Peninsula Forays into Hospitality

Peninsula Land, the property development arm of Ashok Piramal Group,
today announced its foray into the hospitality sector with a joint venture
with textile maker and real estate developer Arrow Webtex. The JV will
develop business hotels across the country.
The foray comes months after the company exited its retail business,
Pyramid Retail, in December 2007. The group sold Pyramid Retail to Indiabulls
group for Rs 208 crore. The foray into hospitality also marks continuance
of the demarcation of group’s businesses among the Piramal brothers.
Urvi Piramal is the chairperson of the group, while her three sons,
Rajeev, Harsh and Nandan, head independent businesses.

While Rajeev Piramal heads the group’s property business Peninsula
Land, another brother Harsh Piramal heads the textile venture Morarjee
Textiles and auto components business Miranda Tools and PMP Components.

Arrow Webtex, promoted by Jaydev M Modi, manufactures narrow woven
fabrics and is into real estate consultancy and property development.
Modi is also on the board of Peninsula Land. Arrow owned nearly 133,000
sq ft of property in Mumbai as of April last year.

Peninsula and Arrow Webtex will create a special purpose vehicle (SPV),
where they will hold 50 per cent stake each. In the first stage, the
JV will invest Rs 100 crore and build 10 hotels of 100 rooms each, aggregating
1000 rooms. The JV plans to initially build hotels in Mumbai, Pune,
Nagpur, Nashik and Kolhapur in Maharashtra and subsequently develop
hotels in Ahmedabad, Surat, Jamnagar, Mundra port, Goa and Kerala, Peninsula
said.

The hotels coming up in Maharashtra are expected to be operational
in 30 months. Peninsula Land is developing nearly 4.5 million sq ft
of real estate, including residential, commercial, IT parks and special
economic zones, across the country. It also has a real estate joint
venture with global investor Lehman Brothers, where it holds a stake
of 25 per cent.

"We have been present in the real estate business for many years
and operate in residential, commercial and retail spaces. Hospitality
is a right fit into our business model. Besides, the demand for rooms
from business travellers compelled us to look at the hospitality business,”
Nandan Piramal said.

The JV is exploring whether to give management contracts to hotel companies
to run its hotels or run them by their own, Piramal said. Banking on
the acute shortage of hotel rooms in the country, real estate companies
such as DLF, Unitech, Parsvanath and Emaar MGF have announced hotel
projects and tie-ups with international hospitality companies.

DLF plans to invest Rs 20,000 crore to build 125 hotels in the next
seven years. Another Delhi-based realty player Unitech has plans to
construct 35 hotels and has already tied up with global hotel chains
Marriott and Carlson Hotels to run its hotels.