OP Munjal-promoted Hero Group will build a 280-room 5-star deluxe hotel in Gurgaon, marking its foray in the hospitality business. The group has recently acquired a four-acre plot of land on Gurgaon's Golf Course Road through a bidding process for Rs 406 crore.

The land, with a partially constructed building, was put on the block by Punjab National Bank. The building was mortgaged by a business family but had failed to service the loan. Pramerica, a US-based fund had an equity stake in the project, sources who did not want to be named said.

Hero will construct the hotel and plans to rope in an international hotel chain to manage the property. "Looking at the huge growth potential and dynamic social changes, we see a room for a high end hotel in this part of the national capital region," said Pankaj Munjal, managing director of Hero Motors, in a statement. He added that the total cost of the project would be Rs 650 crore.

Hero Group owns Hero Cycles, Hero Motors, Munjal Kiriu and ZF-Hero Chasiss Systems. The group is debt free with over Rs 1,000 crore free cash in its balance sheet, it said.