The Telegraph
Since 1st March, 1999
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Globe-trotter Taj aims higher

Calcutta, Sept. 17: The Indian Hotels Company Ltd wants to buy a hotel chain to increase its presence in the US, UK and west Europe — its key source markets. Managing director R. K. Krishna Kumar said: “We would like to do another Tetley with Indian Hotels.”

Indian Hotels, the country’s largest hotel company, already has 16 properties overseas, but most of them are located in the Indian Ocean region — in countries like Maldives and Sri Lanka, among others. It has a property in London as well.

“In the past, we have looked at individual properties. Ideally, we would like to acquire a small, but high-quality chain, which would enhance our presence in the source markets, which are the US, UK and may be even China,” Krishna Kumar said.

“Financing the acquisition is not the key concern; finding the right property is. If the cash flows from the property are satisfactory we can leverage our own funds to acquire it. When Tetley was acquired, it was significantly larger than Tata Tea.”

Back home, the company is in the process of restructuring its properties. Kumar said the exercise was aimed at identifying and re-branding some of the weaker hotels in the chain.

“The Taj brand will be reserved for the best properties. This will be matched by the Exotica brand in the leisure destinations. Those that are a shade below that level will perhaps be called Gateway, which is another brand owned by the company,” he said.

Besides the overseas expansion drive and the restructuring exercise, Indian Hotels is also consolidating its subsidiaries. “We will reduce our 57 subsidiaries — mostly investment and holding companies — to 30 by March 2003. The consolidation will continue next year. We have already trimmed seven subsidiaries this year,” he said.

Commenting on operations, he said: “Performance in the second half of the year should be satisfactory. Though tariffs have fallen sharply, occupancy is picking up. There are clear signs of recovery in the industry thanks to the withdrawal of travel advisories and increase in business travel within India.”

Tetley expansion plan

Tetley plans to enter Russia, Pakistan and Bangladesh by the end of the current financial year, CEO Ken Pringle said. The company is now part of the Tata group.

Tetley will sell packet tea in these countries, despite being predominantly a “tea-bag company” so far.

Pringle added that Tata Tea and Tetley would soon start working as “one seamless entity”. This implies that the operations of the two companies will be fully integrated though legally they would remain separate entities.

Task forces and a supervisory committee for the integration have been formed, and Boston Consultancy Group is advising the two companies from outside. The two companies together control about 4 per cent of the world’s tea markets.

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