Shimla’s Wildflower Hall hotel to face special audit

June 29th, 2011 - 12:38 pm ICT by IANS  

Sonia Gandhi Shimla, June 29 (IANS) Oberoi Group’s Wildflower Hall, a landmark luxury hotel on the outskirts of this popular hill resort that is the preferred choice of high-value tourists, is facing a special audit as the state government suspects some financial fiddles.

The state government, a stakeholder in the heritage hotel, has asked the Comptroller and Auditor General (CAG) to conduct a special audit of the hotel, located at Charabra at a height of 8,300 feet amid thick verdant forests of pine and cedar.

Chief Minister Prem Kumar Dhumal said the government has asked the official audit agency to conduct a special audit of Mashobra Resorts Ltd, the company that runs the hotel, as it has been incurring huge losses since its inception in March 2001.

“How is a world-class hotel that’s attracting guests from across the globe running into losses? This is something unusual, unbelievable. The company that is quite professional is hiding facts,” Dhumal told IANS.

“It’s strange that the Oberoi’s other two ventures in Shimla — Clarke’s and Cecil — are making profit. Only Wildflower Hall is running into losses — that too for years together.”

Silki Nanda, director, corporate communications at Oberois in Delhi, refused to comment on the government decision to ask the CAG for the company’s audit.

British-era Wildflower Hall was once the residence of Lord Kitchener, the commander-in-chief of the British.

After India’s independence, the building was handed over to the Himachal Pradesh Tourism Development Corp for running a hotel. It was gutted in a fire in 1990. The government then approached prominent hoteliers and finally shortlisted the Oberois.

It was handed over to the hospitality group under a joint venture in 1995 by the then Congress government to set up a five-star hotel. At that time, the cost of constructing the 85-room hotel was pegged at Rs.40 crore (Rs.400 million) and the state government’s share was fixed at 35 percent.

Subsequently, the Oberois raised the cost of the project to over Rs.990 million, which reduced the government’s equity, officials said.

“During the construction of the hotel, the Oberois had raised loans from subsidiaries and allotted construction work to its sister concerns. This is a violation of the agreement between the stakeholders,” Dhumal said.

The government scrapped the joint venture agreement with the Oberois in 2002, pointing out serious irregularities in the construction cost. The Oberois challenged the decision of the government in the Himachal Pradesh High Court, which appointed an arbitrator.

Even the arbitrator gave his decision in favour of the government in 2005.

The Oberois, who were told to pay Rs.940 million to the government as rent for a period of 40 years from 1995, again moved the high court against the decree. The case is now pending in the court.

“The company is also supposed to provide the government lease money of Rs.2-Rs.2.5 crore every year with an increase annually,” Dhumal said. “We don’t need such investments in the state. We are ready to take over possession of the property.”

Wildflower Hall, because of the breathtaking view that one can get from there, is sought after by high-value tourists, celebrities and politicians. Congress party chief Sonia Gandhi and her daughter Priyanka are regular guests at the hotel.

(Vishal Gulati can be contacted at vishal.g@ians.in)

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