Classified under the Hotels and Travel Sector, 20 million ordinary voting shares of Ramboda Falls with security code RFL-N-0000 will be listed.
RFL will be the 284th company to be listed on the CSE and is among the final batch of companies taking the listing via introduction route. It is also the third from the hotels and travel sector to list since the end of the war in May 2009.
The other two being Citrus Kalpitiya and Citrus Waskaduwa.
The reference price of the voting share of RFL is Rs. 10, being the last transacted price, whereby the shares of RFL were transferred from Managing Director L.S. Sigera and Director I.J.A. Karunarathna to the other shareholders of RFL to meet the 10% public shareholding. RFL also said the reference price is in line with the book value per share of the company.
As at the date of the Introductory Document, the public shareholding of the company is 27.07%. The public float comprises of 5,413,600 shares, all of which are freely tradable, and held by 125 ‘public’ shareholders.
The Board of Directors of RFL comprises Takashi Igarashi (Chairman), Sasanka Sigera (Managing Director), Ananda Karunarathne, Namal Gomes, Saman Karunarathna and Ono Teruaki.
Ramboda Falls Limited (RFL) was established in 1996, as a privately owned luxury tourist hotel, which caters to both local and foreign clientele, by the two major shareholders of the company. RFL was subsequently converted to a public limited liability company on 5 September, 2011.
The Executive Directors (who are the two major shareholders of RFL), along with the Senior Management, carry out the management of the hotel. Both the hotel and land is owned by the company.
The hotel was initiated with the intention of providing a ‘rest-stop’ for travellers wanting to grab a quick meal on their way to Nuwara Eliya. The hotel is situated along the Nuwara Eliya-Kandy road, scenically located next to the cascading Ramboda Falls.
The founders wishing to create a differentiated experience for visitors determined the location was ideal to build a hotel, capitalising on the geological positioning en-route to Nuwara Eliya, the abundant natural resources available, personalised service and unique view of Ramboda Falls.
The operation of the hotel commenced with five bedrooms, a bar and restaurant with a seating capacity of 125 pax, catering to local clients.
In 1998, the Company obtained the Tourist Board License to operate as an “A Grade” restaurant. Subsequently, additional rooms were added gradually over the years to bring the room count to 20 deluxe rooms. Expansions and modifications to the hotel were funded through bank loans and cash infused by the two founders.
Further, an additional wing has been added to the restaurant, to increase the available seating capacity to 350 pax, in expectations of catering to a greater demand in time to come. The long term goal of the hotel is to create an environment of pampered luxury that surpasses all competition throughout the hill country.
The company has entered into contracts with travel agents to accommodate local and foreign clientele. At present, the company has contracts with 22 travel agents. These include leading travel agents such as Aitken Spence Travels, Jetwing Travels, Walkers Tours and Connaissance Travels and Tours to name a few.
RFL has another hotel – Peacock Solitude – situated in Higurakgoda, Minneriya. Peacock Solitude is located in the cultural triangle of Sri Lanka, only 196 km from Colombo, 20 minutes to Minneriya Wildlife Park and Polonnaruwa ancient city and five minutes to Kadulla National Park, Giritale Tank and Minneriya Tank.
Peacock Solitude has a total land extent of two acres and 21 perches, which is owned by Ramboda Falls Limited. The hotel has 10 rooms with air conditioning, hot water and television facilities. The hotel is ideal for adventure seekers, as it lies in close proximity to the wildlife parks. The hotel has also developed new activities to cater to the growing interest in adventure and eco-tourism.
RFL has leased out the hotel to a third party E.G.D.S. Desapriya with effect from 20 November 2011 and currently the only income generated by RFL from Peacock Solitude is a lease rental. RFL is no longer involved in the operations of the hotel as it is solely managed by the party which has leased the hotel, as such all profits and losses are accrued to the lessee. The initial capital for Peacock Solitude was infused by RFL, as it was owned and managed by RFL, but any additional capital infused to the hotel will be funded by the lessee.
RFL has plans to enhance and sustain growth in the company. Among those under discussion and listed in the introductory document are addition of 20 luxury rooms. The company intends to build an extension to the existing building to add more rooms thereby increasing the total capacity to 40 rooms.
The estimated cost for the additional rooms is Rs. 50 million (i.e. Rs. 2.5 million per room). The cost will be funded 70% through equity raised through a further issue of shares to shareholders at a latter period of time and balance through debt. The estimated time period with which to complete the additional rooms is three to four years; but this may vary depending on the demand for the rooms.
Others include construction of a gym and snooker room. The total estimated cost for the gym is Rs. 6 million and Rs. 1.5 million for the snooker room. These will be funded through 70% equity and 30% debt. The estimated time period for completion for both is between three to four years.
The estimated cost for the construction of a hot water swimming pool is Rs. 7 million. The cost will be funded 70% through equity and balance through debt and will be completed within two to three years. The cost of construction will be higher than normal due to the location of the hotel.
Planting tea in the remaining six acres of the hotel and expansion of market share through online marketing and broker/tour guide based promotions as well as resume marketing campaigns through print media as well as other promotional activities to reach the targeted 70% occupancy rate throughout the year.
Given the strong performance in the tourism sector in the country since the end of the war, the company expects its business to achieve significant growth in the future and expect to attract different segment of clients.
Total assets of the company as at 31 December 2011 was Rs. 292 million whilst total equity was Rs. 207.6 million comprising Rs. 100 million as stated capital and Rs. 114 million as revaluation Reserves. It has retained loss of Rs. 6 million. Liabilities amounted to Rs. 84.5 million, of which Rs. 54.5 million is long term in nature.
For the nine months ended 31 December 2011, RFL’s revenue was Rs. 45.5 million, up from Rs. 22.5 million a year earlier. Pre-tax profit was Rs. 1.46 million, down from Rs. 4 million and after tax profit was Rs. 0.16 million, lower in comparison to Rs. 4 million in the first nine months of 2010/11 financial year.