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ITC should come up with solid proposal: EIH

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Oberoi on news that ITC is keen on joint venture.

Mr P.R.S. Oberoi, Chairman and Chief Executive of EIH, flanked by Mr S.S. Mukherji (right), Vice-Chairman, and Mr Vikram Oberoi, Joint Managing Director, at the annual general meeting of the company in Kolkata on Thursday.
Mr P.R.S. Oberoi, Chairman and Chief Executive of EIH, flanked by Mr S.S. Mukherji (right), Vice-Chairman, and Mr Vikram Oberoi, Joint Managing Director, at the annual general meeting of the company in Kolkata on Thursday.

Our Bureau

Kolkata, Aug. 20

Mr P. R. S. Oberoi, Chairman of EIH Ltd, said here on Thursday that if ITC wished to join hands with the Oberoi Group in the hotels venture, it must come forward with a concrete proposal.

Reacting to queries on the subject at a press conference after EIH’s 59th AGM here, Mr Oberoi said that some media reports suggested that ITC was willing to work with the Oberoi group.

He, however, clarified that his group was yet to receive any formal proposal from ITC in this regard.

ITC, which owns the Welcome group of hotels, has a 14.98 per cent stake in EIH through its subsidiary — Russell Credit. ITC’s indirect stake stands a shade below the threshold of 15 per cent, which, under SEBI takeover regulation, triggers open offer for additional 20 per cent stake. The promoter group holds 46.42 per cent in EIH.

To invest Rs 350 cr

Mr Oberoi said EIH proposed to invest Rs 350 crore in new projects in the next two financial years to add 2,500 rooms.

Currently, it has a total of 4,022 rooms. The company is also planning to manage more properties owned by others. Three such properties are under construction in Dubai, Abu Dhabi and Morocco. EIH is also setting up flight kitchens in Mauritius, as also in Kochi and Kozhikode, he said.

He said the global financial crisis, the terror attacks in Mumbai and the recent H1N1 pandemic had affected the hotel industry causing a sharp fall in foreign tourist inflow.

Room rates were currently down by 30 per cent from their last peaks, he indicated.

Mr Oberoi felt that business conditions during the remaining period of the current year could continue to be difficult for the hospitality industry. He, however, was hopeful of a revival in 2010-11. He wished the Government considered hotel industry as part of the infrastructure sector.

Mumbai hotel to reopen in 2010

He said the Oberoi hotel in Mumbai, which was damaged following the terrorist attack in last November, was likely to reopen in the first quarter of 2010. Built in 1986, the hotel was being renovated entirely and the technology back-up system was also being upgraded. Renovation of four floors of the Trident Nariman Point, Mumbai, was completed during 2008-09.

The 440-key Trident Hotel at Bandra-Kurla in Mumbai would open shortly. The Oberoi, Gurgaon, is expected to open in 2010.

The 153-key first phase of the Trident hotel project at the new Bangalore International Airport is expected to be ready in 2011. The second phase, consisting of 167 keys, is likely to open by 2013. Construction of the 299-key Oberoi hotel at Cyber City, Hyderabad is under way adjacent to the 326-key Trident hotel, which is also under construction.

Related Stories:
EIH undertakes restructuring exercise
ITC plans more properties in its kitty this year

(This article was published in the Business Line print edition dated August 21, 2009)
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