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CAG rap may not trip Centaur selloff

May 13, 2005 11:17 IST

The sale of Tulip Star (formerly Juhu Centaur) is on track despite the Comptroller and Auditor-General's stricture on its disinvestment. The hotel is at present owned by Tulip Hospitality Services Pvt Ltd.

The CAG had last week observed that the sale of Airport Centaur and Juhu Centaur took place without the benefit of competition.

It also stated that the valuation and reserve prices in these transactions were not consistent with the practice followed by disinvestment ministry in other cases.

Tulip Hospitality is in negotiations with a consortium of builders -- Nirmal Lifestyle, Oberoi Constructions and Vinod Goenka of the Conwood group -- to sell the property for about Rs 370 crore (Rs 3.70 billion).

Vikas Oberoi, managing director of Oberoi Constructions, said: "If the title deed is clear and our solicitors give the nod, we will go ahead. The due-diligence is on."

A fax as well as an e-mail sent to Tulip Hospitality managing director Ajit Kerkar did not elicit any response.

Last month, Vijaya Bank, a lender to Tulip Hospitality, went public saying it was opposed to the sale of the hotel properties. A section of lenders to the company, however, feel the sale proceeds will help the hotel group repay its outstanding loans.

Tulip Hospitality had taken a loan of about Rs 150 crore (Rs 1.50 billion) to fund the purchase of the hotel from a consortium of lenders. Bank of India, Union Bank of India, Canara Bank, Vijaya Bank and Indian Bank are part of the consortium. It was a five-year facility carrying an interest rate of about 11 per cent.

Juhu Centaur was sold in March 2002 for Rs 153 crore (Rs 1.53 billion) to Tulip Hospitality and the Airport Centaur in April 2002 for Rs 83 crore (Rs 830 million) to Batra Hospitality Pvt Ltd.

Meanwhile, the hotel located in Juhu, a western suburb of Mumbai, has been shut for two months now and the workers of the hotel are on strike fearing job loss and demanding higher compensation.

The builders, which were earlier interested in the property, had plans to convert it into a commercial/ residential complex.

The company launched a voluntary retirement service in March and a large number of former Centaur Hotel employees accepted the golden handshake leaving behind only about 100 employees.

Airport Centaur and Juhu Centaur were owned by the Hotel Corporation of India, an Air India subsidiary.

Finance minister P Chidambaram had observed in Rajya Sabha that the former government's disinvestment minister, Arun Shourie had taken "active interest" in processing the transaction to Tulip Hospitality.
Poornima Mohandas in Mumbai
Source: source