Indian Hotels Company Ltd, owners of the Taj group of hotels, has firmed up plans to sell idle real estate assets worth about Rs 150-200 crore in the current fiscal. The company had realised over Rs 21 crore by selling certain assets in 2000-01.
"We plan to invest the funds in expanding the business hotels division of the company," said R K Krishna Kumar, managing director, IHCL.
The assets are spread over Mumbai and some other cities in the country, he said.
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While the book value of the assets in the balance sheet is very low, the investments having been made several years ago, their market value today is significantly high. "We plan to convert the idle assets into cash and expand the business hotel portfolio," Krishna Kumar said.
In its annual report for the year 2000-2001, the company has stated that it was vigorously looking at an idle asset disposal programme to infuse liquidity into the system.
"With revenues rising slowly and increasing costs, the investible surplus available with the hotels require careful management. Increasing international competition with new high quality products is forcing all the chains to invest substantially in their products and infrastructure.
The increased capital requirement along with steady revenues put pressure on the bottomline of all the hotel companies in India," the report added.
IHCL's business hotels division currently has 18 hotels spread across 16 cities. The company has given a major thrust on the division earmarking growth rate of about 15-16 per cent in the budget hotel segment.
"Our immediate focus is to expand our brand to newer destinations with a well defined product on a controlled cost basis to ensure good experience and quality for money to our customers," Shashank P Warty, newly appointed chief operating officer of the business hotels division said.
The group is targeting various locations in north India including Delhi and also some cities in the south to expand. Though Warty refused to divulge any further details, he added that the group was examining the business prospects of various cities and a final decision would depend on their demography and needs.