The Hindu Business Line : Hotel Corporation posts lower operating loss

AIR India's subsidiary, Hotel Corporation of India (HCI), has registered an operating loss of Rs 7.97 crore for the 2003-04 fiscal, which is much lower than the operating loss of Rs 22.45 crore recorded during 2002-03.

For the current fiscal, HCI has budgeted for an operating profit of Rs 2.24 crore, official sources said.

The HCI board, at its meeting held in Mumbai on Wednesday, took the financial results for 2003-04 on record and also approved the budget for 2004-05.

Informed sources said that HCI would have posted an operating profit for 2003-04, but for the allocation of about Rs 7 crore - Rs 8 crore that it had to keep aside for the voluntary retirement scheme (VRS) of 378 employees. The total VRS compensation for the 378 employees, who were relieved during 2003-04, worked out to Rs 22 crore. This amount is being amortised over a period of three years beginning 2003-04. The VRS for the employees would result in an annual saving in salary of about Rs 9 crore.

For 2003-04, HCI has recorded a total revenue of Rs 39.94 crore as against a budgeted total revenue of Rs 48.27 crore. Sources indicated that the budget for 2003-04 was made at a time when HCI did not figure in the divestment list of the Government.

"At that time, we had planned for making capital investments to improve the revenue earning capacity of our rooms and, therefore, budgeted for higher revenues. However, HCI was put on the disinvestment list and, therefore, we could not undertake capital expenditure. So, the desired additional revenue did not materialise during 2003-04," sources said. During 2002-03, HCI mopped up a total revenue of Rs 51.77 crore.

However, for 2004-05, the HCI board has budgeted for a total revenue of Rs 49.08 crore. Sources said that the rationale behind the quantum jump in budgeted revenues for 2004-05 as against the actual of 2003-04 is two-fold - the Chefair flight kitchen would contribute more revenue this year and the Centaur Hotel in Srinagar is already booked for the four-month period of April to July. The increased occupancy at the Srinagar hotel will result in additional revenue of about Rs 3 crore - Rs 4 crore for HCI during the four-month period.

At present, HCI runs the Centaur group of hotels in Delhi and Srinagar and the Chefair flight kitchens in Delhi and Mumbai. For the year 2004-05, HCI budgeted for a net profit of Rs 2.39 crore as against a net loss of Rs 11.32 crore registered during 2003-04.