CB News Desk (cbedit@imaws.org)
Indian Hotels Company,(IHCL), one of the largest hotel players in India, will come with a Rs 3,000 cr rights issue to the existing shareholders of the company in accordance with Securities and Exchange Board of India (SEBI) regulations, making it the biggest fund raising activity by the Tata Group Company in the recent past. The committee board meeting of directors was held on August 23 2021, to decide the terms and conditions of the rights issue,which includes the rights entitlement ratio, the issue price, record date, timing of the rights issue and other related matters.
Mainly the issues will be covered in the area of the company’s financing needs for the capital expenditure, current and future growth and debt repayments. “We would like to inform that the Board of Directors of the company at its meeting held today has, considered and approved, subject to receipt of relevant approvals from regulatory authorities, issue of equity shares by way of a rights issue to the existing shareholders of the company on a record date for an amount not exceeding Rs 3,000 crores,” IHCL said.
IHCL’s net debt has increased 67 percent to Rs 3,110 cr by the end of FY21 as the end of March 31 because of cash burn due to second wave in the month of April, May and June, as against Rs 1,857 cr reported in FY20, as per the company’s presentation. The last rights issue that IHCL did was in 2017 for Rs 1,500 crore.
“The objective of the rights issue is to meet the company’s financing needs for capital expenditure, growth plans and debt repayment and will be finalised in consultation with the merchant bankers. The board also approved the formation of a Committee of Directors for the said rights issue to decide on the terms and conditions of the rights issue including the rights entitlement ratio, the issue price, record date, timing of the rights issue and other related matters,” IHCL added.
The company also appointed Anupam Narayan as an Additional Director of the company in an independent capacity, not liable to retire by rotation, for a period of five years from August 23, 2021 to August 22, 2026. The appointment needs to be approved by shareholders at the next general meeting.
Taj Hotels and Resorts, the premier brand of IHCL, is aiming to expand its portfolio of properties by 36 percent to 300 in the next 3-5 years, a major chunk of which will come up under its asset-light strategy where it will not invest its own funds but take readymade hotels under its fold for operation.
By the end of the next 3-5 years IHCL will have 46 percent of its properties under the management contract, 36 percent held by group companies and 18 percent under holding company, according to a recent presentation made by IHCL.
