| (From left) EIH managing director S. S. Mukherji, chairman P. R. S. Oberoi and newly appointed directors Nusli Wadia and Christopher Reeves at the company’s AGM in Calcutta on Friday. Picture by Kishor Roy Chowdhury.
Calcutta, Aug. 30: EIH chairman P.R.S. Oberoi today said the promoters of the hotel major were willing to buy out Unit Trust of India’s (UTI) 7.94 per cent stake in the company.
“If we do not buy Unit Trust’s stake, we will get someone else to buy it for us,” Oberoi said after the company’s annual general meeting here today.
However, he clarified that UTI had not yet approached the company’s promoters to offload its shares. “Nor have we approached them so far,” he added.
Oberoi’s offer to buy out UTI’s stake gains significance from the fact that the mutual fund has been selling the stock in the market to the advantage of ITC Ltd—the tobacco major—which has piled up a 14 per cent stake through three investment companies.
Oberoi had, in the past, made a similar offer to the former UTI chairman P.S. Subramanyam. “But UTI assured me it would remain invested in EIH,” he said.
The EIH promoters have been consistently increasing their stake in the company through the creeping acquisition route, which Oberoi said, would continue. The Oberois now hold 42.44 per cent, having increased their stake by close to 1 per cent over the last couple of months.
Earlier at the AGM, Oberoi said EIH would drastically cut down on capital expenditure for the next two to three years in view of the downturn in the hospitality industry. But investment on the upkeep of existing properties would continue.
“I have committed to His Majesty, the King of Morocco, that we will build a hotel in Marrakech. We will certainly build that one, but otherwise we will prefer to conserve resources. For the next two to three years, we will prefer to manage existing properties rather than invest in new ones,” he said.
However, there will be no major investment in the Marrakech project this year. “We have just started planning the property. We will have only to pay the consultants this year,” EIH managing director S.S. Mukherji said.
“We are going slow on other ongoing projects as well. Construction of the property at Bandra-Kurla in Mumbai has been extended. We will be finishing it in 2005 or early 2006, unless the situation improves dramatically,” Mukherji added.
Commenting on business prospects this year, Oberoi said: “I don’t think this year is going to be a good one. I wish I am wrong but I don’t see the industry recovering before the winters, which would not be sufficient.”