RIL Likely To Buy Hotel Leela’s IT Park

Mukesh Ambani owned Reliance Industries Limited (RIL) is keen on the acquisition of Hotel Leela venture – promoted IT Park based in Chennai, with sources claiming that the talks have reached the advanced stages. A whopping amount of Rs. 172 crore is the acquisition price, as claimed by resources. Hotel Leela’s Board were known to approve the sale to the highest bidder, last Friday.

This IT Park, spreading across an area of 2.20 lakh square feet, has the valuation price quoted to be Rs.8000 per square feet. However, a senior official claimed that no deal confirming the purchase has been signed yet. The Group has been looking out for a suitable suitor for almost a year. While the company initially decided to lease out the property to IT companies, it later changed its decision to sell off the property owing to its financial doldrums.

With the property falling in the category of IT Park, RIL will have to confine its use for ICT purposes alone. As the company is gearing for its 4G rollout, the company will require this property for numerous IT purposes that it will have to cater. Mukesh Ambani and Krishna Nair, CP of Hotel Leela have been sharing an amicable relationship for several years, now. Krishna Nair is all praises for Mukesh Ambani deeming him the white knight.

Since Leela has an IT park with higher FSI rules, its use will limit to IT purposes. The rentals are at present estimated to be around 60 to 65 per square feet, paving way for a return of 10%. With the help of RBI mandated Corporate Debt Restructuring (CDR) cell, they will be able to put an end to their financial woes. They have also decided to sell some of the assets from the hospitality segment. The present terms give Leela a span of eight years to settle the debt.

Added to the above speculations, RIL is also going to set up a 160-180 room Trident Hotel, collaborating with EIH in Navi Mumbai. Based on the deal, RIL will cater to the purchase of the land and will invest in the property while the Oberoi Group will look into the management of the hotel. India’s largest conglomerate, RIL, had bought a 14.8% stake in EIH by shelling out Rs. 1,000 crore and at present has 18.53 % in the same. Its deep pockets enabled it to cut the competition with ITC that was rubbing its shoulders in order to have a higher control in the EIH stake.