Indian Hotels: Ajit Kerkar Controversy



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Introduction

On September 2, 1997, in the board meeting of Indian Hotels Co. Ltd. (IHCL), Ratan Tata took over as the chairman of IHCL, after the former chairman and managing director, Ajit Baburao Kerkar (Kerkar), was made to resign. R.K. Krishna Kumar (Kumar), managing director of Tata Tea, was appointed the new Managing Director and S. Ramakrishnan of Tata Industries was made the Deputy Managing Director.

Kerkar was asked to leave after two allegations of FERA violations surfaced: the non-repatriation of dollar deposits by two foreign airlines, which had offices on the Taj premises in Mumbai; and issue of Global Depositary Receipts (GDR) by IHCL's subsidiary, Oriental Hotels, amounting to about US$30 million.......

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The Tatas leveled serious charges of misdemeanor and irregularity against Kerkar, who had by then become a legend in the hotel industry for turning a single loss making property (the Taj Mahal Hotel in Mumbai) into a reputed international chain.Commenting on Kerkar's exit, a leading national daily wrote, "Building an international hotel chain during the most draconian days of the Foreign Exchange Regulation Act (FERA) obviously could not have happened without plenty of tightrope walking and some maneuvering on either side of the law."

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