In a major boost for the Tata group owned Indian Hotels Company Ltd(IHCL), Kamal Nath, the Union Minister for Urban development has come out in open support of IHCL for the renewal of the iconic Taj Mansingh property lease. IHCL operates the Taj Mansingh Hotel in Delhi.
Nath wants the lease to be renewed and the auction process should not be followed. 'I dont agree with that (auction process) at all. Of course, we have to have a renewal and in proper terms, and it's something that has to be resolved and will be resolved' Nath said.
Interestingly it was Nath's urban development ministry that had directed New Delhi Municipal Corporation (NDMC) to find a new partner via an open auction process. The lease had expired in October 2011. Even IHCL's MD & CEO is confident that the lease will be renewed and the company is in negotiations with NDMC as per a report in ET by Sameer Hashmi.
'We've been great partners with NDMC for the last 33 years, we've been equity investors in the hotel, and so that partnership has continued without any issues for the last three decades and I'm sure that this extension will be essentially sorted out in the next few months' Bickson told ET NOW.
This support comes right after NDMC dropped Infrastructure Development Finance Company (IDFC) from advicing it on the lease renewal for the property due to a conflist on interest. HDFC chairman Deepak Parekh heads IDFC board of directors besides being a board member of IHCL.
The Taj Mansingh Hotel property is quite significant for the Indian Hotel as it contributes nearly Rs 150 crores annually in the form of revenues.
In the '70s, Land Development Organization (LDO) had leased out large tracts of land for development of hotels to NDMC for a period of 99 years. NDMC in turn leased out some parcels of land to ITDC, Le Meridien and Taj. In case of Taj Mansingh, NDMC entered into two separate agreements with IHCL. One was for design, development and funding the property and the other one was for operational and maintenance of the hotel.
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