On a happy note

Mumbai, May 30: EIH Ltd, the holding company of the Oberoi group, today announced that its board will meet tomorrow to consider a bonus issue, signalling the best of times in the hospitality industry.

If the board clears the proposal, EIH will be the first hotel company to reward its shareholders with a bonus issue in recent times. It had last offered a bonus 10 years ago.

The announcement comes at a time when the industry is enjoying an upswing in its occupancy and room rates. Most companies reported better-than-expected numbers for the fiscal 2005-06 as consolidated net vaulted 200 per cent behind a 20 per cent topline growth, making the industry a star performer of Corporate India.

Analysts said the proposed bonus issue offers the company a chance to reward shareholders when the industry is on a roll.

EIH had issued bonus shares five times in the last 25 years. In the last instance, in 1996, shares were offered in the ratio of 1:2.

Soon after the announcement, the EIH stock sizzled on the bourses. After opening at Rs 705, the scrip jumped to an intra-day high of Rs 728 before signing off at Rs 707.50. There were 1,675 trades with 70,657 shares changing hands

EIH board will also discuss the company?s fourth quarter results at the meeting. Analysts expect positive numbers to add a further fizz on the company. It had declared an interim dividend of Rs 5 per share for the last fiscal.

During the third quarter of the year ended December 31, 2005, the company posted a 475 per cent rise in net profit to Rs 126.39 crore against Rs 21.97 crore in the same period of 2004-05. Total income shot up to Rs 225.53 crore from Rs 180.37 crore.

The board had earlier in this year transferred two hotels, The Oberoi Cecil, Shimla and the Trident Hilton, Bhubaneswar to EIH Associated Hotels Ltd.

EIH Associated Hotels allotted to EIH 10 lakh redeemable non-cumulative preference shares and 68.99 lakh redeemable unsecured debentures.