This would be, perhaps, the first time that any luxury hotel chain plans to enter the lower-end of the hotel market.

The proposed hotels will be set up by East India Hotels (EIH), the group's Rs 470-crore flagship. The group at present operates 32 properties in six countries.

EIH sources said the company recently initiated an in-house study to identify potential properties and make an analysis. The study is likely to be completed within the next few months. The company is also understood to have studied the operations of a few US-based hotel-cum motels.

Sources added that the hotels will, largely, be set up on the outskirts of towns. Potential properties could be in Ludhiana, Dehradun and Varanasi, among others, they added.

Besides these properties, the group has chalked out plans to invest over Rs 1,200 crore over thenext few years to expand its Oberoi and Trident chain of hotels across the country and overseas.

The company is also under negotiations for acquiring heritage properties in the country, including in Rajasthan and Madhya Pradesh, sources said.

As part of its expansion drive, the company is also looking at major expansions in the overseas markets. Sources said the group has picked up equity as a minor partner in couple of projects abroad.

Sources said the expansion projects will primarily be through borrowings and internal resources. In view of the proposed investments, the company has already secured shareholder approval to increase the borrowing limit of the board to Rs 500 crore for supplementing the need for finance for expansion and upgradation projects.

The group's biggest hotel project in the immediate future is the Rs 400-crore 500-room Trident hotel at the Bandra-Kurla complex in Mumbai. Besides this, the company is setting up a Rs 115-crore 175-room Trident hotel in Pune, Cochin and Calcutta.The company has already acquired land at Salt Late at Calcutta.

It intends to set up another hotel near the existing Oberoi property in south Delhi. The company has taken possession of the land for the proposed four-star 500-room project but is awaiting some government clearances, sources added.

EIH Ltd had recorded a dip in its net profit to Rs 123.25 on a turnover of Rs 431.68 for financial year ended March 31, 1998, against a net profit of Rs 138.12 crore on a turnover of Rs 440.42 crore the previous year.

Besides hotels, the Oberoi group is also engaged in flight catering, travel and tourism services, airport restaurants, project management and corporate air charters.