Indian Hotels Company Ltd (IHCL), that operates Taj group of hotels and resorts, will raise around Rs 850 crore through a preferential allotment of shares to its main promoters – Tata Sons Ltd. The entire capital raised will be used for the retirement of debt. The company’s standalone debt as on September 30, 2010 stood at Rs 2,362 crore and consolidated debt till date is Rs 4,210 crore.

A part of the Rs 850 crore will be raised in the current financial year and the balance will be raised not before April 1, 2011, but within the next 18 months. IHCL will raise equity to strengthen its balance sheet. The Tata Group shareholding in IHCL will increase from 30.27 per cent as current to 37.55 per cent over the next 18 months. The company will be issuing up to 3.6 crore shares and up to 4.8 crore warrants on a preferential basis to its promoters for raising this amount.

IHCL posted a net loss of Rs six crore for the second quarter ended September 30, 2010 against a net profit of Rs 12 crore in the corresponding period last year. The total income of the company, (including other income) grew by four per cent to Rs 344 crore, as compared to Rs 330 crore in the same period last year. The company’s total expenditure for the period rose by 12.8 per cent to Rs 317 crore in the period under review, as against Rs 281 crore, last year.