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Indian Hotels lowers FII stake cap to 30%

Indian Hotels lowers FII stake cap to 30%
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First Published: Sat, Aug 04 2007. 12 09 AM IST
Updated: Sat, Aug 04 2007. 12 09 AM IST
Indian Hotels Co. Ltd has decided to reduce the ceiling on the stake in the company that can be held by foreign institutional investors (FIIs) because it doesn’t know the entity on whose behalf FIIs buy the stock.
“This issue has stemmed out of some concern over the likelihood that often in the case of FIIs you do not know who the eventual shareholder is because they stand behind the FII,” said Ratan Tata, chairman, Tata Sons Ltd, the holding company of the Tata group of which Indian Hotels is a part.
Indian Hotels has decided to reduce the ceiling on the stake that can be held by FIIs from 40% to 30%.
On 20 June, the company had announced to the Bombay Stock Exchange that it had decided to do this, “subject to receiving all the applicable approvals.”
This will not change the current holdings of FIIs, Tata added. “In any case the FIIs’ holding stands at 25% as of now, and not at 40%, so we haven’t taken anything back. We’ve just moved the limit,” he said.
Tata made the announcement at the 106th annual general meeting of the company on Friday evening.
Analysts and experts could not immediately be reached for comment on what this meant.
At the meeting, the company also announced that it would be moving to a single currency tariff by September in an effort to protect itself from losses such as the one it has suffered on account of the rupee’s appreciation against the dollar. The rupee has appreciated by almost 7% against the dollar in the three months to June.
Most hotels charge Indian patrons in rupees and foreign visitors in dollars. However, the rise of the rupee meant that the company was earning less (in rupee terms) on dollar transactions.
“Going forward all the quotes will be in Indian rupees. This does not include our overseas hotels, where the rates will be determined by the local currency,” said Anil Goel, chief financial officer, Indian Hotels.
He maintained that the company’s decision to switch to a single currency tariff was driven by a combination of factors which included the steady appreciation of the Indian rupee. “In the old days we used to have dual tariff for historical legacy reasons which are no longer relevant,” he added.
Slammed by the weakening dollar, several hotel companies and tour operators have been considering a similar switch.
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First Published: Sat, Aug 04 2007. 12 09 AM IST