Indian Hotels Company (IHCL) is looking at raising fresh resources via equity and quasi equity to lower its debt load. The total debt of IHCL is more than Rs 4,646 crore as on March 31.

“We are looking at various options to repay our debt including equity and quasi equity among others,” said Ratan N Tata, chairman, IHCL & Tata group at the company’s annual general meeting on Monday.

Analysts expect that the company is likely to use options such as warrants, convertible bonds or convertible debentures to address the debt. However, Tata declined to comment on whether the company is also looking for a global depository receipt. The 11.5 per cent stake picked up by IHCL in the Orient Express Hotels (OEH) and acquisition of Sea Rock hotel for Rs 680 crore from ELEL Hotels and Investments has increased the debt of the company’s balance sheet. An advance of Rs 250 crore has been paid to ELEL as advance. As a result the debt: equity ratio rose to 0.58:1 in 2008-09 as against 0.55:1 in a year ago period.

“IHCL funded the $247 million acquisition through offshore debt. However, due to the global financial meltdown, its market price fell sharply more than 85 per cent in the past one year. As a result, in May the company acquired another 2.25 million shares for $12.93 million, which reduced its average cost per share from $51 to $36. However, at a present market price, the company is still sitting on a notional loss of more than $210.2 million (around Rs 1,100 crore),” said an analyst, requesting anonymity.

“However, considering the strain on profitability of its international properties, high debt to equity and recent expensive buyouts, we are valuing the stock at a discount to its global peers,” the analyst said.

The total borrowings of the company stood at Rs 1,766.47 crore as on March 31 against Rs 1,134.18 crore as on March 31 previous year. The increase in debt was on account of on going capital expenditure on new projects and and investment in international subsidiaries.

During the fourth quarter of 2008-09, all capital expenditure, other than that for projects was frozen and operating costs were min-utely scrutinised and kept to the bare essential.

The company has fixed a capex of Rs 350 crore for this financial year. At the same time, IHCL is planning to undertake several cost cutting measures, wh-ich is expected to help save over Rs 15 crore.