Asian Hotels Splits into 3 Entities

News Posted - 2010-02-19

The 28-year-old partnership that brought the Hyatt hospitality brand into the country has formally ended with the three key promoters creating three distinct entities. Sushil Gupta, Shiv Jatia and Umesh Saraf, who came together to establish the three Hyatt properties under the umbrella of Asian Hotels Ltd, have got the Delhi High Court’s nod for a de-merger, thereby splitting the erstwhile company into three separate firms. The three Hyatt properties in the country will now be operated by three companies. While Shiv Jatia will run Hyatt Regency in New Delhi, Sushil Gupta will have control of the Hyatt Regency in Mumbai via Chillwinds Hotels Ltd. Similarly, Umesh Saraf will operate the Hyatt Regency, Kolkata through Vardhman Hotels Ltd.

On Wednesday, Asian Hotels announced the company’s name stands changed to Asian Hotel (North) Ltd. It is understood that the same will be undertaken for the other two firms involved in the de-merger. As on October 31 last year, R K Jatia and the Shiv Jatia Group held 26.8 per cent in Asian Hotels, while Saraf Industries and Forex Finance, representing the Saraf interests, held 15.16 per cent in the company. The Gupta group held another 17.25 per cent. “The three groups have been together for almost 30 years. However, each of us have our own interests and want to pursue our own plans. By undertaking the de-merger, it is a win-win situation for all of us,” Sushil Gupta told Business Standard.

He added that, despite the de-merger, there would be cross-holding across the three companies for sometime, but did not divulge the details of this arrangement. In its filing before the Delhi High Court, available on the BSE website, Asian Hotels said the three promoters have independent interests in the hospitality industry, “which may create potential conflict of interest situations”, leading to an impact on shareholders’ interests. Therefore, with an eye on minimising conflict of interest and maximising growth and future prospects, the Kolkata and Mumbai undertakings should be transferred and vested in Chillwinds Hotels and Vardhman Hotels respectively, the petition argued.

It is understood that the three constituent groups were exploring opportunities to establish properties across geographies, which could have led to some discord. Gupta, for instance, intends on setting up a hotel in Delhi. Moreover, Magus Estates and Hotels, part of the Jatia Group, has already opened a Four Seasons property in Mumbai and is scouting for other locations.

Source: Indian Realty News 19/2/10