The Telegraph
Since 1st March, 1999
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Stake tussle in EIH intensifies

Calcutta, Oct. 11: The promoters of EIH Ltd — the country’s second largest hotel company — have increased their stake by 1 per cent over the last three months. The Oberois now hold 42.5 per cent in EIH.

Tobacco major ITC, which has been buying shares of EIH through three investment companies for over two years, has also raised its holding in the company, albeit marginally. The three investment companies together hold 14.25 per cent in EIH now. The three investment firms—Peninsular Investments, New Deal Finance and Megatop Financial Services — hold over 74.6 lakh shares of EIH now, roughly four lakh shares short of the crucial 15 per cent mark.

ITC will have to make an open offer for at least 20 per cent of the company’s shares if its stake exceeds 15 per cent. However, ITC chairman Y. C. Deveshwar says there are no plans of wresting management control of EIH. ITC is understood to have invested around Rs 150 crore for its stake in EIH.

The Oberois, however, are tightening their grip on the company. They have raised their holding substantially by way of creeping acquisition since ITC entered the scenario. They felt ITC’s acquisition was abetted by constant selling by Unit Trust of India (UTI).

UTI has reduced its stake in EIH by 23.13 lakh shares over the last one-and-a-half years. The country’s largest mutual fund now holds 39.42 lakh shares or about 7.52 per cent stake, which the Oberois are willing to buy out.

P. R. S. Oberoi, chairman of EIH, announced his willingness to acquire the shares held by UTI after the company’s annual general meeting in Calcutta in August. He said: “We will buy it, or arrange to have it bought by someone close to us.”

P. R. S. Oberoi had once met P. S. Subrahmanyam, then chairman of UTI, with an offer to acquire the stake, but he reportedly told Oberoi UTI intended to stay invested in the company.

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