The Oberois, promoters of East India Hotels Ltd (EIH), have raised their stake in the company by a shade over three per cent in the last fiscal through the creeping acquisition route.
The promoters of the hotels major would take creeping acquisition route again this fiscal to scuttle any attempt at a hostile take over of the company, P R S Oberoi, managing director of EIH Ltd, told shareholders at the company's annual general meeting here today.
The promoters may take this course to boost their holding in the company, which stood at only 39.15 per cent as on March 31, 2001.
Oberoi's comment assumes significance in the wake of recent reports about three investment subsidiary companies of tobacco-cum-hotel major ITC Ltd having picked up a 10 per cent stake in EIH.
The market had been abuzz with such a rumour in recent weeks. The investment companies - New Deal, Peninsular and Russell Credit - had denied this and maintained that the holding was below six per cent.
As on March 31, 2001, the shareholding pattern of EIH reflected promoters' holding of 39.15 per cent, mutual funds and UTI (12.60 per cent), banks, financial institutions and insurance companies (17.30 per cent), foreign institutional investors (4.9 per cent), with private corporate bodies holding 7.32 per cent and the public 18.46 per cent.
Addressing the concern of shareholders at the AGM, Oberoi brushed aside apprehensions that the company might fall prey to any takeover attempt. He said the promoters were not worried at the turn of events, as they held 44.5 per cent of the voting right, he informed.
At the AGM, EIH shareholders also unanimously passed the special resolution pertaining to increase of authorised share capital of the company from Rs 200 crore to Rs 300 crore. The authorised capital would be divided into 10,00,00,000 equity shares of Rs 10 each and 2,00,00,000 cumulative redeemable preference shares of Rs 100 each by the creation of 1,00,00,000 cumulative redeemable preference shares of Rs 100 each. However, the company did not transact Resolution 8 pertaining to issue of preferential shares to promoters following a case in Bombay High Court and the management undertaking on the case.
Expansion plans
East India Hotels (EIH) has proposed an investment of Rs 1000 crore in three years to augment its presence in the hospitality business at home and abroad. PRS Oberoi, managing director, said, while around Rs 350 crore would be spent to complete ongoing projects, the rest would be used for financing new projects. The company would source the required fund mainly through debt instruments.
Expressing hope that India might witness a surge in tourists following the initiatives to be taken by government, Oberoi said: "We expect the government at the Centre and in the states to take a proactive role in focusing tourism as a core area of economic activity in the country."
EIH is presently building two hotels in north Africa, one at Mashobra the other at Casablanca in Morocco. The Mashobra project will be developed jointly with ONA, a leading hospitality group of north Africa. In the $35 million project, 65 per cent stake would be held by EIH and the rest by ONA. Although the architects have been chosen, the construction work would begin in 14 months time from now, Oberoi said. For the Casablanca project, land has been identified but no other progress has been made.
Oberoi also said that the company has temporarily deferred its plan of putting up two projects, one each at Jaisalmer and the other at Khajuraho, owing to lack of communication. "There are no air services to those areas at present," Oberoi added.
EIH is also looking at putting up a small resort hotel in the backwaters of Kerala. The EIH MD said that the company would be spending Rs 60-80 lakh per room in the Kerala project.
