The civil construction contract for Citrus Leisure’s Kalpitiya Beach Resort PLC (CITK) property, which has been delayed for over four and a half years, will be tendered shortly, over a year after the Securities and Exchange Commission (CSE) forced the company into action.
“All preliminary work for the Ayurveda Resort Spa has been concluded and the civil construction contract will be tendered shortly,” Citrus Leisure Chairman Prema Cooray said in his annual review.
He said that the board is reviewing the timelines and the planned return on investment in view of the current market conditions. “The board is of the view that the expected growth in the Kalpitiya zone has still not taken place and therefore, would continue to carefully evaluate the region’s development as a tourist destination,” he said.
During the previous year’s review, Cooray had said that the hotel would be completed
CITK’s property has been in limbo for four and a half years. Construction on the property was to start in December 2011 and be completed within 24-30 months.
It was planned to become commercially active by early 2015.
Citrus had gone for an initial public offering for CITK in December 2011 and had raised Rs.283 million, bringing the stated capital of the company to Rs.1.72 billion.
The initial plan was for a 150-room and 50-villa property to be constructed at a cost of Rs.1.8 billion—excluding the land—with the villas to be constructed first and come into operation by 2013, generating Rs.750 million in profit by the time the rest of the hotel became operational.
The hotel was to be constructed on a 78-acre land and out of which, 35 acres were purchased for Rs.169 million and the rest of the 43 acres were taken from CITK’s parent Citrus Leisure on a Rs.177.5 million 99-year sublease.
However, construction on the project was not started by March 2015, which forced the SEC to direct CITK to inform its minority shareholders of the status of the project and to outline any alternative courses of action.
CITK had said that it had been hoping to construct the resort as part of the government’s currently halted flagship tourism project in Kalpitiya.
Following the consideration of several models, CITK had decided to reduce the scale of the project and to go ahead with the 60-room Ayurveda Resort Spa.