Hotel Wild Flower Hall Losses Disputed By Himachal Government

Shimla: With the tussle over Wild Flower Hall between the state government and Oberoi group refusing to settle down, government directors have recorded their dissent and refused to pass the years accounts, which show Rs 80 crore as accumulated losses on the balance sheet, rendering what otherwise is a prime property as junk.

Manisha Nanda, tourism secretary said, three government directors on the board of Hotel Wild Flower Hall management, which includes chief secretary Asha Swaroop have recorded dissent at the board meeting that was held to pass the annual accounts.

Sources revealed the property which was handed out to Oberoi’s under a joint venture agreement in October 1995, has been incurring losses and the government by way of equity has not earned anything from the disinvestment made thirteen year ago.

Chief Minister Prem Kumar Dhumal told Hill Post, “the state has earned nothing from this property.

“The Oberoi group should honour the arbitration award and pay us our due amount,” he said.

Sources privy to the accounts revealed, “other than an amount of Rs 5 crore parked in an escrow account by way of an arbitration order, the government has earned nothing from handing over the heritage site to the private sector.”

The government directors are reported to have disputed the loss accounts of Mashobra Resorts Ltd, which operates Wild Flower Hall.

An Oberoi group spokesperson when contacted refused to comment saying, “the matter is in court.”

However, the person who had taken a look at the accounts said “staff expenditure is shown as going up and against a monthly salary bill of Rs 17.55 lakh which loss making organization would declare Rs 30 lakh as bonus and performance award for it staff.”

An accumulated loss of Rs 80 crore on a capital expenditure of Rs 46 crore, makes the business unviable, the source said.

Hotel Wild Flower Hall, which in British days was the house of the commander in chief of the armed forces, passed onto the state government and was run as a tourism hotel.

After the old property burnt down the state government, over looking a higher bid by a rival company, decided to enter into a joint venture for operating a high end hotel.

The initial agreement with Oberoi’s had spelt out 35 percent equity for the state which was paid in kind and the site was valued at Rs 7.5 crore.

Over a period of time the government equity was reduced to 21 percent as the capital cost of the 85 room hotel was shown at Rs 99 crore.

The hotel that was to come into operation within four year after signing of the agreement, but was made operational in March 2001.

The government then disputed the hotel construction cost and attempted to forcibly occupy the property in March 2002. The dispute went to court and was referred for arbitration.

The arbitrators considered that the differences among the partners as irreconcilable and decided that the government would continue to remain owners of the property.

The arbitrator asked the government to enter into a 40 year lease agreement with Mashobra Resorts for a total amount of Rs 95 crore.

The Oberoi group was also required to pay Rs 12 crore against the state transferring its equity in Mashobra Resorts.

The arbitration award was challenged by the Oberoi group.

Wild Flower Hall happens to be a premier property of the Oberoi’s that is frequented by congress president Sonia Gandhi and her daughter Priyanka Vadra.

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1 Comment

  1. says: raman khanna

    The location of wildflowerhall as decreed by the forces of nature, simply cannot put into language the magnificance of over 500 kilometers of the Himalaya as viewed from there.

    it is unfortunate that the oberoigroup chose to perceive this as an opportunity for ” a desirable rate of return” instead of using the chance to repay the state responsible for launching the fortunes of this company in the form of giving the founder chairman rai bahadur m.s. oberoi the clarkes hotel to begin his empire..The limitless greed of acquisition without any contribution to the state or the people even in the immediate vicinity of wildflower hall is ,to say the least, disgusting,

    I do hope corrective measures in the interest of the people of the state and the state of himachal are taken in the strongest possible measure by the powers that be ,without any other consideration to allow equitable, fair and transparent benefit to the deserving.

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