I doubt if Sahara is serious about selling properties: Adar Poonawalla

Q&A with CEO, Serum Institute of India

Owners of Pune-based Serum Institute of India, the Poonawalla’s have thrown the hat to acquire the iconic Grosvenor Hotel in UK from Sahara Group. Adar Poonawalla, CEO of Serum Institute and son of Cyrus Poonawalla is categorical that they are only interested in the Grosvenor House Hotel property from Sahara and this does not signal their entry into the hospitality sector. In an interview with Shivani Shinde Nadhe, Poonawalla talks about funding options, expansion plans for the family business and interest in real estate. Edited excerpts…

You have upped the ante for the Grosvenor House Hotel by taking the bid to Pound 550 million. Is there room for further hike?
No we are not going to get in a bidding war. The amount we have pegged is based on the debt and operational ability of the hotel. This is fair valuation that that we have come up with. For some of the parties that have shown interest, they can increase their bid as it would just be a few hundred million dollar, but from a business point of view it does not make sense.

Would you look at partnering with any financial partner like PE for the same for funding?
We did say that it will be all cash deal but it will be a mix of debt and equity. The ratio could be 65:35 of equity and debt. We would not like to go with a third party financial player like PEs as they would have other conditions as well. If we were to look into the other two properties—The Plaza and Dream Downtown hotels in New York-- then we may have looked for a financial partner. But in this property we would not want any other financial partner.

Has Sahara responded to your bid?
Not so far. I doubt if Sahara is serious about selling these properties, as so far they have not yet got back to any of the bidders.

You also have plans to get Ritz Carlton, is hospitality big bet for you?
For us UK is special. Our family visits London atleast twice a month and I personally have lived there for years so we are familiar with that country and hence the interest. We have always maintained that we will buy only the Grosvenor House Hotel. The Plaza and Grosvenor house are iconic and hence trophy properties, you do not need to own one to have another. The other reason to  bid For Gosvenor is also because it is among the few hotels that is making money. We have seen several top end hotels for acquisition in India too, but other than a few top once most of the hotel chains are in losses.

Yes we are bringing Ritz Carlton into Pune along with Panchshil Realty. Because we think there is a demand for such service in the area (the property is coming near Airport Road). But this does not mean we are getting into hospitality sector. What attracted us to Grosvenor is its unique size and location. It’s like a trophy asset. I would only look at UK if buying overseas.

What would be the area for expansion for the family business?
We would still focus on our core pharma business and the bio-tech industry. We have also looked at acquisition, like we acquire Netherlands-based Bilthoven Biologicals for Rs 550 crore. We did have investment in Orchid Chemicals but that did not go well. We tried to diversify, but have had bad experience.

We are also interested in the real-estate sector. We have been buying and accumulating land. We are coming up with two townships—one near the Pune-Mumbai Highway and at Manjari.