Race course plan under cloud

No hotel project will be allowed in land leased from BMC: Chief Minister

Royal Western India Turf Club's (RWITC) plan to develop a part of the 226-acre Mahalaxmi race course for commercial purposes may come a cropper as the Maharashtra government is unlikely to give its nod.

State chief minister Sushilkumar Shinde said he was yet to receive either an application or meet a delegation from RWITC on the issue.

"What I know about the proposed project is what I have read in the newspapers. The race course land is housed on government property that the Brihanmumbai Municipal Corporation (BMC) has leased out to RWITC till 2013. I can assure you that no hotel project would be allowed to come up on this land," Shinde said.

According to municipal officials, the details of the project are being scrutinised before any formal decision is taken by the BMC.

RWITC has been planning to restructure its business model to tide over an acute liquidity crunch.

The Rs 120-crore (gross revenue) RWITC has accumulated losses of over Rs 10 crore. It broke even last year but this year (its financial year is July-June) ending June 30, it is projected to make a loss of around Rs 1 crore.

RWITC also runs the RWITC, Pune. The major revenue stream for the club is racing events (betting). It also rents out its lawn for marriages, parties and product launches.

Explaining the rationale behind the move, a senior RWITC official said: "The club incurs high expenditure and quite a substantial amount is paid to the government in the form of taxes. So, there is no money to beautify the place."

Though the club's members had approved a resolution on the proposed diversification project at the extraordinary general meeting on Tuesday, RWITC is facing opposition from various fronts "" political parties, government authorities, environmentalists and non-government organisations.

The contract for the proposed project (spread across six lakh square feet) was bagged by Pegasus Infrastructure. It plans to construct a private golf course, convention centre and service apartment at the site.

However, going by the agreement between RWITC and Pegasus, the project can take off only after it gets clearance from the BMC and the state government.

Pegasus will have to forfeit Rs 10 crore paid to the club, even if the project fails to take off. It had deposited Rs 135 crore, to be refunded by the club after 40 years.

As part of the deal, RWITC will also get a royalty of Rs 6.5 crore every year for 40 years and Rs 26 crore thereafter or 15 per cent of net profit "" whichever is higher.

Vivek Jain, vice-chairman, DCW Ltd and a committee member of RWITC: "Personally, I am not in favour of the club move as it should have taken into account all the objections to the project and obtained the necessary clearances from the government. Only after all the clearances are in place, it should have passed the resolution."

The nine-member committee of the club consists of Khushroo Dhunjibhoy, chairman of Five Star Shipping; Diwan Arun Nanda, chairman of Redifussion DY &R; Shyam Ruia of Raptakos Brett; Champklal Jhaveri, owner of a leading outdoor advertising firm, among others. It has a 7,000-strong member base of which 1,200 have voting rights.