IHCL Updates SSHA with SATS Ltd; Taj SATS Reclassified as IHCL Subsidiary

Indian Hotels Company Ltd (IHCL) has announced the execution of an amended Subscription cum Shareholders Agreement (SSHA) with SATS Ltd (SATS) and Taj SATS Air Catering Limited (Taj SATS) on July 23, 2024. The SSHA, originally established on September 25, 2001, was designed to regulate the relationship between IHCL and SATS and to address various aspects of Taj SATS’s operations.

Under the SSHA, IHCL holds a 51% equity stake in Taj SATS, while SATS holds the remaining 49%. The significant terms of the agreement grant both IHCL and SATS specific rights, including the ability to nominate directors, the first right to subscribe to shares in the event of issuance, and the authority to restrict changes in Taj SATS’s capital structure. Additionally, these rights extend to aspects of the day-to-day management of Taj SATS, ensuring both parties have substantial control over the operational aspects of the business.

The purpose of the recent amendment to the SSHA is to refine and modify certain shareholder rights related to the day-to-day operations of Taj SATS. This amendment aims to delineate the responsibilities and areas of focus between Taj SATS and a subsidiary of SATS operating in India, ensuring clearer operational boundaries and improved governance.

Despite these changes, the amendment does not affect the shareholding structure of Taj SATS; IHCL and SATS continue to hold their respective 51% and 49% stakes. The adjustment primarily addresses the operational dynamics without altering the equity distribution.

Following the execution of the amended SSHA, Taj SATS will now be accounted for as a subsidiary of IHCL under Indian Accounting Standards (IndAS). This change is due to a revised evaluation of “control”, which, from the date of the amended SSHA’s execution, reclassifies Taj SATS from a joint venture to a subsidiary of IHCL. This reclassification reflects the enhanced control and influence IHCL has over Taj SATS’s operations, aligning with updated accounting standards and providing a clearer representation of IHCL’s ownership and control in financial statements.

Taj SATS is recognised as a related party of IHCL and its group companies, which underscores the close business relationship between the entities involved. The amendment to the SSHA reflects ongoing efforts to optimise governance structures and operational efficiency within the group.

On July 24, 2024, the share price of Indian Hotels Company Ltd opened at ₹624.85, touching the day’s high at ₹638.60, as of 10:35 AM on the NSE.

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