Leela refutes ITC's takeover intentions

Vivek Nair, vice-chairman & managing director at Hotel Leela Venture has refuted market intelligence that tobacco conglomerate ITC is moving to take over his company.

In a TV interview to CNBC-TV18 on raising capital through the FCCB and QIP routes, Nair shot down the notion that his family’s controlling stake was at risk with ITC increasing its stake by 7.37% last month. This was done through ITC’s investment arm Russell Credit.

“The chairman of ITC has been my friend for the last 25 years. He personally assured me that this is only a treasury operation. They feel our stock is the lowest amongst hotel priced stocks. Therefore, it is the only intention in mind,” said Nair.

Yet, as a precautionary measure, Nair is increasing his family’s holdings from 53% to 55% by March 31, this year.

ITC which is sitting on a huge cash pile has been looking to buy out a large luxury hotel company in India. It was earlier linked to Aman Resorts and lately EIH which owns the Oberoi Hotels. An ITC insider, in a discussion on his company’s expansion plans, did indicate that acquiring Leela is an option because its heavy debt burden has made it vulnerable.

Nair’s statement also comes in the wake of a recent buzz that ITC had offered to buy a strategic stake in Hotel Leela Venture at Rs80 per share. “Nothing at all. Our sales may even go to Rs100 once our Delhi hotel Chanakyapuri) will be made operational. Our Chennai hotel will also be made operational in the first quarter next year. So in FY11-12, our revenue will go up to Rs1,000-1200 crore as we work in very high gross operating margins in our industry. Close to 45-50% of the market is good and the average Delhi rates are high. Hence, we are very confident of producing great results from FY11-12 onwards,” said Nair when asked if there was any truth in the rumour.