According to sources, both Indian Hotels and ITC Hotels had bid for the prime property which is 70 per cent owned by the Kirloskars. This would be the first acquisition by Indian Hotels after the new management, led by chairman Ratan Tata and managing director, R K Krishna Kumar took over the reigns.

When contacted, Ravi Dubey, the official spokesperson of Indian Hotels denied that till date any deal has been signed with the Kirloskars for acquisition of the property. Insiders, however, say the deal is almost closed and an agreement would be signed shortly.

Earlier, the company had sold off its loss-making properties at New York and Chicago for over $ 100 million. Sources say that these funds would be utilised to acquire moreproperties in India and restructure the organisation.

At present, Indian Hotels is making money only from its five properties in the metro cities while the rest are managing to break even. The acquisition of Blue Diamond will result in the Taj making its presence in the city which is not having any five-star hotel.

Sources say the company's next target would be ITDC's properties which would be put on block by the Union government. The government has announced that it would put 12 more hotels on the block which includes Puri and Ranchi properties. The exact procedures for sale of these properties will be announced in March this year.

Incidentally, Indian Hotels already has 10 per cent stake in ITDC which was acquired by the former Chairman and Managing Director, Ajit Kerkar keeping in view the massive potential of ITDC's properties in all the key cities of the country.