Tata Group won an auction war to own iconic hotel “Taj Mansingh” against ITC. The e-auction conducted by New Delhi Municipal Corporation (NDMC) on Friday attracted only two bidders, ITC and IHCL, despite revising eligibility criteria. Tata Group will now have to pay a hefty license fee of ₹7 crores per month for the next 33 years. This is 79% more than what NDMC received earlier.
Puneet Chhatwal, MD & CEO, IHCL said, “We are delighted that the iconic Taj Mansingh, New Delhi, which has been an important part of the cultural and historic fabric of the National Capital, will continue to remain a part of the IHCL family.”
Earlier, NDMC received 17.5% of Taj’s gross turnover. In the auction, the company made an offer of 24% of GTO and agreed to pay 32.5%.
— Taj Hotels (@TajHotels) September 28, 2018
The Friday auction has been challenging for NDMC as it has failed to do the same for past two times owing to difficult eligibility norms. The previous auction was cancelled as IHCL was the sole bidder.
New Indian Express quoted an NDMC official saying, “The Tata Group’s Indian Hotels Company Limited has retained the property at a license fee of `₹7.03 crore per month including GST or 32.50 per cent of the gross turnover of the property. Earlier, they were paying `₹3.94 crores per month as license fees.”
The stocks of IHCL were trading red as investors were betting big on its winning factor. The stock jumped 7% in the intra-trade and settled at ₹135.45 (+5%). The results were announced post market hours.
Tata group has been the owner of the prime hotel since 1986 and has opened a series of hotels under the name “Taj” across the country.
It looking forward to invest money in the hotel’s renovation. Chatwal added, “We look forward to investing in the hotel and taking it to new heights of Indian hospitality. The Taj legend will continue to serve Delhi with elegance”