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Disinvestment funds -- Confusion over HCI remains

Ashwini Phadnis

P. Manoj

NEW DELHI, Sept. 26

EVEN as confusion exists over where the proceeds from the disinvestment of Hotel Corporation of India (HCI) are to flow, a meeting was held here late last week to expedite the disinvestment process.

Official sources told Business Line that the meeting was called to take stock of the disinvestment process and ensure that no ``procedural lacunae'' creep into the process now that the matter is to be handled by the Ministry of Disinvestment.

Sources indicated that once the Ministry of Disinvestment (MoD) gets the `all clear' from the Inter-Ministerial Group (IMG), which will examine the disinvestment from various angles including looking at the issue of company law and other issues, the new nodal Ministry would call global advisors and seek bids.

Another meeting is expected in the next 7-10 days as that much time would be required by the departments concerned to go through the disinvestment process carefully, sources said. However, official sources said that it is still too premature to say when the bids would be called.

HCI was a subsidiary of Air India till July 4 when the Cabinet transferred HCI to the Ministry of Civil Aviation. However, the Ministry recently handed over a letter to the Ministry of Disinvestment transferring HCI to the latter.

Sources indicated that the move would help broadbase the disinvestment process and garner more funds from the divestment as the MoD has been specifically created for the task.

However, confusion exists on where the funds raised from the HCI disinvestment are to flow, with a section in the Government expressing the opinion that the funds should flow to the Consolidated Fund of India while another section feels that the proceeds should be parked with the Ministry of Civil Aviation.

``Confusion will continue to prevail till there are clear-cut written orders from the government indicating where the funds are to go,'' official sources said, when asked as to who is to get the disinvestment proceeds.

HCI has five properties under the Centaur brand in Mumbai, Delhi, Srinagar and Rajgir (Bihar) apart from the operating the `Chefair' flight kitchen in Mumbai and Delhi. The disinvestment process has already attracted several leading hotel chains includin g Bharat Hotels Ltd which owns two hotels in Srinagar and Delhi which are managed by Intercontinental Hotels and Resorts.