MUMBAI, MAR 1: Fearing a takeover bid on its three associate companies, Indian Hotels, the operators of Taj group of hotels, has begun an exercise to increase its stake by buying out the stakes of other investors. The three associates are: Gateway Hotels & Resorts Ltd, Taj Kerala Hotels & Resorts Ltd and Indian Resorts Hotels Ltd. Indian Hotels' present stake in the three hotels is at an alarmingly low. In Gateway Hotels (owners of Bangalore, Hyderabad and Mangalore properties) Indian Hotels' has a stake of 20 per cent, while in the listed Indian Resorts (owners of Taj's Goa properties), the company has a meagre 9.1 per cent stake. In Taj Kerala too, the parent company's stake is hovering at 16.7%.When contacted, Ravi Dubey, vice president of Indian Hotels, said that the group is aware of the low stake in its associate firms and as and when any takeover attempt is made, they will deal with it properly. He, however, claimed that the Tata group and associates have already increased their stake to form amajority shareholding in all the three companies. "We have a controlling stake now," he added.
As Indian Hotels' stake in the three major properties was far below the required 26-per cent mark to make or break any resolution, the directors have written to all shareholders of these hotels making an offer of buy-out. The low stake, in an era of hostile takeovers, was turning out to be a major concern for the company directors, sources say.
In fact, a director of Indian Hotels and Tata Sons has even sought the help of former chairman and managing director of Indian Hotels, Ajit Kerkar to help them tide over the crisis. Tata officials say in its consolidation drive, Indian Hotels would be buying the shares of all investors who presently have stake in these three subsidiaries. As the response from other investors was extremely unresponsive, Indian Hotels fears that it will lose control, if remedial steps are not taken now. Hence, the plan of buy-out.
Besides, the company is also busy identifying theinvestors of the global depository receipt (GDR) issue of Oriental Hotels, owners of Taj Coromandal Chennai and Taj Malabar, Cochin. The GDR had been privately placed due to bad market conditions. In Oriental too, Indian Hotels stake is at 10.3 per cent. The massive reserves of over Rs 700 crore of Indian Hotels would be used by the company to up its stake, officials said. In the annual general meeting (AGM) of the company held last year, chairman Ratan Tata had said that the group will embark on a consolidation drive and may merge all the companies into the parent company.
Sources say if the Tatas do not increase their stake in these companies, they would eventually lose control in these properties which are contributing a major chunk to the parent company's balance sheet.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
