P.R.S. Oberoi may carve out EIH properties

P.R.S. Oberoi may carve out EIH properties

Kolkata: Properties may be carved out of EIH Ltd, the Oberoi family’s flagship hotel firm, and transferred to EIH Associated Hotels Ltd—a joint venture with the Rajan Raheja group—under group chairman P.R.S. Oberoi’s succession plan involving his son Vikram and nephew Arjun.

“Nothing is impossible," P.R.S. Oberoi said, when asked if he was considering such a move. There is, however, no immediate plan to do so, he later clarified.

“I have been thinking about it (succession) all the time," Oberoi added. “I hope to do something about it within a year or two."

Tuesday’s announcement is being seen as an indication that cousins Vikram Oberoi and Arjun Oberoi, who are joint managing directors of EIH, may not run the company together after P.R.S. Oberoi, 81.

It isn’t immediately known if others in the extended Oberoi family have any stake in the holding companies that collectively own 46.43% of EIH.

Vikram Oberoi is also the managing director of EIH Associated Hotels in which EIH and the Rajan Raheja group hold 36% apiece.

The Rajan Raheja group is a diversified conglomerate with interests in real estate, industrial batteries, cement, petrochemicals and media. Raheja is a close associate of P.R.S. Oberoi, and is an independent director of EIH.

EIH Associated Hotels was founded 27 years ago to hold stakes in properties that are not fully owned by EIH or the Oberoi family. It has, over the years, consolidated its stake and now owns eight hotels, most of which are under the Trident brand. EIH also owns eight properties, of which two use the Trident brand.

The Oberoi group owns or manages nine properties under the Trident brand, 19 under the flagship Oberoi brand, which includes three cruise ships, and two “unbranded properties" in five countries, according to a spokesperson for the group. All the Trident properties are located in India; among the Oberoi branded properties, 11 are in India.

Over the last few years, several properties have been transferred from EIH to EIH Associated Hotels, but “those transfers had nothing to do with the Oberoi family’s succession plan," according to EIH vice-chairman S.S. Mukherji.

EIH Associated Hotels’ shares closed 8.9%, or Rs12.65, higher at Rs155 apiece on the Bombay Stock Exchange (BSE), after touching an intra-day high of Rs166, while the bourse’s Sensex index shed 97.76 points, or 0.5%, to close at 18,311.59 points. EIH’s shares advanced 3.24% to close at Rs145.

Though both companies own eight hotels each, there is a huge gap between their market valuations. EIH has a market capitalization of Rs5,697 crore; the market value of EIH Associated Hotels is just Rs303 crore.

Though not “worried" about rival ITC Ltd’s 14.98% stake in EIH, P.R.S. Oberoi said his family would continue to ramp up its stake in the firm through the so-called creeping acquisition route under which founders are allowed to raise their holdings by up to 5% of a company’s shares in a year.

“Deveshwar has made several statements that they have no intention of bothering us," Oberoi said. “So, am I not worried." He was referring to ITC chairman Y.C. Deveshwar, who has said several times that his company would not make a hostile bid to take control of EIH.

On business expansion, he said EIH was looking to secure properties in cities such as London, Paris, New York, Shanghai, Beijing and Bangkok, on management contracts, “at minimum or no investment in the assets". The company proposes to invest Rs150 crore over the next two years on projects under development, he added.