Leela Group sold Leela Resorts Kovalam for 500 crore to NRI Ravi Pillai
By Jac - Wed Aug 17, 6:29 am
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The Leela Group is set to sell its signature property in Kovalam, a famous beach on the outskirts of the capital of Kerala, as part of an ongoing exercise to ease its debt burden.
The property is being sold for 500 crore to NRI Ravi Pillai. The property, Leela Resorts Kovalam, will enter into a management contract with Pillai to manage the property for 30 years.
The trigger for the sale of the property, which was originally developed by state-run ITDC and has a commanding view of Arabian Sea, was the need to reduce debt.
Leela Venture, a listed company, had accumulated debt of 3,830 crore at the end of FY11 owing to capital expenditure of over 4,000 crore, which is currently underway. This includes 3,200 crore on new hotels in Udaipur and Delhi. The company also expects to spend 1,200 crore on building a hotel in Chennai, which is scheduled to open in December.
The company has been looking to sell properties across the country to cut its debt which, at close to 4,000 crore, is more than double its market cap of 1,782 crore at Wednesday’s closing price. In March, the company announced plans to sell an IT park in Chennai for 950 crore. Hotel Leela Ventures’ debt is the highest compared to peers such as Indian Hotels Company, part of the Tata Group, which had debt of 2,500 crore as on March 31, 2011.