Vatika Hotels refinance Rs 550 crore debt with Kotak

Vatika Hotels, owner of The Westin Gurgaon, has refinanced Rs 550 crore of debt through Kotak Mahindra Bank, marking the exit of India Special Assets Fund III (ISAF III), managed by EAAA India Alternatives, people familiar with the matter said.

The refinancing follows a multi-year turnaround after the hotel company slipped into financial stress during the Covid-19 pandemic and defaulted on loans from lenders, including Piramal Capital and Goldman Sachs. The transaction is expected to reduce the company's borrowing costs by 8-9%.

In early 2024, funds managed by EAAA India Alternatives restructured Vatika Hotels' debt through a customised financing package that enabled the repayment of Piramal Capital and eased the company's debt burden, the people said.


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The company's balance sheet improved after restructuring. Total debt declined from around Rs 1,000 crore at the beginning of 2023 to nearly Rs 700 crore by mid-2024, while a subsequent equity infusion by the promoter reduced borrowings further to below Rs 600 crore.

The company has since moved from a default position in FY21 to securing a BBB investment-grade rating in December 2025, reflecting the improvement in its financial profile and operating performance.

Kotak Mahindra Bank and EAAA India Alternatives did not respond to ET's requests for comment.

Rating agencies had identified refinancing high-cost debt with bank borrowings as a key trigger for further credit upgrades. The latest refinancing is expected to lower interest costs, extend repayment tenure and further improve the company's credit profile.

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Vatika Hotels, incorporated in 2004 as a special purpose vehicle of the Delhi-NCR-based Vatika Group, owns and operates The Westin Gurgaon.

Before the restructuring, the company had refinanced its borrowings multiple times and was saddled with high-cost debt from lenders including Edelweiss Asset Reconstruction Company. The pandemic severely affected hotel occupancy and cash flows, leading to repayment stress.