SBI Caps to auction Taj Mansingh for NDMC
SBI Capital Markets will conduct the auction of the iconic Taj Mansingh for the New Delhi Municipal Council (NDMC), the Capital’s civic body. SBI Caps, which worked out the coal linkage auction mechanism in 2015, will also advise the NDMC (which owns the land on these properties) on the auction of two more hotels, The Connaught and Hotel Asian International. In 2015, the NDMC had hired SBI Caps to oversee the Taj Mansingh’s bid. However, the process did not move as Indian Hotels Company, operator of the Taj, went to court. The NDMC recently got approval from the apex court to conduct a bid.
SBI Caps will conduct the auction of the Taj Mahal hotel here for the New Delhi Municipal Council (NDMC), the capital’s civic body.
SBI Caps, which worked out the coal linkage auction mechanism in 2015, will also advise the NDMC (which owns the land on these properties) on the auction of two more hotels, The Connaught and Hotel Asian International.
In 2015, the NDMC had hired SBI Caps to oversee the Taj Mahal’s (popularly known as Taj Mansingh, after the road it is on) auction. However, the process did not move as Indian Hotels Company, operator of the Taj, went to court. The NDMC recently got approval from the Supreme Court (SC) to conduct an auction.
It was not clear if SBI Caps would remain the advisor. An official at NDMC confirmed that SBI Caps remains so. It is learnt the civic body had already made some payment to SBI Caps, in 2015, when it had finalised it as an advisor to the auction.
The NDMC is likely to offer the Taj on a long-term lease, on a revenue-share model and an upfront payment.
“Indian Hotels will not be given any priority in the auction process,” the official said. The SC, while allowing the NDMC to auction the property, had said the civic body should consider the ‘unblemished’ track record of Indian Hotels while going for the auction. The recommendation of SBI Caps on the auction is expected in a month, after which the actual process will begin.
Indian Hotels, a Tata Group entity, was seeking a renewal of its licence on the ground of the equity investment it had made in the property. The initial cost incurred by it before the hotel became operational in 1978 was ~4.61 crore. It had since invested far more to modernise the property. The NDMC gave it to the company on a 33-year lease. This ended in 2011 and saw seven extensions on various grounds.
The official said the agreement under which the first lease was given for Taj did not have a renewal clause and hence the NDMC decided to go for an auction. Indian Hotels has said it will participate in the auction. In case its bid fails, it will get six months time to vacate.
Taj Mahal is a 294-room property, estimated to bring annual revenue of at least ~150 crore. The Connaught and Hotel Asian International were sealed last year, as they owed fees worth ~140 crore and ~56 crore, respectively, to the NDMC. These will also be auctioned.