ITC keeping cards close to chest on EIH, Leela
Non-committal after Sebi expands takeover trigger, says entire business spectrum on radar for investment; enters dairy biz
It’s not just EIH or Hotel Leela Venture, ITC’s other competitors, too, should now be scared of the diversified conglomerate picking up stakes in them.
ITC has significant equity investments in these two hotel companies, and the company may invest in a similar way in other competing companies also, ITC chairman Yogesh Chander Deveshwar indicated on Friday.
ITC’s investments in EIH have reaped significant financial gains as it could foresee the prospect in a company present in same industry, a strategy, that Deveshwar said could be used for other rivals too.
“We invested in EIH at a price of 35 while others invested at a much higher price. This is the reason our investments are confined to industries, by and large, where we operate. We think we know these industries better than those who are not into them, and this makes us feel safer. So, therefore, it’s not only that we would invest in these two companies, we could also invest in other hotel companies, we could also invest in other fast moving consumer goods companies. We could also invest also in agri-products businesses, even information technology companies,” Deveshwar told reporters during a press conference after the 100th annual general meeting of the company.
He added a disclaimer though: “This is not to say we will not invest in industries other than in which we are operating.” Deveshwar didn’t comment when asked if the new relaxation in the takeover laws would lead to ITC raising its stake in EIH, now at 14.98%, a tad less than 15%, the level, if breached, would trigger an open offer under present rules. Under the new takeover rule announced on Thursday, that trigger level has been raised to 25%.
“If the opportunity is good, price is good we would invest. If EIH’s prices have gone up, we may even sell,” Deveshwar said.
After giving tough times to competitors in the branded packaged foods business, diversified conglomerate ITC is readying itself for a foray in the dairy business.
The foray would take off from Munger in Bihar where ITC plans to set up a dairy farm, Deveshwar said.
“We want to be present in (several) fast moving consumer goods businesses and one of the businesses under the umbrella of foods in dairy-based products. India is the world’s largest producer of milk and there is a great opportunity to add value to it by making derivative products and brand them and market them. Our first project would be in Munger where we have been engaged in animal husbandry programme, upgrading the quality of cattle leading to improvement in yield of milk. Over a period of time we would like to establish a dairy there. That would be the starting point for entering the dairy business,” Deveshwar said.
When asked about the products that ITC would be churning out in the dairy space, Deveshwar said: “It could be pasteurised milk, it could be skimmed milk powder, it could be cheese, butter and may be chocolates.”