An iconic hotel to turn into a multi-speciality hospital
HAIRCUTS & TONSURES
Guindy seems to be twice blessed: With plans to set up a multi-speciality government hospital and the iconic Meridien Hotel turned into another hospital.
MGM Healthcare, won the bid at the National Company Law Tribunal (NCLT) to acquire Appu Hotels that owns Le Meridien Hotels in Chennai and Coimbatore. It is likely to convert the luxury hotel into a multi-speciality hospital.
In the July issue, IE pointed to recent NCLT awards turning out to close tonsures and not mild haircuts. The Assets of Le Meridien Hotels are claimed to have a value of around Rs 1600 crore. NCLT has approved the bid for Rs 423 crore with a 70 per cent cut. The Committee of Creditors to Appu Hotels that included the Tourism Finance Corporation of India Ltd., State Bank, Indian Bank and IDBI among others, had approved the bid of MGM Healthcare’s M K Rajagopalan with 87.39 per cent voting. The bid amount will clear 100 per cent dues of secured and unsecured financial creditors amounting to Rs 340.43 crore and unsecured financial creditors of Rs 49.13 crore. The present owners are appealing against the NCLT order on the ground that the valuation was too low and the 70 per cent cut untenable.
Thus the curtain seems to be ringing down on the dream foray of NRI academic–entrepreneur Dr P G Periasamy.
PGP hails from a farm family of a village near Namakkal. With zeal, he excelled in pursuing higher studies in the US and settled down as a Professor in Economics at Baltimore. Remember all this was well before the new-gen middle-class immigrants flocking to the US seizing great opportunities that opened up in the 1990s?
The rise and rise of PGP
In the 1980s PGP started with a mini cement unit. The course was not very smooth. When, with liberalisation cement demand picked up, Dharani Cements was sold at a handsome price to the Aditya Birla Group.
PGP was active with the Tamil Nadu Foundation and came close to then chief minister M G Ramachandran [MGR]. When the latter fell seriously ill in 1984, PGP helped sending a team of specialists to Chennai and got MGR shifted to the Brooklyn Hospital, US. The attention and service rendered, endeared him to MGR. I remember the grateful MGR honouring the Japanese Doctor Kanu who treated him and PGP with a rousing reception at the Kathipara junction on their arrival from the US.
The close relation built by PGP with MGR was a big help in his making a bigger foray into business. MGR gifted him a sugar licence. PGP set up Dharani Sugars & Chemicals Ltd (DSC). Helped by N Mahalingam, the unit was established in quick time. With the rigid controls in force and with the liberal incentives offered by the Centre and the state, DSC began under good auspices. Thrilled by the initial success, PGP expanded capacity in the first unit and also obtained a licence for another at Sankarapuram. When Odisha Chief Minister Biju Patnaik offered sick cooperative sugar mills along with the licences and other attractive incentives, for new units, PGP entered Odisha with great expectations.
With liberalisation the protection and incentives enjoyed by industry vanished. Tamil Nadu, dependant on monsoon, also had a cyclical fortune. DSC landed in serious losses, surrendered the Odisha unit and the Tamil Nadu operations turned sick.
A dream hotel project…
PGP had experience in the hotel industry running the Ramada Inn Hotel in Florida. He had a burning desire to bring the American techniques in management and shine in the hospitality industry. In the first flush of enthusiasm he managed to get huge land mass near the Moore Market complex. MGR gifted 170 acres at My Ladye’s Garden which originally housed the Madras zoo, as a joint venture with Tamil Nadu Tourism Development Corporation (TTDC). The demise of MGR and the dissensions in AIADMK was the first major setback; when the DMK under Karunanidhi assumed power in 1989, this gift was taken back.
With the initial success of the sugar industry, PGP pursued his hotel dream. He managed to acquire a prime property at Guindy from liquor baron Ramaswamy Udayar and announced the Pallava Hotels Corporation with great elan. It went through several iterations; initially in a tie-up with Holiday Inn/Crowne Plaza, later with Hilton and finally with Le Meridien Hotels and Resorts, a division of the Forte Hotel Group, London. But then competition heated up with 3-star and 4-star hotels mushrooming. Despite the location near the airport and several unique features, operations could not be sustained on an even keel.
The travel industry received a battering ram with the Covid-19 pandemic. The hotel business suffered the most. Appu Hotels turned sick; with mounting NPAs became a candidate for IBC and NCLT. The successful bidder, M K Rajagopalan (MKR), is reported to convert the hotel into a hospital.
The rise of MKR is meteoric; he seized opportunities in medical education and perceived the enormous scope for quality medical education and healthcare. Initially he gained experience participating in a flourishing medical education business in Karnataka. He established sound rapport with policymakers in the UnionTerritory of Puducherry. In quick time, he made a great success of his foray into higher education. Look at the list of institutions of his Sri Balaji Educational & Charitable Public Trust: Bharathiar College of Engineering & Technology and Sri Venkateswara College of Education in Karaikal; Rajiv Gandhi College of Engineering & Technology, Mahatma Gandhi Medical College & Research Institute, Kasturba Gandhi Nursing College and Indira Gandhi Institute of Dental Sciences, all in Puducherry. In Tamil Nadu, the trust runs Sri Sathya Sai medical College & Research Institute at Nellilkuppam. Along with the Sri Balaji Vidyapeeth Trust, MKR’s institutions run two medical colleges, a dental college, two nursing colleges, a school of pharmacy, school of biological sciences and a faculty of allied health sciences.
These kamadhenus generate handsome surpluses. The group made a bold foray into a multi-specialty hospital in Chennai: MGM Healthcare Pvt Ltd, inaugurated by the Vice President in May 2019, has already earned a reputation for quality healthcare. The success achieved in a very short time has prepared MKR to bid for the Meridien Hotel housed in a sprawling 3.5 acre property in Guindy.
MKR’s initial plans indicate continuing with the hotel business in Coimbatore. This should make sense in the context of Coimbatore already having a good number of quality hospitals. – SV
