How Lalit Suri Hospitality Group bagged Great Eastern for Rs 52 cr

Suri had paid Rs 52 crore to acquire a 90% stake in the hotel

The Lalit Great Eastern

History was created when Lalit Suri Lalit Suri Hospitality Group’s 172-year-old heritage property, which was reopened here on Tuesday, will be open to the public in another fortnight. However, a closer look at the Lalit Great Eastern throws up a question: How did the group get the property so cheap from the West Bengal government in 2005?

Then, the group had paid Rs 52 crore to acquire a 90 per cent stake in the hotel. The state government, then led by the Communist Party of India (Marxist)’s Buddhadeb Bhattacharjee, had to face a lot of opposition to see through the divestment.

While the divestment attracted many names initially, on the final day, only The Lalit Suri group submitted a price bid.

According to officials in the know, the deal was a complex one as a lot of renovation work was still to be done and all the existing employees had to be given voluntary retirement.

“It was a complicated process and we finally achieved it after two unsuccessful attempts. The hotel was under the tourism department, but to get the divestment going, it was brought under the industrial reconstruction department. The divestment was under the restructuring programme supported by the UK’s Department of International Development (DFID). The balancing of unions and DFID was tough,” a Left leader recalled.

Jyotsna Suri, chairman and managing director of the group, acknowledged the same on Tuesday when she said the renovation for the heritage hotel was a challenge.

The state government still holds a 10 per cent stake in the hotel through the Department of Industrial Reconstruction and the state’s principal secretary (health), Malay De, is the government nominee. The department falls under the state’s commerce and industry ministry helmed by Partha Chatterjee.

One of the officials of the hospitality major said the group would look to initiate talks on cornering additional stake after six months. “We are looking to finish the heritage block one first and then we would look at acquiring additional stake,” said the official.

“I am yet to go through the share agreement pact, so we are yet to decide whether the remaining stake will be sold at old rate or at a fresh value,” Chatterjee told Business Standard over the phone.

Another major reason for the valuation of the hotel was the number of tenants. While many of them have vacated, two tenants have refused to move out despite several attempts from Suri herself. The state government’s help has been sought in the mater.

“Hopefully, better light will prevail over all,” she had said on Tuesday. It may take more than six months to be fully operational for the iconic hotel but surely the Suris made smart deal that is hard to beat.

REVIVAL JOURNEY

• 1840: Great Eastern Hotel was built by David Wilson as the Auckland Hotel
• 1915: It was rechristened as The Great Eastern Hotel
• 1970s: During the 1970s the West Bengal government took over the hotel
• 1995 & 2001: Divestment attempt by Left Front government failed twice
• 2005: State government sold it to Bharat Hotels, under Lalit Suri Hospitality Group. Rs 52 crore was paid for 90 per cent stake
• 2007: Renovation work started at the heritage hotel
• 2013: Hotel was reopened on Nov 19 as The Lalit Great Eastern with 195 rooms in phase-I