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Six years after Indian Hotels Company Ltd (IHCL), a Tata Group firm, acquired the landmark Sea Rock Hotel in Bandra, a Mumbai suburb, Chief Executive Rakesh Sarna is optimistic that a legal dispute over the property could be resolved soon, and that the company would be able to develop the asset.
In June 2009, IHCL had announced the purchase of a majority stake (85 per cent) in ELEL Hotels and Investments, which owned the Sea Rock hotel, for ₹680 crore. IHCL already owns the Taj Lands End hotel, across the road from Sea Rock hotel. The reconstruction plan was aimed at fully integrating Sea Rock with Lands End in a synchronised manner.
In 2010, IHCL had shifted its investment in ELEL into a special purpose vehicle. IHCL had the option to take the asset back on its balance sheet in three years. Subsequently, a public interest litigation (PIL) was filed in the Mumbai High Court challenging the additional floor space of the project.
“The level of activity has picked up at Sea Rock, and that is why we have thought it fit to bring the transaction on to our balance sheet,” Sarna told reporters. “Hopefully, we will bring this (litigation) to some sort of conclusion either way this fiscal,” he added.
The Sea Rock hotel had suffered severe damage in the 1993 Mumbai bomb blasts. In 2005, it was acquired by the Claridges Group, owned by industrialist Suresh Nanda. Stating that the company was “trying to overcome the issue, given the available floor space index (FSI) norms,” Sarna added the matter was sub judice.
Clear permits Asked about regulatory clearances, Sarna said an environment permit was still pending. “We need 24 permits, of which 23 are taken care of,” he said.
The CEO maintained that the focus would be on progression at IHCL, and that he would not speculate if PAT (profit after tax) was two years away or later. “We are focussed on showing progression, in the way we have more cash, and how we can simultaneously use that new resource to build the pipeline, and improve profitability,” he said.
Stating that his biggest anxiety was the perishable nature of developmental opportunities, the CEO added the number of opportunities (hotels) would reduce over time. “We will soon be oversaturated. Prime locations will be gone. I want to make sure that we don’t lose our prime locations,” he said.
Sarna added though the key is progression, it is “critical to have your balance sheet in order, to see the opportunities that are coming your way. We also need to protect the sanctity of our asset at Land’s End (Bandra).”
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