The Telegraph
Since 1st March, 1999
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Oberois plan recast to reach out wider

Calcutta, Sept. 1: The Oberois are planning to restructure their operations in a bid to make EIH Ltd — the group flagship — a bigger company. Currently, various proposals to restructure the group are being internally evaluated.

Besides EIH, the group comprises a number of subsidiaries and privately held companies and group patriarch and EIH chairman P. R. S. Oberoi hinted at the possibility of a merger of group companies and subsidiaries. “We have a number of small companies in the group. The objective of the proposed restructuring is to have one large company rather than a number of small ones. But there are several issues—taxation, stamp duty and valuation among others—that have to be carefully considered before finalising the recast plan,” Oberoi said.

Some of EIH’s subsidiaries hold single properties such as Mumtaz Hotels, Mashobra Resort and Rajgarh Palace Hotel and Resorts.

Besides, EIH has investments in a large number of companies that hold various properties promoted and managed by the group. These include some privately owned firms as well like Indus Hotels, which holds four Trident properties.

EIH also holds a majority stake in Mercury Travels, a leading tour operator and travel agent.

A couple of years ago, the company had thought of reducing its control in Mercury Travels, but, EIH managing director S. S. Mukherji said, the plan had been postponed till such time the industry recovered from the ongoing recession. EIH had earlier planned to foster a co-branding and marketing tieup with a foreign major. Though it has been two years since the plan was mooted, Oberoi said the company still was optimistic the move would succeed. “Though there’s been little success so far, we are still talking to people, and hope it will materialise some day.”

Eastward ho

Oberoi said EIH had received offers from companies in Malaysia and Cambodia to set up properties there. EIH may consider developing properties in these countries, if at all, jointly with local partners.

“We have had some discussion with these companies, but we haven’t made up our mind yet whether or not to set up properties there,” he said.

“However, if we expand internationally, it will be in the Asia Pacific region, where tourist inflow is steadily rising. We are also thinking of setting up a second property in Morocco—in Casablanca,” he added.

The group has decided to cut down on capital expenditure over the next two to three years in view of the downturn in the industry. It has even deferred the completion of its property in Bandra-Kurla, Mumbai, till end of 2005 or early 2006. A property in Angkor Wat, Cambodia, is nevertheless, under consideration.

The group has a policy of holding not more than 40 per cent equity stake in properties overseas. “If the properties materialise, we will hold 15-40 per cent in them. The local partner will hold the rest,” Oberoi said.

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