The disinvestment of these hotels would be either through long-term structured contract or demerger into separate corporate entities, and sale of entire government equity in them, official sources said.

On the basis of their bids which are to be submitted by next Monday, the list of shortlisted bidders is likely to be pruned further by the Disinvestment ministry and global adviser, Lazard India Limited, they said. ITDC has already divested ten per cent of its equity in 1994-95 to its employees.

The disinvestment commission had recommended divestment of upto 74 per cent of ITDC's equity by leasing out hotels, demerger of ITDC hotels in small towns and spinning them into separate companies before the sell-off.

The Government has now decided to accept some of its recommendations which include handing over of the Bangalore and Delhi hotels of the Ashok Group to "established hotel chains", through competitive bidding process on a long-term structured contract on lease-cum-management basis, the sources said.

The Government has also approved disinvestment by ITDC in two of its hotels-Ranchi Ashok and Utkal Ashok (Puri)-the process for which has started with the company having taken up the matter with the respective state governments for clearance.

ITDC, which had recorded a turnover of Rs 288.5 crore last fiscal as compared with Rs 297.1 crore in 1998-99, projects Rs 343.95 crore in the on-going fiscal, during which it also estimates to reduce losses from Rs 24.04 crore in 1999-00 to Rs 13.88 crore this year. In a bid to further reduce costs, the Union cabinet last week reverted the retirement age in the corporation from 60 to 58 years. This step would lead to a saving of Rs ten crore.