The country’s oldest hospitality chain EIH will begin operations of its Dubai and Hyderabad hotels in the next two months even as it finalises plans to construct new five star hotels in Bangalore and Goa. It has also set its foot in Maracas in Morocco and is scouting properties for Reliance Industries overseas. RIL has 18.53% stake in EIH and the latter is keen that RIL develops and acquires properties that can then be managed by EIH.

In an interview to FE, the first to any media since he took charge as vice chairman and CEO on January 31, SS Mukherji said the company wants to grow in an asset-light manner and therefore going forward would only undertake management of operations rather than managing properties. He said that after developing the hotels in Bangalore and Goa, EIH would not go for owning properties.

?All successful international hotel chains are into management of operations. We will fall in the line of international hotel operators through management of operations only,? he said.

The hotel in Dubai would be an Oberoi hotel and the one in Hyderabad would be Trident. Golden Jubilee Hotels has developed the property in Hyderabad and EIH is holding 16% in it at an investment of R35 crore. The total project cost at Hyderabad has been R400 crore.

In Dubai, Aujan Industries has promoted the property with other equity partners and EIH has no equity holding in it. Since EIH has no investment there, Mukherji declined to share the project cost.

He said it would be mixed-used development with a hotel, office space, business centre and residential complex. ?The hotels would start operations in the next two months,? Mukherji said, adding that EIH has the contract of managing operations in both the hotels. EIH would be given fees for this contract and will be paid a royalty for using the Oberoi and Trident brands.

At the Oberoi hotel at Maracas in Morocco, EIH would hold 25% equity with three more partners who are jointly developing the property. EIH would invest around $4 million in the project. ?We are talking with villa owners to bring them under the project. It will become a mixed-used property because the villas will be sold out. The project will take another 3-4 years to come up,? Mukherji said.

He said that the projects in Bangalore and Goa would also be mixed-use and the cost estimated for both the projects were R700 crore and R250 crore, respectively. Investments in Bangalore and Goa would be a temporary requirement since mixed-use development ? a hotel-cum-apartment with high-end retails at Bangalore ? would generate immediate cash flow. Villas in the Goa project would be sold out. ?So the money that we will need is for the intervening period of construction. We will have to go for a bank loan of about R350 crore,? Mukherji said.

EIH expects to start construction work on both the projects in another year. The company has already got all clearances in Bangalore and the peripheral infrastructure is complete. In Goa, EIH was waiting for few more clearances because the state government has made some change in planning regulation.

Earlier, EIH announced it would develop the projects in Bangalore and Goa with RIL, but Mukherji said that it didn?t intend to go separately with Reliance, though it is keeping the option open to form a JV with Reliance if it failed in implementing alone.

EIH is also scouting for properties on behalf of RIL overseas, but so far hasn’t zeroed on any suitable target. ?Greece was one destination we were looking at and here in India we are looking at Vasi. But nothing has matured so far,” he said. RIL’s Nita Ambani and Manoj Modi are on EIH’s board. In fact, Reliance?s presence on the board is viewed as warding off rival ITC, which has a holding equal to that of Reliance in EIH.

Mukherji said that even by increasing its stake further in EIH, ITC would not be able to put a ?spoke in the wheel? of the company’s expansion plans.

?ITC picked up equity from the market and we don?t have interactions with the company. We don?t know why ITC has picked so much in EIH. ITC is a professionally managed company with formidable cash reserves and may be it has invested here to deploy its reserves. I don?t think by increasing stake one can put a spoke in the wheel,? Mukherji said.