Eih To Pick 35% In Morocco Property

EIH Ltd, the Rs 519 crore company which owns the Oberoi chain of hotels, will hold 35 per cent stake in a Rs 165 crore ($35 million) property being set up in Marakech, Morocco. The property will be set up in a joint venture with a local conglomerate, ONA group of companies.

The company is likely to seek shareholders' approval at its upcoming annual general meeting, to a resolution enabling the board to issue securities and raise debt to finance various upcoming projects, including the one in Morocco.

EIH vice-chairman and managing director P R S Oberoi said: "We may increase our holding in the property in future. Conventionally, our properties are financed by debt and equity in the ratio of 1.5:1, and this would be no exception."

EIH has signed a pact with its Moroccon partner for development of yet another property in Casablanca, Morocco, Oberoi said, adding that ground study for the second property had not yet begun.

About 60 per cent of EIH's revenues come in foreign currency, and industry observers feel, the recessation in the US and Europe may affect the company's business.

"Companies tend to reduce travel expenses as part of their austerity drive in situations like these, and this may result in lower occupancy for the hotel industry in India," an analyst said.

Over 80 per cent of EIH's guests are businessmen. It gets most of its overseas guests from the States, the UK and western Europe, an EIH spokesperson said.

Income from accommodation accounts for about 55 per cent of the company's revenues, while sale of food and beverages contribute about 35 per cent. The balance comes from other services.

The company expects tourism in India to improve on the back of improving flight connections to India.

"Better flow of tourists to the country should help offset whatever impact the recessation in the west has on the company," an EIH spokesperson said.

In 2000-01, the company registered a topline growth of 11.3 per cent to Rs 518.93, which EIH attributed to political stability and improvement in business conditions enabling it to achieve better occupancy and average room rate.

Though the company's net profit of Rs 94.82 crore in the fiscal was higher than the previous year, it was lower than its bottomline in '95-'96, '96-97, '97-98 and '98-99.

The company achieved a net profit of over Rs 138 crore in '96-97, but since then it declined to Rs 72.5 crore in '99-00.