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Closed Bars Have a Total Liability of Rs 290 Cr

The 418 bars which were closed in the state have a total liability of `290 crore with banks and financial institutions, putting a question mark over the repayment following the lack of business in these watering holes since April this year.

Published: 12th August 2014 06:00 AM  |   Last Updated: 12th August 2014 08:57 AM   |  A+A-

KOCHI: The 418 bars which were closed in the state have a total liability of `290 crore with banks and financial institutions, putting a question mark over the repayment following the lack of business in these watering holes since April this year.

Industry officials said that while there are loans worth `290 crore taken from nationalised banks, scheduled banks and the Kerala Financial Corporation, the bar-owners have  similar, or even higher, liabilities with private moneylenders and chit-funds even as uncertainty continues over a proper policy framework for the bar licensing issue.

“There is a question mark over the repayment of the loans,” said M D Bhanesh, whose five bars are among the 418 closed bars.

“It is estimated that about 20,000-21,000 workers were rendered jobless after the bars were shut down,” said Bhanesh, who is the general secretary of the Kerala Bar Hotels Association.

“Investments worth around `5,000 crore is stuck following the bar closure,” said industry officials.

Meanwhile, owners of the closed bars are using the ‘lean period’ to renovate and refurbish the bars.

The majority of the closed bars are spotting a new look, with new coat of paint, new furniture and renovated kitchens, among other things.

The bar-owners said they were investing the money as the bars are closed.

Though no official numbers are available it is believed that the total amount spent on renovation would run into several crores.

Biju Ramesh, the working president of the Kerala Bar Hotel Association, said that 67 of the closed bar hotels had 3-4 star status.

The closure was ordered based on a hotel classification list prepared in 2006 by the Tourism Department.

“No proper inspection or evaluation was done before issuing the order to shut down the bars,” he said.

The star grading classification of bars and hotels is done by the Hotel and Restaurant Approval and Classification Committee (HRACC), in which representatives of the Tourism Department, travel agents and the Federation of Hotel and Restaurant Association are present. “It was on the basis of the HRACC’s report of 2006 that the State Government ordered to close the bars in 2014,” he said.

An industry official said that in Ernakulam several bars, including Polakkulam, Alankar and Rockross, were spotting a new look, perhaps to ensure that they pass the grade if the Excise Department conduct inspection.

According to Bhanesh, the 10-week time given by the Kerala High Court to the State Government to come up with a proper policy for  bar licensing will end on Tuesday.

“Initially, the High Court gave 4 weeks’ time to the government, and then they gave another 6 weeks. The 10-week period is coming to an end on Tuesday. We are expecting some clarity on the issue by Wednesday,” he said.

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