Panel For 74% Divestment In Itdc

The Disinvestment Comm-ission has recommended divestment of up to 74 per cent of the India Tourism Development Corporation. Such major divestment is recommended since ITDC falls in the non-core category and it is felt that the public sector is handicapped to provide the high quality service needed in the luxury segment.

The commission, which went into ITDCs strengths and drawbacks, felt that ITDCs presence in all segments of the hotel industry like luxury, budget and economy class has weakened its image among business travellers.

As a result, the luxury hotels of the group experience lower occupancy levels, the commission observed in its report released yesterday.

 

The report also says employee costs are high in ITDC and unlike other major competitors ITDC does not have the flexibility with regard to employee compensation considered essential if good talent has to be attracted.

ITDCs chairman and managing director Anil Bhandari refused to comment on the recommendations.

Analysing the deficiencies of ITDC the report observed, There is some uncertainty about the operations of duty free shops which have contributed significantly to profits in the past.

ITDC is in the service industry and a PSU does not need to provide hospitality services in metro locations where the private sector has established adequate presence in the market. But since ITDC owns prime properties, especially in Delhi, which provide easy access to business and tourist travellers, this is a major factor in its favour since there is scarcity of land.

On these considerations, the commission recommends that ITDC should be suitably restructured in terms of of its operations for disinvestment, the report said.