Uti Picks Up 5.57% In Itc Hotels

Unit Trust of India, as part of its investment in blue-chip companies, has acquired 5.57 per cent stake in the Rs 130-crore ITC Hotels Ltd.

In accordance with the regulations of the Securities and Exchange Board of India's Substantial Acquisition of Shares and Takeover Regulations of 1996, UTI has declared that it has acquired 16,84,190 shares totalling 5.57 per cent of ITC Hotels in a recent deal.

A senior official of ITC Hotels confirmed this acquisition to Business Standard. "They have bought the shares in the open market and the price must be around Rs 125 to Rs 130 per equity share," the official added.

 

The holding company of ITC Hotels _ cigarette major ITC Ltd _ controls a majority 70 per cent stake in the company which operates the Welcomgroup chain of hotels, while the remaining is held by the public and financial institutions.

Another official of UTI, while also confirming the acquisition, stated: "This is a regular part of our activities and we feel that ITC Hotels shares will pay back good dividends."

The move from the financial institution is in spite of ITC Hotels witnessing a lacklustre 1997-98 with gross income remaining almost static and net profit dipping.

The company had reported a gross income of Rs 130.85 crore against Rs 130.71 crore previously and earned a profit after tax of Rs 26.21 crore compared with Rs 31.05 crore in the corresponding previous year.

The hotels firm also fell short of its own projections for the year by a long shot. It had estimated a gross income of Rs 161.11 crore and a net profit of Rs 36.45 crore. The company has attributed the poor showing to the fact that the hotel sector was adversely affected due to an unfavourable demand and supply situation in the previous fiscal.

Out of the profits available for appropriation, the directors of the company has proposed to transfer an amount of Rs 2.50 crore to the Debenture Redemption Reserve. Rs 5.75 crore to foreign exchange earnings reserve and Rs 7.95 crore to general reserve. The company has recommended a dividend of Rs 3 per equity share for the year ended March 31, 1998. It has requested its holding company, ITC Ltd, to take over the investments made by it in the Mumbai hotel project and to fund it to completion.

The company has embarked on large hotel projects including in Calcutta and Mumbai. It has also renamed one of its subsidiaries _ Srinivas Resorts Ltd _ as Welcomgroup Grand Kakatiya Sheraton Hotel & Towers consequent to the association with the renowned hotel chain Sheraton International Inc.

This alliance, according to the company, will give it a boost for providing international publicity and marketing reservation services.