EIH not a closed chapter, says ITC chairman

Does not rule out discussions with EIH management or RIL

ITC Chairman Y C Deveshwar today signalled that EIH, which owns and operates the Oberoi and Trident chain of hotels, was not quite off its radar.

Indicating that the chapter was far from closed, Deveshwar did not rule out discussions with the EIH management or Reliance Industries Ltd (RIL) in future. “We have had discussions with EIH, but that was before the deal with RIL,” Deveshwar said on the sidelines of the Confederation of Indian Industry National Council Meeting.

“Why should it be a closed chapter? Nothing is ever a closed chapter,” Deveshwar said when asked whether discussions could resume. ITC holds 14.98 per cent in EIH, just a shade lower than the Securities and Exchange Board of India regulations that make an open offer mandatory. However, ITC’s stake would be reduced if it does not subscribe to EIH’s proposed rights offer. “When the open offer comes, the board will take a call,” Deveshwar said.

On September 23, EIH announced that its board had given approval to raise up to Rs 1,300 crore through the issue of shares on a rights basis. The date of the rights issue, the ratio and price are yet to be finalised.

“We still hold 14.98 per cent and that chunk has not come down,” he reiterated, while reassuring that the company had no hostile intentions.

The ITC chairman did not divulge details of the discussions they had with the EIH management. “These were private discussions,” he said. ITC has been accumulating EIH shares since 2000. “We have been buying the stock when it was priced at Rs 35 a share. It’s been a great investment for us,” Deveshwar said.

However, he had recently said the valuation of the RIL-EIH deal was high. Late August, in a surprise move, RIL picked up a 14.2 per cent stake in EIH for Rs 1,021 crore, valuing the company at Rs 7,200 crore. RIL Investments & Holding Pvt Ltd raised its stake subsequently to 14.8 per cent in EIH. The shares today closed at Rs 136.20 on the Bombay Stock Exchange.

The industry believed the RIL deal was done to ward off any unsolicited offer from ITC. Earlier, EIH had roped in Max India Chairman Analjit Singh to buy a 17 per cent stake in the hotel chain from the promoters for Rs 1,250 crore, but the deal did not fructify.