ITDC

GOVERNMENT OF INDIA

MINISTRY OF DISINVESTMENT

DISINVESTMENT OF THE HOTEL PROPERTIES OF ITDC (3rd tranche – partial)

The Cabinet Committee on Disinvestment, in its meeting held today, has accepted the bids for the four hotel properties of ITDC. Bids for five hotels were invited on May 21-22, 2002. There was no bidder for one of these hotels, namely, Hotel Khajuraho Ashok. The details are as under: -

(A)  The properties, bid prices and the highest bidders:

'

Sl. No. Name of the hotel property Reserve Price #
(Rs. Crores)
Highest Bid#
and Name of Bidder
1. Kovalam Ashok Beach Resort, Kovalam 41.75 Rs.43,68,76,000
M/s M Far Hotels Limited
2. Hotel Airport Ashok, Kolkata (including Airport Restaurant) 14.83 Rs.20,01,51,000
M/s Bright Enterprises Pvt. Ltd
3. Hotel Aurangabad Ashok, Aurangabad (with 14.48 acres of land) (including Airport Restaurant) 15.05 Rs.17,40,42,000**
M/s Loksangam Hotels & Resorts Pvt Ltd
4. Hotel Manali Ashok, Manali 1.91 Rs.4,00,00,000
M/s Auto Impex Limited

# The Reserve price/Bid Price is inclusive of the upfront payments to be made by the successful bidders towards specified liabilities on account of VRS compensation including gratuity to be paid to the employees who have opted for VRS as well as other liabilities, if any.

**Out of the bid price, the Railway Board (South Central Railways) is to be paid Rs.5,43,42,000/- as compensation for the land.

(B)  No. of bidders in the process:

'

Hotel No. of EOIs No of parties in
due diligence
No. of bids
Kovalam Ashok Beach Resort 31 14 04
Hotel Airport Ashok Kolkata 21 12 02
Hotel Aurangabad Ashok 23 19 05
Hotel Manali Ashok 27 19 06
Hotel Khajuraho Ashok 12 06 NIL

(C)   Financial status of the properties and their liabilities:

'

1.   Kovalam Ashok Beach Resort, Kovalam : Category: Elite; No. of Rooms: 196; Employees: 361 (Executive- 26, Non Executive- 335); Land Area: 63.7 Acres; Built up Area: 31525 sq mts; FAR permissible: Under CRZ III regulations.

Financial Year Occupancy Sales (Rs crores) Net Profit (Rs crore)
1996-97 44% 11.38 2.8
1997-98 36% 10.03 1.7
1998-99 36% 10.63 0.4
1999-00 30% 9.51 -1.3
2000-01 32% 10.28 -1.9
2001-02 (Prov) 24% 8.07 -3.47

No. of employees opted for VRS: 205.

Liabilities(To be paid upfront by the successful bidder):

Amount towards VRS compensation including Gratuity    Rs.10,65,76,000

2.   Hotel Airport Ashok, Kolkata: Category: Elite; No. of Rooms: 148; Employees : 305 (Executive- 21, Non Executive- 284); Land Area: 6.94 Acres; Built up Area: 10508 sq mts; FAR permissible: 200%.

Financial Year Occupancy Sales (Rs crores) Net Profit (Rs crore)
1996-97 37% 9.47 1.5
1997-98 39% 7.42 0.7
1998-99 27% 6.02 -1.9
1999-00 24% 5.10 -3.6
2000-01 35% 6.97 -2.6
2001-02 (Prov) 21% 4.7 -4.8

2.1.   Airport Restaurant and Flight Kitchen, Kolkata: Covers: 76 ; Employees : 166 (Executive- 5, Non Executive- 161); Flights catered to per week: 39; Capacity: 5000 meals per day; Average daily production: 1600 meals per day;

Financial Year Sales (Rs crores) Net Profit (Rs crore)
1997-98 5.03 0.33
1998-99 5.69 0.26
1999-00 5.64 -0.12
2000-01 5.47 -1.17
2001-02 (Prov) 3.20 -1.96

No. of employees who have opted for VRS : 166 (Hotel – 123; Restaurant – 43)

Liabilities (To be paid upfront by the successful bidder):

(i) Amount towards VRS compensation     including Gratuity     Rs. 9,33,42,000

(ii) Outstanding property taxes payable to Dum Dum
Municipality                 Rs. 94,15,040

(iii) Outstanding Electricity charges payable to AAI     Rs. 1,44,13,817

(iv) Outstanding dues towards lease of land and
license fee of Airport Restaurant payable to AAI     Rs. 2,02,32,000

                Total        Rs.13,74,02,857

Payments to Airports Authority of India: The successful bidder will also pay to AAI :

For the Hotel :

  • Rs.25,96,787/- per annum as Lease Rent @ Rs.92.15 per sq mtr calculated on Built Up Area (11,440 sq mts) or 28,180 sq mts (total land), whichever is higher.
  • The Annual Lease Rent would increase by 20% every 3 years.
  • Annual Turnover Levy @2% subject to a Minimum Guaranteed Annual Payment of Rs.14 lakhs increasing every 5 years to Rs.26 lakhs, Rs.34 lakhs, Rs.50 lakhs, Rs.71 lakhs and Rs.85 lakhs respectively.
  • Security deposit equal to Annual Lease Rent of 6 months
    For the Restaurant :
  • Annual Rent of Rs.30 lakhs increasing @ 10% per annum.
  • Fixed amount of Rs.70 lakhs as Royalty per annum
  • Security deposit of Rs.71,60,000/-

3.   Hotel Aurangabad Ashok, Aurangabad**: Category: Comfort; No.of Rooms: 66; Employees: 72 (Executive- 6, Non Executive- 66); Land Area: 14.48 Acres; Built up Area: 9798 sq mts; FAR permissible: 100%.

Financial Year Occupancy Sales (Rs crores) Net Profit (Rs crore)
1996-97 17% 0.75 -0.50
1997-98 15% 0.71 -0.60
1998-99 14% 0.71 -0.90
1999-00 14% 0.66 -1.20
2000-01 17% 0.82 -1.10
2001-02 (Prov) 20% 0.90 -0.80

3.1.   Airport Restaurant, Aurangabad : Covers: 25; Flights catered to per day: nil.

Employees: 1 [Executive- nil, Non Executive- 1 (on the strength of the hotel.)]

Financial Year Sales (Rs crores) Net Profit (Rs crore)
1997-98 0.025 -0.002
1998-99 0.029 -0.003
1999-00 0.025 -0.008
2000-01 0.029 -0.014

**Though the Unit is providing catering service at the Airport Restaurant, Aurangabad, owned by the Airports Authority of India, there is no formal agreement in this regard.

No. of employees who have opted for VRS : 60

Liabilities (To be paid upfront by the successful bidder):

(i) Amount towards VRS compensation     including Gratuity     Rs.2,81,41,000

(ii) Non-Agriculture Conversion Tax payable to Office of

the Tehsildar, Aurangabad           Rs. 9,00,000

    Total           Rs.2,90,41,000

4.   Hotel Manali Ashok, Manali: Category: Classic; No. of Rooms: 29; Employees: 19 (Executive- 2, Non Executive- 17); Land Area: 2.37 Acres; Built up Area: 2650 sq mts.

Financial Year Occupancy Sales (Rs crores) Net Profit (Rs crore)
1996-97 15% 0.26 -0.3
1997-98 20% 0.30 -0.3
1998-99 18% 0.28 -0.4
1999-00 24% 0.29 -0.3
2000-01 22% 0.35 -0.3
2001-02 (Prov) 25% 0.40 -0.2

No. of employees who have opted for VRS: 6

-

Liabilities (To be paid upfront by the successful bidder):

(i) Amount towards VRS compensation      including Gratuity      Rs. 43,46,000

(ii) Outstanding Electricity charges payable to Himachal

  Pradesh State Electricity Board (HPSEB)      Rs. 11,61,000

(D)     Realisation from the sale vis-a-vis returns being realised by Government

  prior to sale:

S.No. Name of the Hotel Realisation
(Rs. Crore)
Interest on 10%
deposit annually
(Rs. Crore)
Dividend received by Govt.
1 Kovalam Ashok Beach Resort 43.69 4.37 Loss Making
2 Airport Ashok Kolkata (including Airport Restaurant) 20.02 2.00 - do -
3 Hotel Aurangabad Ashok 17.40 1.74 - do -
4 Hotel Manali Ashok 4.00 0.40 - do -
Total 85.11 8.51 NIL

(E)      Gratuity: Due to poor performance of its hotels, ITDC has not been able to provide the requisite funds for Gratuity for its employees and consequently, the liabilities have to be discharged substantially from the disinvestment proceeds, which has resulted into less accrual to the Government. For the above-mentioned 4 hotels, out of the total VRS compensation of approximately Rs.23.24 crores (being met by the successful bidders for the employees who have opted for VRS), the gratuity component alone is more than Rs.5.70 crores. For the employees who have not opted for VRS and would remain with the hotel units under new management, ITDC would have to transfer the requisite amounts (approximately Rs. 6.40 crores, likely to increase by 10% till the Closing Date) to the gratuity funds of the respective units. The shortfall in transferring the requisite amounts would also have to be borne by the Government through post-closing adjustments.