IHCL Kicks Off Pilot Plan To Improve Bottomline

EH&C Staff - Mumbai

To boost its operational effectiveness and help contain costs, The Indian Hotels Company Ltd (IHCL) has launched a pilot bottomline improvement programme along with McKinsey and Company. Christened ‘Total Overdrive on Profits’ (TOP), the programme has identified at least Rs 12 crore per annum worth of ideas from various areas like purchase, engineering and operations.

According to the company’s annual report, early implementation of the programme have been encouraging and the TOP team will now begin to generate ideas in the next 12 to 15 months or so, which it feels will improve the company’s bottomline in a big way.

The IHCL-McKinsey team which is supported by focused teams in the related functions at relevant properties are working on the project. Right from its inception in March 2003, this programme has already identified new bottomline improvement with a potential of roughly about Rs 30 crore per annum.

The TOP team will aspire to accrue about Rs 12 crore to the bottomline in this financial year, the balance will accrue in the next financial year. The IHCL report also mentions that the TOP team is now focusing on rolling out the ideas that have been identified to other IHCL properties and also on generating ideas in new areas like associated services (minibar, inroom dining, etc) and key account management with national and large territorial corporate accounts. It will also study other areas like restaurant revenues and corporate overheads.

Other significant results from the TOP programme as well as other cost initiatives include raw material costs as a percentage of food and beverage (F&B) revenue which has been reduced by three per cent over the last three years and power consumption reduction despite adding new properties like Taj Hari Mahal and Taj Lake Palace over the last two-three years to the company.

Consolidation of purchases through a centralised system called the Central Materials Group has also reduced cost to an extent. This leverages the group’s buying power and rationalisation of inventory management.