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EIH Limited Annual General Meeting, August 2009

Growth plans making steady progress.

Current business trends challenging.

20th August 2009, Kolkata, India: Addressing the Fifty-ninth Annual General Meeting of EIH Limited (the flagship company of The Oberoi Group), Mr. P.R.S. Oberoi, Chairman said, “The global financial crisis and the terror attacks on India’s financial capital Mumbai, last November, have resulted in a sharp drop in foreign visitors to India. Several countries issued travel advisories and most companies have curtailed travel. Consequently, the tourism industry is witnessing an unprecedented downturn. Hotel occupancies and revenues have been significantly affected and the Travel and Tourism Industry is experiencing challenging times. The recent H1N1 pandemic could further restrict global travel”.

The Annual General Meeting commenced with Mr. Oberoi paying tribute to the brave members of the company’s staff who worked tirelessly to save many lives during the terrorist attack on the company’s hotels in November, last year. He paid homage to staff members, hotel guests and others who made the supreme sacrifice during this tragedy.

Referring to the economic scenario, Mr. Oberoi further pointed out that current business trends were not encouraging. Occupancies, average room rates and revenues continued to fall resulting in lower profitability.

Consequently, the company’s performance during the financial year 2008-2009 had not been as good as in the previous year. The Total Revenue was Rs. 1073.06 crores as compared to Rs. 1155.11 crores in the previous year. The Profit before Tax was Rs. 273.26 crores as compared to Rs. 349.84 crores in the previous year. The Profit after Tax was Rs. 170.44 crores as compared to Rs. 217.23 crores in the previous year.

The company had declared a Dividend of Rs. 1.20 per share.

The results of the first quarter of this year, too, were reflective of the difficult business environment. The Total Income for the first quarter was Rs. 218.10 crores as compared to Rs. 253.12 crores in the previous year. The Profit after Tax was Rs. 19.05 crores as compared to Rs. 38.01 crores in the previous year.

Mr. Oberoi felt that business conditions during the balance period of the current year would continue to be difficult for the hospitality industry.

He expected a revival in the financial year 2010-2011 at the earliest.

Mr. Oberoi further stated although the future outlook looked grim, there are some positive signs. India now had a stable government. He hoped that political compulsions would not stand in the way of more economic reforms. He expected India and China to lead the global economic recovery. He stated that India was seeing some key signs of recovery as the government, despite an erratic monsoon, was projecting an about 7% GDP growth in the current year.

Mr. Oberoi stated that the Tourism Ministry had been proactive and had offered several incentives to foreign travellers. The Ministry had declared 2009 as the “Visit India” year. However, the Government needed to do more as the employment and foreign exchange potential of the Travel and Tourism Industry can help to create economic activity. It was unfortunate that the hotel industry had not been included in the infrastructure sector in the recent Budget.

Mr. Oberoi said The Oberoi, Mumbai was severely damaged by terrorists on 26 November 2008. The restoration of the hotel is making steady progress and the hotel is expected to reopen in the first quarter of 2010.

As the hotel is more than 20 years old, Mr. Oberoi stated that we took a decision to renovate the entire hotel and thus give it a new look. Technology has also changed since the hotel was built in 1986. It is our endeavour to advance this hotel’s technology to make it more contemporary.

Mr. Oberoi said that the company’s plans for consolidation and growth continued to make steady progress:

  • The “Trident” hotel at Bandra Kurla, Mumbai, consisting of 440 keys, was nearing completion. The hotel was scheduled to open shortly.
  • Construction of “The Oberoi”, Gurgaon was under way. The hotel was expected to open in 2010.
  • The first phase of the “Trident” hotel at the new Bangalore International Airport, comprising of 153 keys, was expected to open in 2011. The second phase, consisting of 167 keys, was expected to be completed in 2013.
  • Construction of the 299-key “Oberoi” hotel at Cyber City, Hyderabad was under way.
  • The above was in addition to the 326-key “Trident” hotel, which was also under construction at an adjacent site.
  • Planning of a “Trident” hotel in Chandigarh was underway.
  • Renovation of four floors of the “Trident” Nariman Point, Mumbai was completed in the financial year 2008-2009.
  • Construction of the 252-key “Oberoi” hotel located at Business Bay, Dubai, UAE was progressing. The hotel was expected to open in 2011. The hotel will be managed by The Oberoi Group
  • Planning of two “Oberoi” hotels in Abu Dhabi and an “Oberoi” hotel in Oman is underway. These hotels will be managed by The Oberoi Group.
  • The Oberoi Group had signed a management contract for an “Oberoi” hotel and residences in Marrakech, Morocco. Planning was currently under way.
  • New Flight Kitchens at Mauritius, Cochin and Calicut were expected to commence operations in 2010 while a new Flight Kitchen in Delhi was expected to be operational in 2011.

Mr. Oberoi also announced that he had signed a Management Contract last week to operate a 100-key 5-Star Trident hotel at Dehradun.

Mr. Oberoi further stated, “Terrorism is one of the biggest challenges of our times. The targeting of luxury hotels and their guests has significant implications for the hospitality industry. Security has become a major priority. This not only adds an extra financial burden but also inconveniences guests. These security measures are, however, unavoidable in the present environment”.


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