RIL is entering into new

business

Presented by:
Tripti
Archit
RIL makes Grand entry into EIH
with 14.8% buy
The Economic Times
31st Aug 2010
 EIH (East India Hotels )
• Late M.S. Oberoi established East Indian Hotels (EIH) in
1949 and is the flagship company of Oberoi group.
• It owns the second largest chain of hotels in India.
• The company is in luxury hotels, restaurant,
management contracts and travel and tours business.
• In January 2004, the company started to manage new
property, ie Trident Hilton in Gurgaon.
• In March 2004, the company signed an agreement with
Hilton International to co-brand its Trident hotels in India.
 RIL STAKES IN EIH

• RIL bought 14.80%(1021 Crore) in EIH which runs the Oberoi

trident chain.
• 58.15 million share.
• After this deal a new share issue could be designed to take the
Ambani-Oberoi holding to 52% with each holding 26% each.
• The Oberoi family’s stake fell to 32% from 46% after this deal.
• No change in operation.
• Will nominate Mrs Ambani, the wife of chairman Mukesh Ambani ,
as the Board of Luxury hotel company EIH.
Cont..
• The deal upsets cigarette-maker ITC’s desire to one day control the
company.

• ITC currently has 14.98 per cent stake and it is very close to the
point from where it will be eligible to make an open offer in EIH.

• RIL might have bought the extra shares to make it more difficult for
ITC.

• The stake purchase possibly ends year of speculation whether

ITC ,with 14.9% stake ,would go for hostile to take control over 33-
storyed hotel on Mumbai's marine drive & hotel such as Udaivilas in
Udaipur.
 Share Holding Patterns in EIH

Promoters 46.43
Banks, FI’s,
Insurance Cos 12.92
FII’s 2.19
ITC 14.98
Other Corporate Bodies 8.68
Individuals 13.85
Others 0.95
 Effect of Deal
• The EIH deal puts Mukesh Ambani in an unaccustomed role,
that of a financial investor without management control.

• ITC share holders will benefit from the fact that the stake is

worth much more now and ITC could sell it at a later date.
THANK YOU