Of the Rs 1,200 crore, around Rs 400 crore has been earmarked for a four-star hotel at the Bandra-Kurla complex in Mumbai. The rest goes into projects at Udaipur and Pune.

About 60 per cent of the project cost will be financed through various term loans and the rest will be generated internally. The shareholders passed enabling resolutions at the AGM today, allowing the company to increase its borrowings.

EIH is also investing as a minority partner in various hotel projects in India and abroad, including those at Bally and Lombok in Indonesia, Mauritius and Egypt.

The company posted lower profit and turnover figures in 1997-98 compared with the previous year. Gross revenue dropped marginally from Rs 469.5 crore in 1996-97 to Rs 469.3 crore in 1997-98 and profit before tax from Rs 154.1 crore to Rs 133 crore. Profit after tax fell from Rs 138.1 crore to Rs 123.3 crore. However, the dividend payout was unchanged at 50 per cent (Rs 5 per share).

Shareholders demanded bonus shares and discount packages to commemorate the completion of 100 years by EIH chairman MS Oberoi, who was not present at the AGM.

Responding to shareholders' queries, Oberoi said: "Employee stock option is an important instrument that the company will some day definitely have to incorporate. The board will be considering the issue soon."

Delivering the inaugural address, he spoke in favour of the proposed Travel & Tourism Association which will include trade bodies like associations of hotels as its members. The articles of association are being drafted, he said, and the hotel and travel industry is taking active interest in it.

The association will help spread awareness regarding tourism and its potential in the country, Oberoi later said at the press conference. "Not much has been done in this regard by the industry," he said. He added that industry organisations like Ficci, CII as well as Indian Airlines and Air-India are likely to be incorporated as members.

New project likely at Sunderbans

The Oberoi group is planning something at the Sunderbans. Although details were not available, PRS Oberoi said: "We have something in mind. I better not talk about it or our competitors might get ideas of their own."

"It is a unique place that is hardly being exploited. We had a meeting with the government and they want us to do something there," he said. However, it was apparent that the company's plans for the Sunderbans do not match those of the West Bengal government.

The company is not very eager to invest in the eastern region. "There are fewer things to see in this area than other parts of the country." Oberoi said.

INSIGHT

Industry looking up

The hotel industry has begun to exude a little bit of optimism for the current year. The depreciation in the rupee will be a big boost to the industry but will have an impact only if the occupancy levels increase. So far the organised sector has been by and large dependant on either foreign tourists or domestic and foreign business travellers. To that extent the exposures that all the major hotel chains have been building in the different budget segments catering to domestic tourists should stabilise earnings. EIH, for example, has been concentrating on its Trident brand of budget hotels. Similarly, the Taj group and ITC Hotels have their own brand of budget hotels.

The optimism from the hotel sector is just beginning to be felt in the stock market, with the Indian Hotels stock already looking bullish while the EIH stock has stabilised at its four-and-a-half year low.