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EIH promoters may increase stake to over 40%

BS Reporters/Kolkata 08 Aug 12 | 12:59 AM
Related to : EIH Ltd
 EIH Ltd

BSE   20 Jun 18 | 12:00 AM

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Promoters of EIH Limited, which runs the Oberoi and Trident chain of hotels, are likely to increase their stake in the company to more than 40 per cent. “We will continue to increase our holding gradually, but it requires a lot of money," Chairman and Chief Executive Officer P R S Oberoi said at the company’s annual general meeting in Kolkata on Tuesday.

In 2011-12, the promoters’ stake was increased 1.36 per cent. Vice-Chairman S S Mukherji said the company was bound by the Securities and Exchange Board of India (Sebi)’s cap of five per cent through the creeping acquisition route. “Increasing the shareholding is a continuous process. This year, we have added 1.36 per cent. Depending on the cash flow availability, we will be increasing shareholding in EIH. And, availability of cash flow depends on the dividends from various companies. I would say we would like to go to 40 per cent," Mukherji said.

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Currently, promoter holding in EIH stands at 35.23 per cent. Diversified business group ITC, which has been buying into EIH since 2000 increased its stake 0.06 per cent, while the holding of Reliance Industries Investment & Holding stood at 18.53 per cent.

On whether Reliance Industries (RIL) had any plan of increasing stake, Oberoi said, “I cannot predict what they would do. There is no talk of increasing shareholding at the moment."

In a surprise move in 2010, EIH had brought in RIL as a stakeholder to ward off any possible takeover. RIL’s wholly-owned subsidiary Reliance Industries Investment & Holding had acquired 14.8 per cent stake from Oberoi Hotels and EIH promoters. Initially, RIL had acquired a 14.2 per cent stake for Rs 1,021 crore. Later, it increased its stake to 14.8 per cent.

When RIL acquired the 14.2 per cent stake, the threshold level for acquiring shares without triggering an open offer for another 20 per cent was 15 per cent, according to Sebi guidelines. However, the new takeover code has increased the limit to 25 per cent.

Last year, Mukesh Ambani’s wife Nita Ambani was inducted to the EIH board. At the EIH annual general meeting on Tuesday, some shareholders hoped the rally in the RIL stock would now rub off on EIH as well. The EIH stock on Tuesday closed at Rs 82.55, up 2.17 per cent.

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