Mumbai: The Tata group-owned Indian Hotels Co. Ltd said on Friday that it will acquire at least 85% stake in Elel Hotels and Investments Ltd, the company that holds a long-term sublease for the Mumbai land on which Bandra’s Sea Rock Hotel is located, for Rs680 crore.
R.K. Krishna Kumar, vice-chairman of Indian Hotels, said that his company is planning to demolish the existing structure and redevelop the area that would have hotel rooms, a large convention centre, and retail and commercial operations.
The Sea Rock Hotel—located opposite Taj Lands End hotel, another Indian Hotels property—has been shut since 1993 after the serial bomb blasts in Mumbai.
Kumar said his company will have to spend around Rs500 crore to redevelop the acquired property. All necessary approvals, including coastal regulation zone approvals, have been obtained, he added.
“There are no pending legal cases against Sea Rock Hotel,” Kumar said, adding that the company can eventually increase its stake in Elel up to 100%.
He also indicated at a Mumbai press conference on Friday that Indian Hotels has secured this deal at a significant discount considering that the deal was struck in the backdrop of the current economic slowdown.
The demolition of the existing structure will be carried out in an environment-friendly manner and should be completed in six months.
The redevelopment will be completed within 18-20 months, Kumar said.
The strategic intent behind this acquisition is to increase the hotel chain’s footprint in north Mumbai, as the city will see the opening of the nearby Bandra-Worli sea link with a second international airport earmarked close to it.
Elel Hotels is a closely held company and a subsidiary of Claridges Hotels Pvt. Ltd.
Separately, Indian Hotels reported a consolidated net profit of Rs12.46 crore in the year ended 31 March, down 96.5%, from Rs355 crore in the preceding fiscal year.
Its income fell to Rs2,780 crore from Rs3,060 crore a year ago, the company said in a statement on Friday.