EIH Ltd. is planning to take up the renovation of the more than 100-year old Oberoi Grand Kolkata, which is also its oldest property. This follows the refurbishment that the firm had undertaken for the New Delhi Oberoi.
“Work has already begun,” EIH Ltd. executive chairman P.R.S Oberoi told reporters. “We will do it gradually, investing around ₹100 crore and adding 52 rooms.” The project is scheduled to be completed in 18 months, he said.
In 2017-18, EIH completed a ₹500 crore renovation of The Oberoi New Delhi. “The project has been very well-received and the unit’s profitability will double,” S.S. Mukherjee, executive vice-chairman said, declining to share any figures.
Mr. Mukherjee said that a ₹250 crore-loan was taken for the Delhi revamp, but no fresh borrowings may be required for the Kolkata project.
‘Too much real estate’
Mr. Oberoi reiterated EIH’s asset-light policy in line with the board decision a few years ago. “We have too much real estate.”
“Gradually, we will reverse the present 70-30 ratio in respect of ‘own’, ‘substantially own’ and ‘managed properties’”, Mr. Mukherjee said, although EIH will continue to develop its own hotels.
To a query on the proposed Navi Mumbai property, he said that the project has had to be put on hold due to restrictions on activities within the Coastal Regulation Zone. “Very rightly, environmental regulation has become stricter and this has held up some of our projects”, Mr. Oberoi said.
EIL closed the first quarter of 2018-19 with a 13% rise in revenue to ₹343.5 crore.
However, post tax profit dipped about 11% to ₹10.2 crore mainly due to increased provisions for depreciation on capitalisation of The Oberoi, New Delhi and also a ninefold rise in interest costs to ₹10.1 crore.
In 2012, Mr. Oberoi announced EIH’s plans for a hotel in Navi Mumbai, on land owned by Reliance Industries Ltd. RIL which, holds a stake of about 18% in EIH, through a group entity, was brought in as a strategic investor in August 2010, in wake of ITC steadily increasing its equity holding in EIH.