MUMBAI: Reliance Industries Ltd (RIL) may ask Oberoi Group to manage hotels and serviced apartments that RIL plans to build in Mumbai’s Bandra Kurla Complex (BKC), said two officials, requesting anonymity.
RIL through its real estate venture, Maker Maxity, owns land in BKC. The first phase of the project included five grade-A office buildings, which were constructed and sold in FY10. In the second phase, a retail mall, membership clubs, a rooftop drive-in theatre and a multiplex mall are under construction. The third phase will involve development of two luxury hotels over 1.2 million sq ft comprising three basement levels, ground floor and 16 stories. The properties will be leased. “For the upcoming hotel, there were earlier talks with several international firms ...but now they are going ahead with Oberoi Group," the first person said. RIL, through its subsidiary Reliance Industrial Investments and Holdings Ltd, holds 18.53% in East India Hotels Ltd, which runs the luxury Oberoi hotels.
Initially operated as a drive-in theatre, the project was owned by Maker Group. It diluted it’s ownership to 35% post investments by Reliance promoters and PE funds.
In FY05, Reliance promoters and PE fund Xander Group had picked up 25.1% and 20% , respectively, in the project. Two years later, Urban Infra bought a 19.9% stake.
In FY17, Reliance Promoters increased their stake to 45% by buying over the 19.9% stake held by Urban Infra. In 2018, RIL bought 45% held by Reliance promoters and 20% by Xander Group for ₹1,100 crore.
RIL did not respond to an email query sent on Thursday. Oberoi Group in an emailed response said, “We do not comment on market rumours or speculations."
The Maker Maxity project is spread over 20 acres, of which 12 acres are being developed in phase two and three. According to officials, ₹1,500 crore has already been spent as of FY17. “It is possible that the investment may go up to over ₹2,000 crore with phase two and three under development," the second official cited above said on condition of anonymity.
He added that the project would be funded primarily by RIL with some debt exposure. It was designed as an ultra-luxury hotel project. The luxury hotel was supposed to comprise 400 hotel rooms and a 90 room serviced apartment. It will take three-four years at least to complete the project, said the first person mentioned above.
“For Reliance, it’s more of a real estate play than getting into hospitality. Maker group is a huge real estate firm. RIL is an investor in EIH and my understanding is that they have been a passive player in the hospitality space. They don’t guide EIH on what is to be done," said the first person cited above.
An analyst tracking RIL said that given the prominence of BKC as an upcoming retail and entertainment hub, the project will have commercial and operational synergies with its 7-8 million sq ft convention centre that is also being built at BKC.
