Hotel Corporation of India (HCI), the 100 per cent subsidiary of Air-India operating the Centaur chain of hotels, will be dissolved after the sale of its properties. The proceeds of the sale would accrue to the Air-India which will have the right to decide on its utilisation.
Top government officials told Business Standard that there were plans to share the proceeds from the sale of HCI assets with its strategic partner in Air-India in the ratio 40:40. The government proposes to sell 40 per cent of its stake in Air-India to a strategic partner. However, this is now been ruled out by the government's lawyers.
HCI has five properties - the Centaur hotels at Delhi, Juhu and Santa Crutz in Mumbai, Srinagar and Rajgir. The government has not taken a view yet on what will happen of the HCI hotel at Srinagar. It expects to realise about Rs 600 crore from the sale of HCI assets. The original proposal was to partly settle Air-India's debt, which runs to about Rs 3,400 crore, using these proceeds.
In case the privatisation of Air-India is completed before the sale of HCI's hotels, the government plans to enter into an arrangement with the strategic partner, wherein HCI will remain a subsidiary of A-I for a year. If the HCI disinvestment does not take place within a year, it will be demerged and transfered to the government.
There are, however, issues like payment of capital gains tax on the sale of assets which are still being worked out. Air-India can invest the proceeds from the HCI asset sale in infrastructure bonds and claim tax exemption, officials said. However, this could result in locking up of funds from the sale for a stipulated time, they added.
