Amid family feud, EIH-owned Oberoi Hotels to develop two hotels in Pune, London

In Pune, the company said in a filing on late Monday night that it had acquired a majority stake in real estate company Muttha group's Muttha Towers II Private Ltd which has assets worth ₹175 crore. EIH will deploy ₹254 crore into the Muttha business which was launched in 2019 and has a land parcel of 1.7 acres in the city. On this property, the company will build a Trident Hotel with approximately 175 keys across about 181,000 sq.ft. 

It will also make a commercial development with an office space and a food and beverage area which will support retail outlets, across 408,000 sq.ft. The entire project will cost ₹972 crore, EIH said in its BSE filings. The hotel and other businesses surrounding it will open in five years, by the first quarter of FY30. The company has 12 hotels in India at present and another nine hotels in other parts of the world. The company primarily owns and manages its hotels but also takes other hotels on management contracts for a fee.

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EIH, in a separate announcement also said that it has now created a new entity in the UK, EIH London Investments Ltd to develop an Oberoi hotel there. The parent company in India, EIH will hold a 51% equity stake of the same. It will build a hotel under The Oberoi brand in London. It is expected to open by FY28. The Oberoi Group parent reported a 9% year-on-year decline in profit during the first quarter of FY25 and a 5% dip in revenue from operations from the quarter gone by.

"Their growth plans have accelerated with the recent announcements of projects not only in India but internationally as well. The financials reported for FY24 have been stellar. Quality hasn't suffered and the focus on service quality is unabated. Arjun (Oberoi) has led development for many years now, some examples being Sukhvilas, their hotels in UAE and Morocco to name a few," said Rattan Keswani, a veteran in the hospitality industry with leadership experience at Lemon Tree Hotels and The Oberoi Group. 

"The focus on aesthetics and unique design is their inheritance, but you see some unique embellishments in the new developments and recent refurbishment of the existing hotels and contemporary F&B concepts e.g. Bay Club and Dhilli, etc. I, therefore, do not see any compromise."

They are now looking for opportunities across both domestic and international markets. "Investors not only reward financial strength but growth as well. I believe they are on the right track," said Keswani.

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Earlier this year, EIH had also announced plans to expand into tier three locations, managing director and chief executive Vikramjit Singh Oberoi had said. Its future projects include a mix of owned and managed properties, such as a palace near Khajuraho, the Rajgir Palace in Madhya Pradesh, and a jungle resort in the same state. In August last year, Reliance Industries also signed an agreement with The Oberoi Hotels and Resorts through its Reliance Strategic Business Ventures Ltd which owns nearly 19% of Oberoi's EIH to jointly manage two properties here and one in the United Kingdom.

Elsewhere in court

Anastasia Oberoi, daughter of the late PRS Oberoi, who passed away in November 2023, is currently locked in a legal confrontation with EIH. The dispute revolves around her claim to a rightful share of the family inheritance and her stakes in the business. She has reportedly contested her exclusion from a portion of the family’s wealth, particularly shares in EIH. Her legal challenge, aimed at securing a larger part of the Oberoi inheritance, has raised concerns about how the estate was divided following Oberoi’s death last year.

The Delhi High Court has granted interim relief to Anastasia, daughter of the late hotelier Prithvi Raj Singh Oberoi, by restraining EIH and its holding companies—Oberoi Hotels Private Ltd (OHPL) and Oberoi Properties Private Ltd (OPPL)—from transferring their shares. This order came in response to a lawsuit filed by Anastasia to enforce her father’s will, alleging that her brother Vikramjit Singh Oberoi and her cousin Arjun Oberoi were obstructing its execution.

In a 19-page order, Justice Navin Chawla noted that Anastasia had established a prima facie reliability of the will and made a "good prima facie case" in her favour. The court found it necessary to restrain the parties from transferring or transmitting any shares in the holding companies to protect the interests of justice.

Additionally, the court has safeguarded Anastasia’s possession of the family property, ‘Villa Ashiana,’ located in Kapashera, Delhi, by preventing cousins Vikramjit (PRS Oberoi's son) and Arjun (his nephew) from interfering with her and her mother’s possession of the property.

The dispute centres around PRS Oberoi's will dated 25 October 2021, which has been contested by family members, including Vikramjit and Arjun, who argue it does not reflect the wishes of PRS Oberoi's father, M.S. Oberoi. They are relying on an earlier will dated 20 March 1992, to claim a stake in the shares of the holding companies.

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In her plea, Anastasia contends that Vikramjit and Arjun are planning to sell the shares, which would undermine her rights. She claims that instead of transferring the shares held by PRS Oberoi in OHPL and OPPL as per his will, the executors are considering selling them to Vikramjit and Arjun at a price determined by them. Anastasia argues this would violate her rights and those of the two trusts, where she is the sole benefactor named as the ultimate beneficiary in the will.

Cousins Vikramjit and Arjun counter that the shares can only be transferred to a blood relative, not to a trust, as per PRS Oberoi’s will. They also support the 20 March 1992 will and an oral family agreement, which they claim entitles them to the shares. They argue that the proper procedure would be to seek probate for the will and that Oberoi needed to offer them the opportunity to buy the shares before transferring them.

Despite their arguments, the court found the October 2021 will to be reliable and determined that probate is not required at this stage. Speaking off the record, a lawyer representing Anastasia told Mint, "For now, we are satisfied with the interim order as it reflects what we were seeking from the court. We will observe whether Vikramjit and Arjun file an appeal and challenge this order in a higher bench. Additionally, we have yet to see or receive a copy of the 1992 will they are relying on, as it has not been submitted to the court to date."

"I don't believe it will impact the brand but if the court decides in her favour, then the conflict becomes very big, similar to what's happening in the Kalyani family story. Anastasia may not necessarily be interested in entering the organisation but it would probably be looking for a buyout of her stake," said one person who had indirect knowledge of the matter.