain, Founder & CEO, Noesis Capital Advisors.
“The KV Kamath Committee has selected 26 sectors, including real estate and construction, that will require restructuring. The current times in the aftermath of the Covid-19 pandemic require extraordinary measures. Restructuring is certainly one of them. However, timely action is needed to bail out the sector. As the sector continues to face challenges in terms of a large debt and reduced liquidity, loan restructuring as recommended by the committee will go a long way in benefitting the sector and its stakeholders,” said a more optimistic Ankush Kaul, President (Sales & Marketing), Ambience Group.