MUMBAI, Dec 23: The Hotel Corporation of India, a subsidiary of national carrier Air India, has put up a proposal to the board of directors that runs slightly counter to the proposed disinvestment of equity by the airline company. HCI has, instead, suggested partial disinvestment by leasing out its flight kitchens and an outright sale of its Srinagar property to improve an already black bottomline.

Sources said that a formal presentation outlining these plans was made by HCI managing director Kamal Sharma at the Air India board meeting held on December 19 in Mumbai.

Top HCI officials denied the reported news that the Air India board had agreed to divest 49 per cent equity in HCI. They pointed out that the proposal by their managing director was made in the same meeting, and no final decision has been taken. Sources at Air India, too, supported the HCI version. What really transpired at the meeting was an "Improvement Strategy" presentation made by the HCI managing director which recommended that HCI make an outright sale of its Srinagar property, Centaur Lake View Hotel, which should fetch HCI around Rs 152 crore.

The plan further states that the Srinagar property has been incurring losses for the past many years due to political disturbances in the valley and HCI has a proposal from the state government for outright purchase.

HCI has also brought up the case of its two flight catering units, including Chefair Flight Catering, which have been making losses for many years. It says that unless Air India guarantees at least 75 per cent of its flight catering business while Indian Airlines gives it 50 per cent of its total business, the units would not be able to turn around. HCI, alternatively, has suggested that the two units, based in Mumbai and Delhi, be leased out on a management contract to a professional hotel group.

The report points out that HCI has been making a profit since 1994-95 from Rs 4.47 crore which has now touched Rs 30.74 crore in 1996-97. It also adds that the company has wiped out its accumulated losses worth Rs 83.51 crore and repaid loans worth Rs 58 crore since April, 1995, to banks, financial institutions and Air India. Given this track record, HCI has made a case against disinvestment by Air India.

Sources added that the company has earmarked nearly Rs 40 crore for renovation and upgradation of its properties in Mumbai and Delhi and hopes to increase occupancy levels thereon.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.