Local hospitality company, Mac Hotels Ltd., promoted by Edwin Cotta, is in the spotlight for being the first family-promoted, small enterprise, to list on the stock exchange, reports Shoma Patnaik
Goa’s small clique of public limited companies got bigger recently with the entry of Mac Hotels Ltd in the circle. A small company in the hospitality sector, Mac Hotels is news for being the first in the state to list on the BSE SME Exchange.
Promoted by the Cotta family, Agassaim, it is the first, small enterprise to raise funds through an initial public offering (IPO) of equity shares. It is tough to remember when was the last time a Goan company approached the capital market for funds. For sure it is not likely to be less than 25 years, making the recent listing of Mac Hotels, on October 4, on the BSE SME (small and medium enterprise) platform a major event for Goan industry.
Speaking to Edwin Cotta, chairman, is interesting. Sitting with brothers, Edgar Cotta, managing director and Schubert Cotta, chief financial officer, he explains that, local companies are fearful of approaching the capital market. “Goans are considered as susegad and good for leisure and few Goan companies are interested in getting listed on the stock exchange. Some have taken the process nearly to the end and then dropped out. We broke the deadlock,” he says.
For the Cotta brothers who are first generation entrepreneurs and 28 years in the hospitality industry, the raising of equity funds by tapping the stock market is the smart way to growth in today’s business scenario. They point out that, they are first generation business men and the family owes its existence in the hospitality industry to brother Alfred Cotta who started the first hotel.
“The economy is growing at fast clip. The upcoming Mopa airport offers a big jump in opportunities to the local hospitality industry. We are not the biggest but certainly the bravest,” says Edwin Cotta. He explains that, raising funds from the stock market gives access to low-cost capital as well as create value for the share holders. The proceeds from the IPO will be used to increase scale and take the capacity to 500 rooms.
“The company will expand not only in Goa but also pan-India. In the short-term we have got an offer to manage a hotel in Sri Lanka which we are likely to accept,” he says, adding that, the longer term goal is to migrate to the BSE main exchange in the next three years.
The process of going public and tapping the primary capital market was difficult, disclose the brothers. They say that, it took about three-four years to set things on course and comply with the stock exchange listing norms. “Goa lacks a professional base which made the process all the more difficult,” reveals Edgar Cotta.
“Getting our company listed on exchange has the advantage of cheaper capital but it also brings a lot of financial discipline. It leads to transparency and professionalizes operations. Further it also enhances our visibility,” points out Schubert Cotta.
‘It also ensures continuity in the business and leaves a legacy for the coming generation”, say the brothers in unison.”
Incorporated on December 1990, Mac Hotels is in the business of owning, operating and managing hotels, restaurants and resorts. The company own three hotel properties in the state- Park Avenue and Village Royale in Calangute and Hotel Miramar in Panjim. For the Miramar property the marketing tie-up is with Oyo.
“We cannot compete with the big names. Without a marketing tie-up you get left out. The principles of marketing as well as management in the hospitality industry have changed. The industry today is capital intensive as rooms have to be upgraded continuously,” says Edwin Cotta.
The IPO was completed on September 24 2018. It raised Rs 1.94 crore of equity capital through the issue of 8,10,000 equity shares at a offer price of Rs 24 (Rs 10 face value + Rs 14 premium). The post-paid up capital of the company is about Rs three crore of which 75 per cent is owned by the promoters and 25 per cent by the public. The shares closed at Rs 25.80 on the first day of listing.
Mac Hotels other directors are, Ingrid Cotta, non-executive director and independent directors- Blaise Costabir, founder, Zarhak Moulders, Verna and Ephran Mendenha, ex-banker.
The company was helped in its endeavor to go public by Clifton Desilva, director, Altina Securities, Mumbai. Speaking on Mac Hotels making its stock exchange debut, Desilva said, “Listing on the stock exchange provides a bench-mark. It unlocks the tangible and intangible value of the company. The company is sure to create wealth for not only itself but also its staff (stock options) and investors.”