Goa hotels struggle to pay back loans

PANAJI, June 13: Cut-throat competition among budget hotels in Goa, despite a healthy growth in tourist arrivals, have pushed the state8217;s hospitality industry deeper in the red. Small and medium entrepreneurs, who borrowed heavily to construct hotels catering to holiday makers looking for an inexpensive vacation, are unable to pay back their loans. Goa8217;s state-owned Economic Development Corporation is to recover loans worth Rs 21 crore from the hotel industry. It has decided not to give any loans to the hotel industry in the future.

The chairman of EDC, MLA Krishna Kuttikar told the media that the recovery of loans from the hotel industry has been very poor. The transport industry which sought to ride the tourism wave in Goa is a similar case. EDC8217;s exposure to the transport industry is pegged at Rs 5.85 crore. According to EDC officials nearly 200 vehicles have been confiscated so far and recovery proceeding initiated against borrowers.

With outstandings amounting to almost Rs 27 crore, the hotel andtransport industries are the biggest borrowers from the EDC. Manufacturing industries including plastics with outstandings of Rs 23.71 crore, barge owners with Rs 18.46 crore, electricals and electronics with Rs 10.66 crore, mild steel ingots with Rs 19.70 crore, etc account for EDC8217;s total outstandings which have been valued at more than Rs 200 crore.

Kuttikar informed that the corporation sanctioned Rs 126.35 crore and disbursed Rs 83.26 crore in the last financial year which saw earnings amount to Rs 8 crore. The profit target for the current financial year is pegged at Rs 9 crore. The EDC has reduced the rate of interest by one per cent for loans to all industries. It is also floating a local area bank to mobilise resources at a cheaper rate.