British American Tobacco has no plan to increase stake in ITC

Company has stake in ITC through different entities including Rothmans International Enterprises, Myddleton Investment Company Ltd

London-headquartered British American Tobacco (BAT), which holds about 30 per cent stake in ITC, might not increase its equity holding when the Indian government sells its 11.3 per cent stake in the Kolkata-based cigarettes-to-hotels group, currently held by the Specified Undertaking of UTI (Suuti).

“We don’t have any plans to purchase more shares in ITC at this time,” said a BAT spokesperson, responding to Business Standard’s query on whether it would raise its stake. The Union government has decided to sell Suuti’s stake in private entities — ITC, Axis Bank (23.58 per cent) and L&T (8.27 per cent).

If BAT buys the Suuti stake in ITC, it will become the controlling stakeholder. BAT holds its stake in ITC through different entities, including Rothmans International Enterprises and Myddleton Investment Company Ltd.

After the Cabinet decision last week not to dismantle Suuti for now, it has started the sale process for Suuti’s stake in Axis Bank.

Given ITC’s market cap (Rs 2,57,229 crore as on January 14), the value of Suuti’s stake in the firm is about Rs 29,000 crore.

According to bankers, the government might take time to initiate the sale process of Suuti’s stake in ITC, as the company was a target for takeover since 1996. BAT had placed a bid in 1996, which fell through as the government intervened.

ITC, which sells products ranging from cigarettes to fast-moving consumer goods to paper to retail and hotels, earns more than half of its revenue from cigarette sales. During the quarter ended September 2013, the firm reported a 23 per cent jump in profit from the cigarette business at Rs 2,570 crore.