DoD trying to sweeten hotels' selloff

Parul Gupta

The government has mobilised over Rs 4.26 billion from the sale of nine India Tourism Development Corporation and three Hotel Corporation of India properties, which is about 52 per cent higher than the reserve price of Rs 27.93 billion set for these hotels. While it mobilised Rs 1.84 billion from the sale of nine ITDC properties, Rs 2.42 billion came from HCI hotels.

However, almost two-third of the premium is on account of only two hotels -- ITDC's Lodhi Hotel and HCI's Juhu Centaur. While the bid price for Lodhi Hotel was Rs 360 million higher than its reserve price, Juhu Centaur's bid price was Rs 520 million more than its reserve price of Rs 1.01 billion.

Interestingly, the government has been able to garner only about Rs 700 million by signing the sale agreements of the six ITDC properties put on the block in the first tranche.

The government had to extend initial deadlines by accepting additional bank guarantees. The Juhu Centaur deal is expected to be signed by March 9. Since the second tranche of both HCI and ITDC properties selloff has just got over, the bidders still have some time to make their payments.

The divestment ministry, after receiving an over 50 per cent premium on hotels, has gone on an overdrive.

In order to find bidders for hotels which received no bids, the divestment ministry has already written to the ministry of tourism and ITDC to submit a report on how to make the hotels more attractive. Even the remaining HCI hotels have been referred back to the civil aviation ministry.

The tourism ministry is expected to submit the report by the month-end. Though 16 hotels were put on the block in two tranches, the government could find takers for only nine. While there were no bids for five of its properties, including its flagship Ashok Delhi, the bids were below the reserve price in two cases including Janpath and Ranjit hotels in Delhi.

Even in cases where the government did find takers, the response was not very encouraging. In most cases, the government received just one or two bids.

YOU MAY ALSO WANT TO READ:
The Rediff Budget Special
Run-Up To The Budget
The Divestment Development
Money