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| It's been a great investment for us: ITC |
| Ishita Ayan Dutt / Kolkata Aug 31, 2010, 00:04 IST |
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ITC has gained Rs 550 crore from its investment in EIH and is not looking to exit the stock in a hurry, not even after on Monday announcement.
“It has been a great investment for us. Why should we exit? What are we going to do with the cash if we sell the stock? We don’t need cash,” an ITC official said, adding the value of their investment had gone up manifold today.
An ITC spokesperson, however, had no official comments to offer.
The company’s holding in EIH is at the threshold limit of 14.98 per cent, a shade below the 15 per cent that would trigger a mandatory open offer, according to the Securities and Exchange Board of India regulations.
 ITC’s investment subsidiary, Russell Credit, has been accumulating shares in EIH since 2000, now held by ITC. The EIH stock was around Rs35 a share back then, vis-à-vis today’s closing of Rs150.70 on the Bombay Stock Exchange.
However, ITC is not planning to make a hostile bid. “We have made it very clear that we don’t want to launch a hostile bid. And, as of now, we have not had any discussion with EIH,” the official said.
Recently, ITC Chairman Y C Deveshwar ruled out the possibility of a hostile takeover. “Even globally, people first attempt not to be hostile, and we don’t want to go for it at all,” Deveshwar had said at a press conference after the company’s annual general meeting.
EIH is not ITC’s only investment in a hotel company. It has around 8.48 per cent in Hotel Leelaventure and with its investment subsidiary, the holding would be 10.68 per cent. The investment has gained around Rs50 crore since 2008, when it began investing there.
At the company’s previous AGM (2009), Deveshwar suggested joining hands for joint ownership or marketing in the hotel companies in which it had invested. However, a few months later, in November 2009, Deveshwar said the company was rethinking the strategy in EIH. That was in the light of a possible deal between the Oberois and Analjit Singh.
ITC, on its own, sees an investment opportunity of Rs9,000 crore in the hotels business over the next seven to 10 years to fuel its growth. New properties are under construction in Chennai and Kolkata and plans afoot for several other locations.
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