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Face2Face - An Interview


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  • We weren’t running with the times - An interview with M.S. Manchanda, acting chairman and managing director, ITDC. (Posted on 8/04/2006)
  • The story of the Rs.350 crore tourism and hospitality major, India Tourism Development Corporation (ITDC), is typical of many PSU's search for identity, post disinvestments. M S Manchanda, acting chairman and managing director, ITDC, has been with the organisation for 34 years, where he started off as a trainee. He shares an insider's view of what went wrong with ITDC and how the organisation is learning to stand on its feet and now getting ready to run.

    You've seen this organisation from close quarters, how it grew and floundered over the years. What ails ITDC?
    We were perhaps not running with the times. We had a large number of hotels in our portfolio. The product had to be upgraded and renovated from time to time. We needed to fund them properly so that they could compete in the market. Our focus is now to consolidate our position and be up-to-date. We shall be at par with, or have an edge over other private hotels over the next two years. From now on we will take timely action and be ready to take on competition. We are getting ready for the Commonwealth Games 2010.

    You took charge at a time when ITDC was going through an identity crisis. What has been the trust over the past one year?
    Immediately after disinvestments, both business and the morale of employees went down. Out of 26 ITDC properties, 18 hotels were divested between 2001 and 2003. This disturbed our existing businesses. We have now chalked out plans to renovate our prime property at Delhi, The Ashok. We also plan to expand our existing network of duty-free shops. We will have duty-free outlets in the new airports, railway stations and outposts bordering Pakistan and seaports like Mumbai to tap international cruise traffic.

    Ashok Travel and Tour, our ticketing and tour operations, is looking at entering the outbound travel business, while the engineering consultancy services division is helping state governments to build tourism-related infrastructure. The thrust of our hotel division is now on conference and convention business. The twin properties of The Ashok and Samrat offer over 800 rooms with 14 conference halls besides a convention centre that can house over 2,000 people. All our divisions are being forced to get business from outside. We are also focusing on more private-public partnerships to shore up our business. The thrust is to consolidate our operations to increase turnover and profit.

    What were the lessons learnt from the last year's scotchgate scandal?
    The key lesson is that we need to be a good negotiator when buying products and pass on the value to our guests. I have personally monitored the best price of various products offered by ITDC. We have ensured that manuals are filled and followed strictly. As a result the basic cost of procurement by our duty-free shops has gone down by 16% over the last one year. Our market share may go down due to increasing competition but we plan to increase our volume of business by becoming a wholesaler in the duty-free business.

    How was the financial performance of ITDC in 2005-2006?
    We are still in the process of compiling the numbers but we expect to record a turnover of over Rs.400 crore as against Rs.350 crore registered in the year ending March'05. All divisions have registered substantial increase in their performance. Net profit is likely to be up by 30% in FY2005-06. The duty-free business contributes as much as 38% to our topline with 30% coming from our hotel division while other divisions such as ticketing, event management and engineering consultancy account for the remaining. Our events division is actively pushing for international conferences. The idea is to create our own brand as The Ashok group. In fact, around 27% of our hotel occupancy is accounted for by conventions and meetings.

    Other factors such as reduction in our wage bill by around 20% over the last one year have also helped to improve performance. We have brought down our staff strength from 3,524 to 2,881 as of now. However as business grows we now feel the need to hire around 30-odd fresh management specialists in various divisions. Courtesy Economic Times

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