| Ashish Chugh, Investment Advisor | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| The demerger of Asian Hotels into three companies, with each promoter group then pursuing aggressive growth & acquisition strategy for their respective companies will lead to huge value enhancement for the shareholders. Asian Hotels Ltd. The demerger of Asian Hotels into three companies, with each promoter group then pursuing aggressive growth & acquisition strategy for their respective companies will lead to huge value enhancement for the shareholders. Background Asian Hotels Ltd. set up its first 5 star deluxe category hotel in Delhi – Hyatt Regency in 1982. Since then Asian Hotels Limited has set up two more 5 star deluxe hotels in India, one each in Mumbai and Kolkata. While Hyatt Regency Kolkata started full-fledged commercial operation from 1st January 2003, Hyatt Regency Mumbai commenced operations from 1st April 2003. HYATT REGENCY, NEW DELHI Hyatt Regency, New Delhi is located at Bhikaji Cama Place and is a 5-Star Deluxe Hotel. The hotel has 508 Rooms and Suites and is well equipped with High Speed Internet, Swimming Pool, Fitness Centre, Business Centre, Boutiques, Salon and Restaurants offering a wide variety of dining options. HYATT REGENCY, MUMBAI Hyatt Regency, Mumbai is located at Sahar Airport Road is also a 5-Star Deluxe Hotel. The hotel is close to the Mumbai International Airport and also not too far from the domestic terminal. The hotel has 401 rooms which are well equipped with Flat Screen Televisions, High Speed Internet, Swimming Pool, SPA, Fitness Centre, Business Centre, Boutiques, Salon and Restaurants offering a wide variety of dining options HYATT REGENCY, KOLKATA Hyatt Regency, Kolkata set on 6.5 acres of landscape gardens is a luxury hotel located in the business district of Salt Lake City. The hotel has 235 Rooms and Suites and is well equipped with High Speed Internet, Swimming Pool, SPA & Fitness Centre, Business Centre, Boutiques Salon and Restaurants offering a wide variety of dining options. Demerger of the Company - Scheme of Arrangement The promoters of the company are constituted in three major groups since the inception of the company - the Jatia Group, the Gupta Group and the Saraf Group. In due course of time, each of the three groups have acquired independent interests in the hospitality industry. To avoid any potential conflict of interest amongst the three groups inter-se and the other shareholders of the company, the promoters have agreed on restructuring of the company by way of a Scheme of Arrangement. The Scheme of Arrangement envisages the trifurcation of the company into three independent undertakings, with each promoter group taking control of each of the three undertakings. The other salient features of the scheme of arrangement and demerger are :- (A) It envisages the trifurcation of the Company into three undertakings in the following manner: (i) Delhi undertaking (ii) Kolkata undertaking together with the investments and development options in Bhubaneshwar and Regency Convention Centre and Hotels Limited, and appropriate cash liquidity; and (iii) Mumbai undertaking together with the investments and development options in Bangalore. (B) It envisages that the Mumbai Undertaking and the Kolkata Undertaking would be transferred to and vested in Chillwinds Hotels. Ltd. (Transferee Company-I) and Vardhman Hotels Limited (Transferee Company-II) respectively. Asian Hotels would then be left with the residual Delhi Undertaking. (C ) It provides for an appropriation of general reserves of the Company to the extent of Rs. 11,40,17,820 to increase the paid-up equity share capital of the Company, pre-de-merger, to Rs. 34,20,53,460. (D) The resultant deemed increased equity share capital of the Company shall be equally allocated to the three undertakings at De-merger. (E) For every three equity shares of Rs. 10/- each held in the increased equity share capital of the Company pre-de-merger, every equity shareholder of the Company shall be entitled to receive one equity share of Rs. 10/- each credited as fully paid-up, in each of the three undertakings. (F) The shareholding of all the three resultant companies would be a mirror image of each other. The Scheme of Arrangement has been approved by BSE & NSE. FINANCIAL The latest financials of the company are given as under :-
The company has a track record of uninterrupted payment of dividend since 1990 and has paid a dividend of 100% each year in the last two years. Conclusion Asian Hotels currently operates three 5-Star Deluxe hotels in the three Metros – a 508 room Hotel Hyatt Regency in Delhi, a 401 Room Hotel Hyatt Regency in Mumbai and a 235 Room Hotel Hyatt Regency in Kolkata. The company has undertaken a restructuring via a Scheme of Arrangement wherein the company will be demerged into three companies – Chillwinds Hotels Ltd., Vardhman Hotels Ltd. and Asian Hotels Ltd.; with one property each going into the fold of each company, where the controlling interest will be vested with each promoter group. The shareholders of Asian Hotels will get one share of each of the three companies for every three share of Asian Hotels held by them pre-demerger. All the three companies will get listed on the Stock Exchanges. Each of the three major promoter groups have acquired independent interests in the hospitality industry. The Saraf Group owns Unison Hotels Ltd. which owns The Grand, a 390 room 5-Star Deluxe Hotel located close to Vasant Vihar in Delhi. The Saraf group also has interest in Hotel Yak & Yeti in Kathmandu, Nepal. As per various press reports, Unison Hotels has plans to build 8 hotels in the next 4-5 years in various cities including Bangalore, Hyderabad, Mumbai and Chennai. Shiv Jatia’s Magus Estate & Hotels Pvt. Ltd. is developing Four Seasons Hotel in Worli, Mumbai which is being constructed on 12000 sq. mtr land and is expected to open in April 2008. The Gupta Group has interest in Edenpark Hotels Pvt. Ltd. which owns The Qutab Hotel in New Delhi. Another company of the Gupta Group, Innova Hotels & Resorts Pvt. Ltd. has plans to build three hotels under the Clarion brand of Choice Hospitality. Besides the ones mentioned above, each promoter group has many other companies engaged in the Hotel & Hospitality business. We believe that the demerger will enable each promoter group to take a long-term strategic decision about their company's future, which may not be possible under the present arrangement. We believe that post restructuring and demerger, each of the three promoter groups will vigorously pursue growth through mergers and acquisitions for the three resultant undertakings. This would ultimately result in enhancement of shareholder value. The demerger of Asian Hotels into three companies, with each promoter group then pursuing aggressive growth strategy for their respective companies will thus lead to huge value enhancement for the shareholders. Ashish Chugh is an equity analyst and investment consultant based at New Delhi, INDIA. At the time of writing this article, he, his firm and dependent family members have a position in the stocks mentioned above. The author, his firm or any of his dependent family members may make purchases or sale of the securities mentioned in the report while the report is in circulation. The author invites readers to send him email and welcomes comments, feedback & queries at nexgenfin@yahoo.com. This report has been prepared solely for information purposes and the information contained herein may not be deemed to be an investment advice. Such information is impersonal and not tailored to the investment needs of any specific person. The information contained herein is not a complete analysis of every material fact representing any company, industry or security. The views expressed may change. While the information contained herein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Investors are advised to satisfy themselves before making any investments and should consult with and rely upon their own advisors whether and how to use such information in making any investment decision. Neither the author nor his firm accepts any liability arising out of use of the above information/ article. |
