Regulations
Hotels next on the block for strategic sale: Jaitley

The main holding arm for the government's interests in the hospitality and tourism trade are through the state-run India Tourism Development Corp

 

Hotels managed by state-run India Tourism Development Corp may soon be sold. A clear indication on this came on Friday from Finance Minister Arun Jaitley, who also said his government's divestment strategy will be balanced.
 
"Already the target of disinvestment this year is very high. It stands at around Rs.69,000 crore of disinvestment and strategic asset sale. This even more than the complete disinvestment made by NDA-1 (National Democratic Alliance government's first tenure," he said at a press conference here.
 
"Apart from this, many ministries have approached me for disinvestment in their non-core sectors and we are looking at it. Our decision will be balanced and the process will be to divest or make a strategic sale as the case demands," he said.
 
"The major assets which are left now are the hotels. We have been approached by th ministries that own them to look at a possible disinvestment. The concerned secretaries and disnvestment secretary are reviewing the proposal."
 
The main holding arm for the government's interests in the hospitality and tourism trade are through the state-run India Tourism Development Corp. In the past, some major properties have been divested, including the Akbar and Lodhi hotels in the national capital.
 

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Status quo on foreign equity in multi-brand retailing: Jaitley

The question to Jaitley was posed against the backdrop of the commerce minister's deliberations last week with key stakeholders on the issue of whether or not India should allow foreign direct investment its e-commerce space

 

Finance Minister Arun Jaitley on Friday said the decision taken by the previous United Progressive Alliance (UPA) government to allow 51 percent foreign equity in the country's multi-brand retail trade industry continues even as his party's views were well known.
 
"The views of my party on the policy and the views of my government on the same has been known to everyone for a long time. However, the official position right now is: The earlier policy, which was legislated and implemented by the previous government, still stands," Jaitley said.
 
"This is the current official position. I've not read exctly what she (Commerce Minister Nirmala Sitharaman) has said. But the views are concurrent with that of the party and our government," the finance minister told a press conference here to mark one year of his government.
 
The question to Jaitley was posed against the backdrop of the commerce minister's deliberations last week with key stakeholders on the issue of whether or not India should allow foreign direct investment its e-commerce space.
 
"We are not taking any position this way or that way from the ministry. We have heard everybody. In fact, this is not going to be sufficient," Sitharaman had said after the meeting, adding: "I will need to hold more meetings with everyone -- individual operators and associations."
 
This made it clear that the government had not taken any position on the matter.
 
In January 2012, the UPA government approved 100 percent foreign equity in single-brand retail stores but with a caveat that they source 30 percent of their goods from India. Following that, in December the same year, it allowed up to 51 percent foreign equity in multi-brand retailing.
 
Yet, despite these norms in placee, actual permissions to the global retail chains have not been given thus far, as Jaitley and Sitharaman's Bharatiya Janata Party (BJP) has been opposed to any form of foreign equity in the multi-brand commerce, fearing displacement of mom-and-pop shops.

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Delhi is India's mall capital, but their success limited: Study

There are around 255 operational malls in the top seven cities of India including Delhi, Mumbai, Pune, Bangalore, Kolkata, Chennai and Hyderabad

 

With 95 operational malls in an around Delhi, the National Capital Region has emerged as the mall capital of India but only 12 of them are successful as people used its air-conditioned confines not just for shopping but often only to escape the heat, says a study.
 
There are around 255 operational malls in the top seven cities of India including Delhi, Mumbai, Pune, Bangalore, Kolkata, Chennai and Hyderabad. Among them Delhi is seen as the best bet to host successful, large malls, despite the low success ration, says realty services major JLL India.
 
Mumbai, on the other hand, fares better with 10-15 successful malls out of the total of 35-46 malls that are operational, followed by Bengaluru with seven successful ones out of the 34 that are functional and Kolkata that has six successes out of 15 that are in operation.
 
"No other city comes close to the number of operational malls found in Delhi-NCR. It is mainly because of the huge population of the city, coupled with the spending culture and the weather conditions over here," Pankaj Renjhen, managing director for retail with JLL India, told IANS.
 
Primarily, the success rates of malls vary, usually depending on factors like design and layout, brand positioning, location and how well they cater to the needs of their target segments.
 
In the case of Delhi, the JLL study is positive on its mall culture, despite the relatively low success rate. "It is also evident that the city of Delhi has better potential in terms of well-performing large-sized malls," it said, adding just four shut down and one became office space.
 
"In Delhi NCR the propensity to spend is higher. Also the city is exposed to long period of heat, which prevents people from shopping in the high streets. They look for more comfortable options like malls," Mohit Bahl, partner, KPMG in India, told IANS.
 
He said the retail industry in India was in an evolution process, with 85-90 percent of it being in the unorganised space. "Retailers are still looking for good quality real estate. The spot of the real estate is very important as a lot depends on the catchment area," Bahl added.
 
The JLL study graded malls according to their average vacancy levels and rentals. While rentals are high in malls with vacancy levels of 10 percent or less and low in those with 20-30 percent vacancy levels, they are poor in malls with average vacancy levels of 30 percent or more.
 
Some of the more successful shopping malls in the NCR, like Select City Walk in Saket, Ambience Malls in NH-8 and Vasant Kunj, the DLF malls in Saket and Vasant Kunj, the Pacific Mall in West Delhi and MGF Metropolitan Mall in Gurgaon, employ professional tenant management teams, it said.
 
These teams then decide on the brands to be leased spaces in these malls. They also evaluate the placement of different brand retail stores, revenue targets to decide continuation of lease agreements, branding, and promotions and customer outreach events in the atrium.
 
The first mall off the blocks was Ansal Plaza in south Delhi, which became operational in 2000.
 
"NCR's ubiquitous position has made it India's Mall Capital. It is the sheer size of the city and vast catchment area that matters much. The NCR has also flourished because of its suburbs," said Shashank Jain, partner, transaction services, PricewaterhouseCoopers.
 
"People from semi-urban and suburban areas also visit malls in Delhi-NCR," Jain told IANS.
 
The JLL study said locational accessibility was among critical aspects contributing to a mall's success. On the other hand, apart from an existing high-street culture in an area, other reasons for failure could be the lack of a proper design and layout, and brand placement.

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