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Business News/ Companies / Oberoi not to choose between son and nephew as successor at EIH
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Oberoi not to choose between son and nephew as successor at EIH

Current chairman of the view that 'fittest and most professionally competent' person should run the company

It isn’t immediately known who will inherit P.R.S. Oberoi’s shares in EIH. Photo: Indranil Bhoumik/MintPremium
It isn’t immediately known who will inherit P.R.S. Oberoi’s shares in EIH. Photo: Indranil Bhoumik/Mint

Kolkata: Oberoi family patriarch Prithvi Raj Singh Oberoi has decided not to choose his successor to run EIH Ltd from between his son Vikram Oberoi and nephew Arjun Oberoi, who currently serve as joint managing directors.

Instead, the board of the company, which operates at least 28 premium hotels in India and abroad, will take the decision when incumbent S.S. Mukherji, 66, decides to retire.

He was last year appointed the vice-chairman and chief executive officer (CEO) for five years till 2018.

P.R.S. Oberoi, 85, said on Wednesday that he executed his succession plan when in January last year he demitted office as CEO. A further decision on this matter is to be taken by the company’s board, EIH said in a statement, in response to a query.

Vikram Oberoi is chief operating officer and Arjun Oberoi is chief planning officer of the company; both are joint managing directors.

P.R.S. Oberoi stepped into his father’s shoes after the late M.S. Oberoi, a first-generation entrepreneur, died in May 2002 at the age of 103. By then, M.S. Oberoi’s other son, Tilak Raj Singh Oberoi, had already died.

The current chairman of EIH is of the view that “the fittest and the most professionally competent" person should run the company, and that person need not necessarily be from within the extended Oberoi family, said a close associate.

“Not just the chairman, all of them are of the same view that the most competent person should be given the mandate to run the company," this person said, referring to the three Oberois on the board of EIH.

So they unanimously decided to give the top job to Mukherji, a professional who has worked in the hospitality industry for over four decades, he added.

On the ownership front, it isn’t immediately known who will inherit P.R.S. Oberoi’s shares in EIH. His father had in his lifetime divided the family’s shareholding in the company between his sons—P.R.S. Oberoi and the late T.R.S. Oberoi.

The founders currently own 35.24% of EIH. It is almost evenly split between the two lines of the extended Oberoi family. Arjun Oberoi has inherited his father’s stake in the company under a will which has been probated, according to the person cited above.

Four years ago, Reliance Industries Ltd (RIL) bought a 14.12% stake in EIH, paying 1,021 crore. The share sale to the petrochemical behemoth was seen as a bid by the Oberois to thwart unsolicited advances from ITC Ltd, which started buying into the company in early 2000s.

Currently, RIL owns 18.5% of the company. ITC, which runs hotels besides producing cigarettes and consumer goods, has a 16.1% stake in EIH.

From the time ITC started acquiring EIH’s shares from the market, P.R.S. Oberoi has maintained that he didn’t want any alliance with the competitor.

At the same time, ITC chairman Y.C. Deveshwar has clarified several times that his company’s interest was not predatory and that it had no intention to launch a hostile bid to wrest control of EIH.

Asked if RIL could have a say in choosing Mukherji’s successor when the time comes, a key EIH official said as an investor with a substantial representation of the board the company hasn’t shown any intention to interfere with the management.

“There has been no unnecessary interference so far, and there is no sign either that things could change going forward," this person said.

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Published: 06 Aug 2014, 11:52 PM IST
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