Five star hotel rooms in Mumbai to explode
Mumbai: From a situation where finding a room with a nice view in the country’s commercial capital – Mumbai – was a bother, tourists and business travelers are likely to find it very easy to get a five star room in the city. Close to 10 new five-star hotels from big international brands like Le Meridien, Hyatt Regency, Intercontinental, Marriott and Renaissance are set to grace Mumbai in the next two years and add a capacity of 2,860 rooms. Another 1,600 rooms over six hotels are being planned in the next five years by players like The Grand Hyatt, the Taj Group, The Leela Group and construction family the Hiranandanis. Many would have been open for business but for financial constraints.

What is noteworthy is that almost all the new hotels are expected to come up in the Andheri (East) belt close to the Sahar International airport in the city’s northern suburbs, as opposed to the erstwhile craze of adding rooms around the central business district of Nariman Point. One reason for this is that the land availability in the suburb is plenty and land is cheaper here than in the South Mumbai business districts. Besides, with many companies moving away from the main business district in South Mumbai to newer offices in the relatively cheaper suburbs, business is bound to be good for these hotels.

Industry analysts are already predicting tough competition and a further fall in room rates after all the hotels commence operations. According to an industry analyst, the room rates are likely to be as low as Rs. 4,500-5,000 per day, as against the prevailing room rate of Rs 8,000 for a five-star.

While analysts see fierce competition, the hotel owners see no problem since they are banking on their foreign collaborators’ marketing network to fill their rooms up. According to them, with the growth in business, occupancies would grow.
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Airline privatisation: government allows Indian companies to bid
New Delhi: In a clarification to the notification for the privatisation of the country’s international carrier, Air India, the government clarified that any domestic company could bid for an entire 40-per cent stake in the airline and become its strategic partner. The Indian companies will, however, not be allowed any foreign partner for the acquisition of the stake.

The concerned minister for privatisation, Mr. Arun Jaitley, stated that the management structure, including the composition of the board of directors, for the privatised Air India would be decided and agreed upon with the strategic investor and a shareholder agreement signed in this regard.

The minister also stated that the country’s domestic national carrier – Indian Airlines – would also be privatised. The global advisor for the Indian Airlines divestment is to be announced soon. According to the minister, no foreign airline would be allowed to participate in Indian Airlines’ privatisation, where the government had decided to retain 49 per cent stake while divesting 26 per cent to a strategic partner and 25 per cent to financial institutions.
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IDBI picks up stake in Punjab phone operator
Mumbai: In a move that will mark the first instance of a financial institution taking a stake in the equity of a basic telephone operator, the Industrial Development Bank of India (IDBI) may pick up equity in the Nahatas-promoted ECL Telecommunication Ltd (formerly Essar Commvision Ltd). ECL had acquired the Punjab circle from Ruias of Essar last year.

The financial institution, while sanctioning Rs. 656 crore to the basic service provider, said it may consider acquiring a part of the equity. The loan carries interest at the medium term lending rate (MTLR) of 12. per cent per annum and has been extended for the purpose of setting up facilities for operating basic telecom services in the Punjab circle.

IDBI has stated in its sanction letter that, with equity investment in the telecom sector being perceived as attractive, it would consider subscription to the company’s equity at the appropriate time. According to the FI’s sources, the financial institution will decide the quantum of equity, once the project attains financial closure.

IDBI has been in the forefront of telecom financing with major exposures in Bharti Telecom, BPL Mobile and Tata Telecom.

Himachal Futuristic Communications Ltd (HFCL) owns 80 per cent in ECL. The remaining 20 per cent is held by the Essar Group and US-based Bell Atlantic.
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Accounting body, ICAI, to make business segment disclosure mandatory
New Delhi: With more and more companies looking westwards for funds and overseas listing, the country’s leading accounting body, the Institute of Chartered Accountants of India (ICAI), has made it mandatory for corporates to furnish detailed information on each business segment, including countrywise financial breakup, along with the balance sheet.

This is being done in a bid to bring domestic accounting and disclosure standards on par with international norms, The new guidelines will come into effect from accounting year beginning April 1, 2001. This reporting has been made mandatory for all listed companies and all non-listed corporates with a turnover of over Rs 50 crore per annum.

The move to bring domestic accounting and disclosure standards on par with international norms is because segment reporting is mandatory under the US Gaap and International Accounting Standard (IAS).

ICAI’s Accounting Standard (AS) board recently approved the new norms. As per the segment reporting provisions, a corporate with revenues from different countries and different segments will have to give details of business generated in each of the segments from each country.

The application of segment reporting will make accounts and disclosures more transparent, and the accounting information more purposeful for the user. Such information would help better understand the performance of the enterprise, better assess its risks and returns, and help make a more informed judgement about it as a whole.
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