KSTDC land lease period for 60 years, not 30 years: ROHL

Bengaluru: The Royal Orchid Hotels Limited (ROHL) has said the leasing of 2.19 acres of land at Domlur from Karnataka State Tourism Development Corporation (KSTDC) has not led to undue profit.

Responding to the DH report titled ‘Govt set to lose Rs 600 crore in Bengaluru lease deal’ dated August 30, ROHL said the company had made sacrifices to resolve the matter of lease renewal.

As per the government order, the original lease expired after 30 years, in 2022.

DH reported that the lease was renewed at 2% of gross income, which was cheaper when compared with the rent (about 24%) the company paid for two hotels in Mysuru.

DH had also reported on the letters written by KSTDC to the government, recommending scrapping of the original lease due to violation by ROHL through sub-letting and inviting tenders for leasing the land.

In response, ROHL denied the charge of subletting and claimed that the lease was not for 30 years, but 60 years.

“The KSTDC had leased the land for 60 years from 1992. As per the lease deed, the rent was fixed till the 40th year, i.e till 2032. The lease was to be renewed at the end of the 30th year, i.e 2022 and the rent for the balance 20 years i.e from 2032 to 2052 was to be mutually decided,” it said.

The previous annual lease rent was Rs 2.76 lakh and the new lease rent will be approximately Rs 1.1 crore per year “an increase of 40 times,” Chander K Baljee, managing director of ROHL, said in a note.

Responding to the higher lease amount for Metropole Hotel and Brindavan Hotel, the company said both were management contracts obtained through tender.

“ROHL has constructed a hotel on the land (2.19 acre) after borrowing a huge loan and the loan is still outstanding to be paid,” it said.