Shares in India Tourism Development Corporation (ITDC) zoomed 20% following its robust earnings last week and as tourism minister Mahesh Sharma confirmed to CNBC-TV18 the government is looking to divest some of its hotels.
Excerpts from the conversation on CNBC-TV18.
Q: There is news the government is looking to sell some ITDC hotels.
A: Some of our ITDC hotels are not doing well in spite of our best efforts. It is a right initiative of the Ministry as well our Finance Minister to either disinvestment them, or enter into joint ventures or on a lease basis. In principle, we have taken a decision that out of 16 hotels, that there is a need to be look at 8 hotels. Shortly, we will take a decision to disinvest these hotels.
In spite of that, this year ITDC has a whole as made an operational profit of about Rs 5.21 crore, compared to last year's Rs 18.50 crore operational loss. So, the net of almost around Rs 25 crore of profits ITDC has made this year. Which is a big effort. Our great prime minister's effort of increasing tourism industry, the hotel industry as a whole and in spite of that, the hotel industry is not doing well nowadays.
However, we feel that this disinvestment is required. Our Prime Minister rightly said that government has no business being in business. Especially, in the hospitality industry where we feel I can make somebody work, but I can not make him smile. This is industry of making people smile, so that is what we are thinking of. We are seriously working on this in a short span of time. We have already informed senior ministers that the process has already started in our ministry on this process.
Q: You said 8 of the 16 hotels you want to divest through various modes, by when does this process actually get off the block and which are these 8 hotels?
A: I won’t dislcose the list now because it will become a public document. However, we have identified those hotels, and looked at their financial balance sheets in the last few years. There are some hotels in Jammu & Kashmir, there are some hotels in remote areas of Guwahati, Bhubaneswar, Puri. All those places we are working on and details will be definitely given in a short time. We are working hard and in a very short time we want to do this exercise
Q: What are the criteria for choosing the hotels? Is it going to be the highest loss making goes first or is it going to be strategic location, is it going to be the land parcel how are you choosing those 8 hotels?
A: Out of 16, those that are border line profit making, we are definitely not disinvesting in them. However, those who are chronic loss makers and we don’t see hope of reviving them on our own, we will take those hotels. Either there are some litigations or 2-3 hotels are in a condition -- like the ones in Gulmarg or Odisha. We are talking of these hotels which are in a bad shape and where we don’t see or we don’t forecast any changes in the near future.
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