This is the first time since the formation of the company in 1986 that none of the Nair family members, who are part of the company’s board, are holding a managerial position at the same time
The Leela Palace Udaipur
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var titStr=”;var editw=”; var typevar=”; var pparr= new Array(‘Monitoring your investments regularly is important.’,’Add your transaction details to monitor your stock`s performance.’,’You can also track your Transaction History and Capital Gains.’); var phead =’Why add to Portfolio?’; if(secglbVar ==1) { var stkdtxt=’this stock’; var fltxt=’ it ‘; typevar =’Stock ‘; if(lastRsrs.length>1){ stkdtxt=’these stocks’; typevar =’Stocks ‘;fltxt=’ them ‘; } } //var popretStr =lvPOPRHS(phead,pparr); //$ (‘#poprhsAdd’).html(popretStr); //$ (‘.btmbgnwr’).show(); var tickTxt =’‘; if(typparam1==1) { var modalContent = ‘Watchlist has been updated successfully.’; var modalStatus = ‘success’; //if error, use ‘error’ $ (‘.mc-modal-content’).text(modalContent); $ (‘.mc-modal-wrap’).css(‘display’,’flex’); $ (‘.mc-modal’).addClass(modalStatus); //var existsFlag=$ .inArray(‘added’,newappndStr[1]); //$ (‘#toptitleTXT’).html(tickTxt+typevar+’ to your watchlist’); //if(existsFlag == -1) //{ // if(lastRsrs.length > 1) // $ (‘#toptitleTXT’).html(tickTxt+typevar+’already exist in your watchlist’); 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The disqualification of executive directors Vivek and Dinesh from HLVL (formerly Hotel Leelaventure), founded by their father, brings curtains to the Nair family’s managerial control of the troubled hospitality firm.
Vivek Nair, Chairman and Managing Director, and Dinesh Nair, Co-Chairman and Managing Director, ceased to be directors of the company at the end of FY21, and were barred from seeking re-appointment due to their disqualification.
HLVL had defaulted payment of instalments towards the redemption of principal amounts due on its Secured Redeemable Non-Convertible Debentures and also defaulted the payment of interest on the debentures issued to LIC.
Accordingly, the disqualification got triggered under Section 164 (2)(b) of the Companies Act, 2013. Vivek Nair has now been redesignated as CEO while Dinesh Nair has been given the position of Joint CEO.
This is the first time since the formation of the company that none of the Nair family members, who are part of the company’s board, are holding a managerial position at the same time.
The board of HLVL appointed Vivek’s daughter Amruda Nair as an additional director, days before the end of FY21. Madhu Nair, wife of Dinesh Nair, joined the board in 2020 and is seeking a re-appointment as a non-executive director at the upcoming annual general meeting (AGM).
Deal with Brookfield
Founded in 1986 by the late CP Krishnan Nair (remembered as Captain Nair due to his service in the Indian Army), The Leela Palaces, Hotels and Resorts, more commonly known as The Leela, operated eight luxury properties across key destinations such as Mumbai, Goa, Delhi, Bengaluru, Chennai and Udaipur.
After the passing away of Captain Nair in 2014, the company engaged in multiple rounds of talks with a number of aspirants to repay debt but struggled to forge a deal due to valuation issues.
In 2019, Canada’s Brookfield Asset Management bought Leela’s operational hotels in Delhi, Udaipur, Chennai and Bengaluru (having a total of 1,017 rooms), a land parcel in Agra (near the Taj Mahal), leasehold rights for land in Bengaluru and a licence agreement for Mumbai property form the core of the Rs 3,950 crore deal.
Only the Mumbai property, which is also its oldest hotel, is owned by the company.
As part of the transaction with Brookfield, HLVL and its promoters agreed to a certain exclusivity, non-compete and non-solicit restrictions. Hence, HLV is not planning for any expansion in the near future, the company stated in its latest annual report.
How did Leela get into this mess?
Leela Hotels closed FY14 with a debt of nearly Rs 5,000 crore. The company was struggling to push itself to profitability, mainly due to the ballooning cost of finance that eroded its margins repeatedly.
Unlike its competitors, such as Hyatt, Marriott and Intercontinental, which run readymade properties on management contracts, the management at Leela decided to infuse its own funds to build new properties. As most of this was done through debt, the interest payout on loans made it difficult to avoid losses.
Even before Captain Nair’s demise, the company had already sold off its luxurious Kovalam property and an IT Park in Chennai. But the high level of debt forced the company to keep exploring the sale of properties. Soon after the Goa property was sold, it was followed by monetisation of another IT park in Kochi.
A detailed questionnaire sent to HLVL’s company secretary and the public relations department seeking clarity on the disqualification of the directors, counter-measures being taken and other queries, remained unanswered at the time of publishing this article.
