East India Hotels (EIH), which operates The Oberoi group of luxury hotels, is eyeing a joint venture with Mukesh Ambani-led Reliance Industries Ltd (RIL) to develop two new hotels at Goa and Bangalore, PRS "Biki" Oberoi, chairman, EIH said on Tuesday.
"In all probability we will develop the Bangalore and Goa projects in association with RIL," Oberoi told reporters on the sidelines of the company's annual general meeting at Kolkata. The two hotels at Goa and Bangalore are expected to incur an investment of Rs 700 crore.
Oberoi refused to divulge details about either the shareholding pattern in the said joint venture firm or whether separate JVs or a single company would execute the two projects.
An RIL spokesperson refused to comment.
Analysts tracking the hospitality sector see Oberoi's move as an attempt to ward off any possible takeover attempts by competitors of EIH.Reportedly, the current management of EIH is keen to offer the RIL a berth on EIH Board. "It is up to the RIL management to decide about taking a position on the EIH Board," said the analyst requesting anonymity. He added EIH sees RIL as a white knight that could save it (EIH) from possible hostile takeover bids.
In fact, Oberoi asserted that he would be happy if Mukesh Ambani's company raised its stake in EIH. In the newly proposed takeover code by the Securities and Exchange Board of India, the trigger for open-offer would be mandatory only after 25% stake was acquired in a company instead of the earlier regulation of 15 % for mandatory open-offer bids.
At present, RIL holds a little less then 15% stake in EIH.
Oberoi added that the proposed hotel at Bangalore would have 250 rooms and the Goa hotel will have 100 rooms. "...both would be managed by Oberoi hotels."
"We hold our own land in both locations. We have 8.2 acre in Bangalore and 55 acre in Goa. Currently, each room costs Rs 2 crore for Oberoi brand hotels without land," Oberoi said.