Thursday, 17 March 2011

Singapore Co. to Invest in Tata's Hotel Chain

Singapore-based Omega TC Holdings Pte Ltd. will invest 2.2 billion rupees($48.77 million), in tranches, in Tata Group's loss-making Roots Corp. Ltd, which runs the budget hotel chain Ginger, for a minority stake.
Omega will also have an option to invest another 1 billion rupees in Roots by March 2014, the company said in a Bombay Stock Exchange filing on Wednesday.

Roots is a wholly owned subsidiary of Indian Hotels, which runs the Taj chain of hotels.
Indian Hotels said Omega will initially invest 1.5 billion rupees to acquire compulsory convertible preference shares from existing holders for 700 million rupees.

Prabhat Pani, CEO of Roots, did not return calls seeking comment. Mint could not immediately contact Omega TC Holdings.
"It is a positive sign for Indian Hotels that an investor is stepping in, despite Roots Corp. incurring losses for the past two years," said Rashesh Shah, an analyst with ICICI Securities Ltd.
"They can use the funds to reduce the debt burden," he said, adding Roots Corp. accounts for 5% to 6% of the total revenue for Indian Hotels.

Roots operates 25 Ginger hotels, which offer rooms with basic services at relatively low prices.
The size of India's hotel industry was estimated at 150 billion rupees for financial year 2010, and is projected to grow at a compounded annual growth rate of 11.8% to 262 billion rupees by the financial year 2015, according to a November study by rating agency Credit Analysis and Research Ltd.

Source: The Wallstreet Journal

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