Indian Hotels, the Tata group's hospitality flagship which runs the Taj group of hotels, has restructured the equity structure of Taj International, the holding company of its London property, St. James Court.
Zubin Dubash, executive director (finance) of Indian Hotels, said: "We have divested part of the equity in St James Court to our group companies - Piem Hotels and Oriental Hotels. With this, the Indian Hotels' stake now stands reduced to 55 per cent from 100 per cent."
Explaining the rationale behind the move, Dubash said it is in line with the company's strategy not to own 100 per cent but to sell stake to a strategic partner. Piem Hotels will hold around 35 per cent and Oriental Hotels around 10 per cent.
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Piem Hotels owns exclusive properties such as the Taj President in Mumbai, Taj Residency in Nashik, Bangalore and Indore, and the Taj View at Nashik.
Oriental Hotels owns Taj Malabar in Kochi, Taj Residency in Vishakapatnam, Fisherman's Cove and Taj Coromandel in Chennai.
St James Court is managed by the Taj group and has a marketing tie-up with Crown Plaza. It is expected to post a profit of pounds 1 million in 2001-02.
The property had incurred a loss of pounds 1.6 million during fiscal 2000-01 and a loss of pounds 2.8 million 1999-2000. The company had expected that the hotel would break even last fiscal.
At present, St James has a net worth of pounds 56 million and accumulated loss of pounds 1.6 million.
"This (the bounceback) was possible due to restructuring of the balance sheet by netting out accumulated loss of pounds 55 million against revaluation surplus," senior company officials had said earlier.
According to officials, two factors delayed the turnaround at St James Court. First, the completion of renovation work at the hotel was delayed by two months - it was expected to be executive by July.
Secondly, the foot & mouth epidemic in Europe impacted tourist traffic across the hospitality industry.
...may sell City Inn
The Indian Hotels Company is considering selling the City Inn, its property at Baramati in Maharashtra.
The hotel came into the Taj group's fold following the acquisition of Blue Diamond in Pune, as part of a package deal with the Kirloskar family.
Zubin Dubash, executive director(finance) of Indian Hotels said: "City Inn may be put on the block as it has no strategic fit with the group."
According to senior company officials, "the 34 room hotel is not up to the Taj standards and there is no demand for rooms in that vicinity."
However, according to hotels analysts, City Inn may not fetch much value because of the small property, lack of demand and the uneconomical size.
In 1999, the Taj group acquired Hotel Blue Diamond and City Inn from the Kirloskar group in a Rs 40-crore deal. The Taj group has classified Blue Diamond as a business hotel.