Kerala Liquor Ban: Prohibition flip side
Owners who renovated bars to get required classification now face a bleak future
By : cynthia chandran
Update: 2014-08-24 06:14 GMT
Thiruvananthapuram: The bar hotel owners are in hot waters following the government decision not to renew their licences and bring in total prohibition in the state. Many of them have taken huge bank loans to renovate the bars, but the UDF move has come as a bolt from the blue for them. Bar owners like T. C. Mani of Kolenchery and John Kallat of Kannur had renovated their bars spending between Rs18 crore and Rs 40 crore with bank loans and they are facing a bleak future.
Mani, 63, had sent his son Chacko, 25, to London to pursue his MBA hoping to initiate him into bar business. Mani owns two bar hotels in Kolenchery, Hotel Lovedens and Lovedens Garden, one of which is brand new, and one in Karimugal, Hotel Lovedens and Tourist Home. The father-son duo had bought 40 cents of prime land at Kolenchery recently and constructed a 30, 000-sq ft bar hotel. Mani had taken a loan of Rs18 crore from two private banks hoping to get the classification for their new bar.
“I ventured into liquor business in 1981 though my father was in the ration retail business. Now I am forced to sell my land,” said Mani who wanted to move from his rented bar. John Kallat’s loss is Rs 40 crore as he too had gone in for renovation of his bars. According to M. D. Dhanesh, general secretary of the Kerala Bar Hotel Association, there are many more Manis and Kallats in the association who are in dire straits. The Kannur-based bar owner owns 6-7 bars on partnership basis as per the recent classification of four-star hotels. The KBHA has called a meeting on Sunday in Ernakulam to chalk out their next strategy.
“For the three-star bars (312) and old bar hotels (418), there is a liability of Rs 1,500 crore and Rs 290 crore respectively. For a single bar hotel to be renovated, it requires between Rs 8 crore and Rs 10 crore. Usually, the norm is that when the bar owners invest 33 percent for a new bar, Kerala Financial Corporation chips in with 67 percent funding”, Dhanesh told DC. Private and nationalised banks allow a repayment period between 10-15 years. Now the KBHA representatives feel that the repayment will be stuck forcing them to take drastic measures.
“Currently, hotels coming under the tourism sector have over Rs 700 crore as liability to the banks. Out of this, Rs 500 crore alone comes under the bar hotel category. Bar owners who have the licence (5 star) will be able to repay the bank loans leaving the rest to fend for themselves,” added Dhanesh.