Reliance Industries Investment and Holding Private Ltd acquires 14.12% stake in East India Hotels Ltd operator of the 'Oberoi' brand of hotels and resorts

Reliance Industries Monday reported its wholly owned subsidiary Reliance Industries Investment and Holding Private Ltd acquired 14.12% stake in East India Hotels Ltd, the firm that operates the Indian Oberoi Hotels and Resorts. Reliance Industries said it would undertake the investment at an estimated Rs 1,021 crore.

The investment will see the Reliance subsidiary acquire the stake from Oberoi Hotels Private Ltd and other promoters of East India Hotels Ltd.  Reliance Industries has undertaken the investment as a foray into the Indian Hospitality market, and as such, its strategic nature is expected to mark that significant entry, said the firm.

The deal will however result in no change of management, operation or control of the East India Hotels Ltd. The East India Hotels is the operator and owner of major hotels such The Oberoi-Mumbai, The Oberoi-New Delhi, The Oberoi-Bangalore, The Oberoi Grand-Kolkata, Trident-Mumbai and The Oberoi Udaivilas-Udaipur.

The Hospitality firm as well owns and manages other businesses such as Motor Vessel Vrinda, a Luxury cruiser, Oberoi Flight Services, Maidens Hotel in Delhi, Oberoi Aircraft services and Business aircraft charters and luxury car hire. On its part, the East India Hotels said it is planning to utilize the accrued funds from the Reliance investment for its own additional investments.

East India Hotels said about Rs 150 crore of the investment sum will be utilized over the coming two years on new projects. The firm reiterated that it is keen on expanding overseas in places such as London, Paris, New York, and Shanghai amongst others. However, the fund will be used for the management control of East India’s existing and upcoming properties. Currently, East India Hotels manages 32 properties worldwide.

Reliance Industries Ltd is India’s most valuable company and the investment will see it part with US$217 million, as it seeks expansion beyond its energy business. As the two firms announced the investment in separate statements, East India Hotel surged 11.5% to trade at 150.9 rupees, marking its highest gain since October, last year. RIL is India's largest private sector company on all major financial parameters with a turnover of Rs 2,00,400 crore, cash profit of Rs 27,933 crore, net profit of Rs 16,236 crore and net worth of Rs 1,37,171 crore as of March 31, 2010.

31 Aug 2010