Plans to Position it in Four-Star Club

The Taj-group of hotels has acquired a Rs.17crore ITDC property in Chandigarh, through its associate company Taj GVK. The Taj Group plans to position it under the upmarket four star hotel brand, Taj Residency. "The Taj group is looking at expansions and acquisitions within the country and abroad. As and when there are opportunities that suit our brand image and needs, we will acquire them," said Zubin Dubash, executive director Taj group. Mr.Dubash said, the project cost will be financed by a mixture of debt and internal accruals. The project cost is likely to exceed rs.17 crore because the ITDC property has to be furnished and designed. The Chandigarh property figures among a clutch of ITDC hotels which have beer put up for sale recently.

Commenting on the Indian Hotels’ 10% stake in government-run ITDC hotels. Mr. Dubash said, "We have got a return of Rs.10crore form the sale of 14 ITDC properties. The major chunk is expected after the sale of flagship Ashok Hotel in New Delhi. "Indian Hotels had invested Rs.70crore during 1995 for a 10% stake in the government-run ITDC hotels. Indian Hotels owns the Taj Group of hotels. For the fiscal ‘02-03, Indian Hotels has earmarked amount of Rs.115crore to upgrade its domestic properties such as Taj Mahal, Mumbai, Wellington Mews, and Lake Palace at Udaipur. To improve the company’s bottomline, aggressive cost cutting measures have been implemented to ensure operating profitability. Also to reduce the interest costs, Taj is working towards reducing its working capital requirements. The hotel company has also raised low cost debt via a Japanese yen loan (Rs.100crore) and low coupon debenture (Rs.200crore at 6%). The total debt for the financial year ‘01-02 is Rs.700crore and the debt burden could go up to Rs.750crore by ‘02-03. Indian Hotels is also re-structuring its two investment companies and merging them with Taj Trade and Finance Company (Tifco).