Indian Hotels Company Limited (IHCL), a Tata group firm that runs the Taj Hotels Resorts and Palaces chain of hotels, has acquired a controlling stake in ELEL Hotels and Investments Limited, a subsidiary of Claridges Hotel Private Limited, for a value of Rs 680 crore. ELEL holds the sublease for the land on which the Sea Rock hotel is located in Mumbai. The said property stands just across IHCL’s property – Taj Lands End in Mumbai. Sea Rock hotel had remained closed since the 1993 bomb blasts and had been a security threat for the Taj?s property right across the road. Incidentally, the company’s other property, the Taj Mahal Palace & Tower, was attacked by terrorists last November.
?We currently hold 85% in the ELEL and plan to acquire it completely in the due course of time,? said RK Krishna Kumar, vice-chairman, IHCL. The Sea Rock property will be completely demolished by IHCL and rebuilt. ?It will house a large convention centre and commercial space along with luxury suites. It will be a major powerhouse,? Kumar added. The company plans to integrate the two properties and plans to get the best architect to design the property. The demolishment work is expected to take around six months. Indicating that the company has got the deal at much cheaper price than the actual market price, Anil P Goel, chief financial officer, IHCL, did not divulge more details. He added that the funding for the said acquisition is done through the Rs 1,400 crore rights issue floated by the company last year. Asked what the pending legal issues at the Sea Rock property, the company said that all the legal issues had been cleared by the earlier owner and there are no outstanding legal issues.
Meanwhile, for the year ended March 31, 2009, IHCL has posted a fall of 96% in consolidated net profit of Rs 12.46 crore as compared with Rs 354.98 crore. The consolidated total income of the company for the year stood at Rs 2711.85 crore as compared to Rs 2984.21 crore, a drop of 9%. Goel said that the performance is linked to the overall condition of the industry which has been impacted significantly due to the economic slowdown globally and terror attack in the December quarter of FY09 in Mumbai, leading to slowdown in key markets during a time which is traditionally peak season for the industry.
?Hospitality industry has been impacted by the economic slowdown globally. However, India shows signs of quicker recovery and we expect to be back on track by end of this calendar year. I am much more bullish for India considering the stable government has come and expect for important policy initiatives, especially massive investment in infrastructure,? said Kumar.
