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May 22, 2002 | 1400 IST
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Second ITDC hotel sold to foreign buyer

Parul Gupta

The government has located new owners for two of its India Tourism Development Corporation properties at Kovalam and Manali. The bids were received on Tuesday.

While Muscat-based Mohammed Ali, who also owns the Meridien at Kochi, has bagged Kovalam Ashok for about Rs 455 million, a Guwahati-based hotelier bagged the Manali property for Rs 36 million.

Kovalam Ashok's is the second instance of divestment, that has attracted foreign direct investment. The previous one too concerned ITDC. Singapore-based Silverlink Holdings bagged Lodhi hotel at Delhi for about Rs 760 million.

The final bids were substantially higher than the reserve price. While the reserve price for Kovalam Ashok was expected to be in the range of Rs 350-380 million, it was about Rs 20 million for the Manali property.

Interestingly, while the Manali property had attracted over 30 expressions of interest, final bids were made by five.

Similarly, though there were 20 expressions of interest for Kovalam Ashok, five bids were received. For the Manali property, there was not a single bidder when it was put on the block last time. Kovalam Ashok came up for divestment for the first time on Tuesday.

Lalit Suri of Bharat Hotels bid for both the properties. BPL and a business group in Kerala bid for Kovalam Ashok. Mohan Singh, who has already bagged the Agra Ashok, and a business house in Manali bid for Manali Ashok. Suri was the second highest bidder for both.

While he submitted a bid of Rs 430 million for the Kovalam property, his bid for the Manali property was Rs 35 million, losing by a narrow margin of Rs 900,000.

The three properties to come up for divestment in the third tranche include Ashok hotels at Khajuraho, Aurangabad and Kolkata.

The financial bids for these will be received on Wednesday. The Cabinet Committee on Divestment is expected to meet this week to take a decision on these properties.

According to analysts, the bids received a better response than earlier because of the voluntary retirement scheme announced by ITDC recently. According to the scheme, while ITDC will offer the VRS, the new owner of the hotels will foot the bill for it.

The reason for the indifference earlier was the huge workforce in the ITDC hotels.

At Kovalam, 205 out of 361 employees opted for the VRS. Only six out of 19 employees at Manali opted for the scheme.

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