iconimg Saturday, August 29, 2015

Abhishek Sharan, Hindustan Times
New Delhi, September 01, 2014
The Central Bureau of Investigation (CBI) probe into the disinvestment of Laxmi Vilas Palace Hotel, a heritage property in Udaipur sold to the Delhi-based Bharat Hotel Private Limited at a reportedly undervalued price, has found that the buyer's representatives allegedly held a pre-bid meeting with officials of the department of disinvestment.

Confirming this, a CBI source told HT: "We are seeking details on what had transpired in the meeting." Bharat Hotel Private Limited was allegedly the lone bidder for the five-star hotel, then owned by the Indian Tourism Development Corporation (ITDC), the CBI source said.

The 29 acre property, with 54 rooms and suites was sold in 2002 for Rs. 7.52 crore, though the value of the land and building was about Rs. 151 crore, resulting in a loss of Rs. 143.48 crore to the government.

The hotel, however, was losing money and had accumulated massive losses at the time of sale.

World over, hotels are valued using a combination of the value of its underlying real estate and their financial performance. The probe will determine whether accepted practices were followed while valuing Laxmi Vilas.

The investigating agency is also examining if the hotel's sale on the basis of its poor financial performance, and not the worth of its assets, was against a directive issued by the government to the firm that carried out the valuation, the source added.

The CBI on Thursday lodged a case of cheating against Pradip Baijal, former disinvestment secretary, Ashish Guha, then managing director of Lazard India, which advised the government on the disinvestment, Kantilal Karamsey & Co, the firm that carried out the valuation, and several others.

The CBI did not name then disinvestment minister Arun Shourie. The agency has reportedly examined him during its preliminary enquiry probe  but did not find any prima facie evidence of wrong doing.

Further, the probe has found that the accused valuation firm had identified "overstaffing" as one of the key reasons behind the hotel's losses.