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Rs 900 crore EIH rights issue to retire debt: Oberoi

Last month, EIH had closed its rights issue, raising Rs 1,178.86 crore at a share price of Rs 66 apiece. It had issued five equity shares for every 11 held by shareholders.

twitter-logoPTI | April 12, 2011 | Updated 17:57 IST

Hospitality major the Oberoi group on Tuesday said its firm EIH Ltd will be utilising around Rs 900 crore out of the Rs 1,178.86 crore that it had raised last month from a rights issue to retire debt.

The hospitality group is also currently undertaking expansion and will be operating four new properties in India and abroad by 2014.

"Majority of it (proceeds from the rights issue), around Rs 900 crore, will be used to retire debt and some part will be utilised for setting up flight kitchens," Oberoi Group Chief Planning Officer and Joint Managing Director Arjun Oberoi told reporters in Gurgaon.

Last month, EIH had closed its rights issue raising Rs 1,178.86 crore through the issue of shares at a price of Rs 66 apiece. It had issued five equity shares for every 11 equity shares held by shareholders as on the record date of February 22.

Oberoi said all the shareholders, including major ones, ITC, Reliance Industries and Analjit Singh, have subscribed the issue and shareholding pattern in EIH remained the same.

Asked if the group would be looking to raise additional funds, he replied in the negative.

Commenting on the company's expansion plans, Oberoi said: "We are in the process of opening five new properties, which will be primarily management contracts along with some equity."

The growth, growing ahead, would come from primarily management contracts and that model would be the priority for the group, he added.

Next year, the group will open a new hotel in Hyderabad with 320 rooms followed by a 250 room property in Dubai. In 2013, the group will open another property in Hyderabad with 220 rooms. By 2014 it expects to operationalise the an 84 rooms property at Marrakesh in Morocco.

It is also likely to operate a 70 rooms resort in Oman, but not timeline has been fixed for that.

At present, the group is also setting up flight kitchen in Delhi and Mauritius.

The group on Tuesday opened the Oberoi Gurgaon with 202 rooms under a management contract with Orbit Resorts, which owns the property. It has been built at a total cost of Rs 400 crore.

On the international expansion, Oberoi said: "We are very actively looking at Europe but nothing has been finalised."

He said the group is looking only at management contract for properties there.

When asked if the group would look to diversify in the lower hotels segment, he said: "Luxury and premium category are the group's focus area and as of now there is no plan to expand into lower segments."

The Oberoi Group operates 32 hotels and resorts and cruisers under the Oberoi and Trident brands in India, Egypt Mauritius, Indonesia and Saudi Arabia. It is also engaged in flight catering.

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