Tata's Indian Hotels sole bidder for Taj Mansingh, NDMC may go for fresh auction
08 June 2018
The New Delhi Municipal Council’s ambitious plan to auction the Taj Mansingh Hotel has flopped with only Tata group-owned Indian Hotels Company (IHCL), the current operator, submitting bids for the property as the tender closed on Thursday.
The NDMC will now have to conduct fresh auction for the luxury hotel to find a competitive bidder for the hotel property.
In all, NDMC had put on auction three hotel properties, which included the Taj and two lesser-known hotels — The Connaught and Hotel Asian International — built on NDMC land. However, the two lesser-known hotels have got three bidders each, allowing the auction process to move forward.
Reports quoting hotel industry sources said hotel companies were not enthused with the financial terms and certain conditions of the tender. Even the revised tender floated by NMDC with some relaxed conditions failed to qualify a number of hotel companies.
One of the tender conditions was that if a bidder failed to meet the eligibility conditions specified in the tender documents, the security amount (Rs25 crore) was to be kept by the NDMC as ‘liquidity damages’.
Obviously, no bidder would accept such terms unless that bidder was sure of securing the contract.
Indian Hotels had entered into a 33-year lease agreement with the NDMC in 1976 for the 292-room hotel, which was inaugurated in 1978. In 2011, when the lease ended, NDMC decided to auction the property.
Indian Hotels challenged the decision in the Delhi High Court. After several lease extensions, the Supreme Court approved its auction last April.
The first tender was floated by the NDMC in December last year and the auction was supposed to be held on 30 January 2018.
As per the tender rules, the bid process would be annulled in case the number of bidders was below three. NDMC will now decide on a new auction date for the Taj Mansingh, according to sources.
SBI Capital Markets is the transaction advisor to the auction.