‘Even rivals raved about Leela Delhi. That’s why ITC’s buying our shares’

Nearly 90, captain CP Krishnan Nair, chairman of Hotel Leelaventure Ltd, has decided to hang his boots and give his sons Vivek and Dinesh the reins of a hotel chain which he built from scratch along with his wife Leela.

Recently, the patriarch of Indian hospitality created a storm when he said Mukesh Ambani, chairman and managing director of Reliance Industries Ltd, will back him if ITC, a stakeholder with a sizeable minority interest, turns hostile and tries to increase its stake. He strongly believes that the old ties he had with the late Dhirubhai Ambani will continue. He is keen to find investors, too.

“Two white knights,” as he says, who will also help pare the hotel’s huge debt. The Nair family is also increasing their stake to 60% from 55%. Excerpts from an interview with DNA:

The Leela in Delhi is your second try in that market. Why took so long?
We had acquired a land parcel from Housing and Urban Development Corporation (Hudco) Delhi, approximately 15 years ago. It was during H D Deve Gowda’s tenure as prime minister of India that the 3-acre plot in the Asian Games Village was acquired to develop a hotel. I thought if a south Indian like Deve Gowda can become the prime minister, then a south Indian like me can also put up a hotel in Delhi. Being the highest bidder at Rs200-odd crore, I got the land parcel in an auction conducted by Hudco Delhi. Being government land, it had a clear title and we were assured that all sanctions / approvals will be given once we have started work on the project. V Suresh was the Hudco chairman then and Ram Jethmalani was Union minister for urban development.

We hired one of the world’s best architecture firms WATG (based in London) who had also created two monumental hotels for us in Bangalore and Goa. They surveyed the land and other historical structures in Delhi. This time around I was fully prepared which was not the case earlier. The site was a very ideal location not too far away from Rajpath and we were quite excited about doing a project there. Within two months we came up with a plan for the hotel and gave it to the Hudco officials. All clarifications were provided to the municipal authorities there. But suddenly, after sometime they came back to us saying we cannot do a hotel there because it was reserved for low-cost housing or something like that. We eventually ended up getting into big trouble with that land parcel.

Today in the context of Jan Lokpal Bill, I can only imagine the kind of torture people would have had to face all these years in this country. The situation is just not compatible to justice and fairplay because of bureacracy and political play. Can you imagine, people like V Suresh and Ram Jethmalani could wash their hands of it quietly and get away with it too?

So did you get the land parcel from them?
We never got back the land. Instead we got caught in a web of problems and we were attacked from all sides. Because of vested interest of some people in the system, the land acquisition deal was termed as unauthorised and the government decided not to pay us the money and forfeit it instead. I went from pillar to post to sort out the matter but in vain. Our bank accounts were frozen and there was a significant interest expenditure piling up because we had borrowed money in addition to equity.

It was really a terrifying situation. I was surprised that I didn’t get a heart attack. I was left with no option but to comply with whatever I was told. Despite all this, the Hudco officials unnecessarily delayed the matter and dragged it in court for another three years.

So did you finally get the money back with interest?
The irony of the matter is that I am still in the court fighting to get a complete refund. It so appears that they (Hudco) somehow wanted to use the Rs200 crore for themselves and used ‘court sanction’ as an excuse for not paying us back. We eventually had to approach Lal Krishna Advani, who directed the cabinet secretary to issue a directive to Hudco to pay Rs100 crore without any delay. So we did get 50% of the dues which was a great breather at that time. Hudco, however, wasn’t ready to pay us 22% interest (as per the rules and regulations) and decided to appeal the matter in a higher court. As a result the matter is still pending final decision. This entire incident only demonstrates the kind of torment one has to go through fighting bureaucracy in this country.

Despite all the hurdles you were determined to flag off the The Leela brand in Delhi…
The incident only motivated me further to establish presence in Delhi and I was determined to make that a reality. So while I did lose an opportunity then, the very thought of getting a much better location for our Delhi hotel kept me going. So when a few land parcels were being identified and auctioned to meet demand for hotel rooms during the Commonwealth Games, we chose to bid for the Chanakyapuri site. It was an international bid and I told my sons Vivek (vice-chairman and managing director) and Dinesh (joint managing director) that it will be a very competitive process and we must get it at any cost.
We assumed the price will be above Rs600 crore for the 3 acre land parcel. Among some of the competitors in the electronic bidding process included a Dubai sheikh and Ong Beng Seng (the Singaporean businessman). However, we also participated in the enclosed bidding procedure and were the highest bidder for that land parcel at Rs611 crore. The challenge then was to open the hotel well in time for the Commonwealth Games. We did open before the games but only partially and have now launched the property with all the facilities including restaurants and spa.

What has been the response for the new hotel?
It has been mind-boggling especially because of its strategic location in the Diplomatic Enclave. The property is getting rave reviews from patrons across the globe. Really heartening is the fact that the Indian hospitality fraternity including RK Krishna Kumar (Tata Group/Indian Hotels) have lauded our efforts.

In fact, Vikram Oberoi (of Oberoi Hotels) wrote to me saying the hotel is way above the quality standards of any other Indian hotel operating in the country so far. I personally wrote back thanking Vikram for the feedback. It brought back memories of Rai Bahadur Mohan Singh Oberoi, who at one point was very keen on partnering with us when we had put up the Mumbai hotel. We told him that we could certainly look at a marketing tie-up but he was more keen on taking the management so we did not take up the offer.

In fact, my wife Leela has been very clear from day one that the hotel business be run by the family members. That was the reason why we also sent Vivek to Cornell (University in New York) to study hotel management. He was the first Indian to have undergone a proper three-year programme there. Vivek’s wife is equally well-qualified from Cornell and very well understands the hotels business.

Management contracts seem to be the way forward with most domestic and especially international chains entering the Indian market...
We have done a deal in Gurgaon which is a mix of hotel and serviced residences and it has been doing great business from day one. It’s today the most preferred hotel in Gurgaon with almost 100% occupancy despite the highest rates in that category. Management contracts certainly is one way to expand presence/reach but you need the right partner and hence it’s always better to be on your own. As for the asset light strategy adopted by foreign companies, I think they have nothing to loose with that approach. The asset owner is building the hotel, making all the investments, gives management to a foreign brand but if the management company isn’t able to perform well, they can always de-flag the brand.

You have been saying that your ambition is to put up 18 hotels and then retire. What is the status of that goal?
We already have eight luxury hotels in our portfolio including the Chennai hotel that will open in August this year. The only capital city not in the network currently is Kolkata, we are looking for a place and we will be there soon. This will be followed by a second league of hotels in the pilgrim destinations. I think there is great potential for organised hotel companies in these locations. The new additions will now be done by my sons and grand daughters while I will play the advisory role.

Vivek’s two daughters are already in the business wherein the elder one (who also studied at Cornell) is looking after the finance and the younger one (studied at the Culinary Institute of America) is focussing on food and beverages and wines segment of the business. My third grand daughter Samyukta (Dinesh’s daughter) is currently studying at Lausanne in Switzerland and will be spearheading our foray into new pilgrim/business hotels after completing her course. In fact, she has already put up a business plan and has identified Nashik and Ahmedabad as locations for the first few launches.

She wants to call it Leela 1922, the number being my birth year. I am not saying no to her. It’s her concept. She will be back in August and then begin work on the project. These will be three-star hotels with a room rent of Rs4,000 ($100) for a night, will offer clean rooms in a very green environment. Such hotels are the need of the hour and that was the key reason why we thought of introducing the new category in our offerings. I was also wanting to have some environment-friendly hotels under The Leela Gardens brand.

You look very fit for your age…
Every day for one hour I go to our health centre. I feel so fit after that. I also go to the spa every alternate day.

The Delhi hotel, we are told, is your new flagship…
Even my competition has admitted we are far ahead of them. That’s why ITC is buying our shares. Even our Bangalore hotel (a money spinner) is beaten by Delhi. Chennai will be built on the same lines. But Chennai is not a market that is comparable to Delhi. Even before opening the hotel in Delhi there are many delegations which have come and raved about the hotel. The target audience are the foreigners and upscale Delhites.

You said in June you’ll retire.  But hoteliers rarely hang up their boots. If you look at PRS ‘Biki’ Oberoi, he’s still going strong..
PRS is 80. I am 89. Rai Bahadur retired when he was 85 years. I am going to be 90 and I think it is time to give the young people the chance to show their mark before our eyes.

I am healthy enough and I can continue. My memory is good and I am very happy and contented that in this lifetime I could see India growing to become a powerful nation.

How did you and Dhirubhai Ambani become friends?
We were both into textiles. He had Vimal and I had a textile firm called Leela Lace. When he came back from Aden, he started a yarn business. He wanted me to buy yarn from him and he had a very affable and friendly demeanour. I said yes to him, provided he (Dhirubhai) ensured that the yarn was of the requisite quality and tensile strength. He used to call me Krishna. He bought the yarn from Kohinoor Mills, a special tensile strength yarn which will not break like nylon does. And I bought from him from day one until we closed our textile unit.

(An attendant interrupts, to say Mrs Leela Krishnan Nair is ready to leave. He looks at the watch, smiles, and says “ten more minutes”. But the interview continues for half-an-hour more.)

You see, Leela and I have planted 2,00,000 trees in the vicinity near the airport. Most of the trees have been uprooted, but still for nostalgia’s sake we go for a drive around the airport to look at the trees and the foliage...

You were talking about Dhirubhai…
He was a dear friend of mine until his end. I used to go everyday to the Breach Candy Hospital. When he first got a stroke, he was admitted to the Jaslok Hospital. The moment I heard, I rushed there. You see, he was a very jovial person, bubbling with energy.

You must have met him before he had a stroke..
He used to call me those days and invite me to Oberoi Hotel. I used to go at times, as it was difficult to leave everything as I stay in the suburbs.
Once President (Hugo) Chavez of Venezuela was to stay in our hotel. Dhirubhai learnt about it and said he wanted to meet him. When the day arrived, Dhirubhai suddenly took ill and didn’t turn up. Instead, he told me to take his place, and sent Mukesh to make a presentation on the Jamnagar refinery. They have got good support from Venezuela.

What is Mukesh’s interest in hotels?
Mukesh went to the rescue of  the Oberois. Mukesh is blessed with oil & gas, the biggest source of revenue in the world. He is unfettered. If he can develop and ramp up the gas fields, he can supply the whole of India with gas from KG basin. It has inexhaustible gas.

Is ITC thinking there’s an opportunity when father-figures such as you and PRS Oberoi fade into the background they probably can go for the kill?
Yogi (Yogesh Chander) Deveshwar (chairman of ITC) is a very shrewd man.

Have you spoken with him?
We are friends. He was in charge of The Searock Hotel (opposite Taj Land’s End in Bandra, Mumbai) about 25 years ago as its general manager. He came here (to The Leela in Andheri East) and accepted that we had indeed built a fabulous hotel. Out of curiosity, he had come with 8-10 of his colleagues, all heads of departments to inspect our hotel. I was sitting in a corner and he came up to me and sized me up. He is a tall figure and an astute man.

He asked: “Sir, are you the owner?”

“No, I am the housekeeper,” I replied (laughs).

“In that case, I will tell you have put your money in the gutter. You have built it so beautifully, but this will never sell,” Yogi told me.

How did you react?

“Yogi,” — I called him by that name — “You are an employee of ITC.” His boss P M Menon, who was on the board of ITC, was my cousin. “You are doing a good job at Searock. You have managed to make Searock the most happening hotel in this part of town, so I’ll hire you at double the money you earn now to run this hotel.” He walked away (laughs).

Have you checked with him on his interest in your hotel?
I never asked him. I told my people, if ever Yogi Deveshwar comes to our Delhi hotel, treat him with great respect. I am told he stopped his car in front of our Chanakyapuri hotel and looked at it very, very carefully from the outside for 10-15 minutes. He looked at the elephants. He’s an astute man and he’s a businessman. He’s leading a big company. My cousin was the director of Imperial Tobacco, which is now ITC. But the money is being made from cancer. Tobacco business (shakes his head)... Now he’s moving away and is making soaps and other things. That’s the way to do it. He should go for solar energy. Why is he putting money in hotels? If he has got money, he should put money into solar energy. All Indian entrepreneurs should put their money into this. I want Mukesh Ambani to do that. Discover a cheap way to generate solar power.

Mukesh is doing that, we hear…
Mukesh (Ambani) must develop it. He must employ the best technicians from all over the world. One day will come, when we’ll not depend on oil and gas. Nuclear power is not good for us. I was a votary of nuclear power, but today after seeing Japan and its plight, I fear the earth may get crippled if we go ahead with such energy resources.

You were friends with politicians and freedom fighters?
When I was a young boy I fought untouchability, the British. I was a student leader when I was 13. I was a fighter.

Are there any unfinished tasks that you expect your sons to complete?
My sons will bring this group to a higher level. My children will make this group a truly Indian hospitality chain. I am ashamed that all our people are running after Marriott, Sheraton and Hilton. Kempinski was just a tie-up. We foolishly called it Leela Kempinski, on the advise of our marketing people. That was the challenge. I’ll be on my own.

You remain a passionate hotelier. Do you see the same passion in the current generation?
Why not? Both my sons are very passionate. Vivek studied in Cornell. I wanted them to study hotel management in all respects. Vivek bought the first architects for this hotel 27 years ago. They were from Boston. They changed the plans even though the building was already up. They changed everything. Dinesh’s  skills are in operations, whereas Vivek is strong in thinking, political liasoning.

How do you perpetuate the ...
I have three grand children.

No, we are asking because there are stakeholders such as Yogi Deveshwar’s ITC prowling in the shadows…
We have 55% and we’ll make it 60%. It’s a fact that we carry huge debt on our books. It’s a fact. But the assets we have put in place such as the Rs1,600 crore Chanakyapuri hotel is now worth Rs2,000 crore. Costs have gone up, but we still built one of the most valuable hotel properties in recent times in India. Without batting an eyelid, our competitors will pay at least Rs2,000 crore for that property. So the debt is still manageable. If you tell Sheikh al-Waleed (the Saudi billionaire), he’ll pay Rs3,000 crore.

You’ve had an association with Sheikh al-Waleed?
Al-Waleed has invested in Four Seasons. He was very keen to have a stake in my company. “Krishna, he told me, I want the stake through Four Seasons.” “Sheikh al-Waleed, I told him, it is in my wife’s name. She has put her heart and soul into everything — landscaping, cuisine … even today my wife is very compassionate towards the boys working in the hotel.”

We are lavish when we spend on food for our people. Leela, even today, gets the food from the cafeteria. In the beginning, when we were giving our boys ration rice, my wife intervened and told the chef that when the boys are serving five-star food to guests, they should also have it. The same rice should be served to them and arrange a bada khana (big feast) for the boys and girls every month. They should be treated like the guests at least in a small measure.
(We point to a picture of his with US president Barack Obama.)

This picture of you in deep conversation with the US president, what was that about?
Well I told him, “Mr President, you captured India.”

“Have I? Have I?” Obama replied, looking at a loss. “I mean, you captured the mind of Indians,” I explained.

“When you invoked Mahatma Gandhi, you touched a chord in the heart of all Indians. People have forgotten Gandhi here, you’ve revived him,” I told him.

“You’ve become an Indian,” I told him. “Have I? Have I?” Obama asked.

In the same vein, I told Michelle Obama I have five grandchildren who are Americans. “Where are they in America?” she asked me. I told them two are in Washington. She told me: “Ask them to see me.”

They are very kind people and very informal in their interaction.

I had supported Hillary Clinton. I had told her, Clinton, make sure, that Capt Nair is invited for your inauguration. She didn’t make it because of her miscalculation. In the beginning she ignored Bill Clinton, and only half way through the campaign did she invite him on board. If his services were taken in the beginning they would have easily won.

You spoke about your troubles? Any regrets?
India has to be a land devoid of greed and corruption. We preached Panchsheela. This is the land of Swami Vivekananda and Gautam Buddha. Now look at (Andimuthu Raja (the tainted, jailed former telecom minister), how he has behaved. He did not treat our prime minister with respect, he felt he could do anything. This Anna Hazare should be upper most in everybody’s priority. We must get back the trillions of rupees stolen. We should rebuild India in the next 10 years.

I am a true Indian. Soniaji is an upright woman leading a simple life. Both Rahul and Priyanka are simple kids, well-behaved. Priyanka, if she ever decides to get into politics will fly like Indira Gandhi. Rajiv Gandhi was a good man, he used to stay here (points to the hotel). The last time he went for election campaign, from here he went to Chennai. He put his hands on my shoulder and said: “Sir, we’ll come back victorious.” He was dreaming of a big
victory. I’ll not commit the mistakes I committed in the past. The moment you become a minister or prime minister, forces of greed come and capture them.

The asuras. That should be avoided.

What is the most dear memento in your office?
This (pointing to a crystal) lotus. Priyanka (Gandhi) gave me this lotus with a note. She gave this seven years ago. I have a thousand gold lotuses in Delhi designed by Satish Gupta. I love lotuses. I have ponds for beautiful lotuses in the hotel and even in my house. Priyanka knew about this and send it to me. I was so touched.

This is (points to a figurine) Buddha, which the Dalai Lama gave me. He has stayed here 27 times.

What do you like to be remembered as?
A true Indian host. Let us bring back our ethos back. Let the world say we Indians are a class by themselves. Today, Indians are walking with pride everywhere.