New Delhi, March 28, 2018 (TMC Desk) The central government has invited ‘Expression of Interest’ to divest 76 per cent stake in the national passenger carrier Air India (AI).
The development follows the issue of Preliminary Information Memorandum (PIM) which invited “Expression of Interest” for the strategic divestment of AI, along with the airline’s shares in AIXL (Air India Express) and AISATS (Air India SATS Airport Services) from private entities including the airline’s employees.
The central government owns 100 per cent equity of Air India. In turn the airline has a cent per cent stake in Air India Express, while it holds 50 per cent stake in the joint venture AISATS.
“The Government of India has given ‘in-principle’ approval for the strategic disinvestment of AI by way of the transfer of management control and sale of 76 per cent equity share capital of AI held by GOI, which will include AI’s shareholding interest in the AIXL and AISATS,” said the PIM document.
The PIM detailed that the central government plans to retain a 24 per cent stake in AI and that the existing debt and liabilities of AI and AIXL are being reallocated.
“… the balance debt shall be allocated to Air India Asset Holding Limited which is 100 per cent owned by the GOI subject to receipt of requisite approvals from lenders and regulators, as applicable. Details of this debt or liabilities reallocation shall be shared at RFP (request for proposal) stage,” the document said.
Apart from AIXL and AISAT other subsidiaries of AI Group like AIESL (Air India Engineering Services Ltd), AIATSL (Air India Air Transport Services Limited), HCI (Hotel Corporation of India) and AASL (Airline Allied Services Limited), “will not be part of the proposed transaction”.
The other four subsidiaries will either be “hived off (along with any receivables or payables related to these subsidiaries) through demerger or other appropriate mechanisms… before the closing of proposed transaction.”
According to the memorandum, private entities should have a net worth of Rs 5,000 crore to be eligible to send in their bids for the proposed transaction. The entity should have reported a positive profit after tax in at least three of the five preceding financial years.
Last month, Minister of State for Civil Aviation Jayant Sinha had said that the government plans to divest its stake in the national passenger carrier by this year-end.
He said the bidding process is expected to be finished by June, by when the winning bidder will be chosen, and all the “legal formalities” will be completed by December.
As per the plan, the Air India group will be divested as four different entities and that the “information memorandum” will be issued in sometime.
Accordingly, one of the four entities will include Air India, its budget subsidiary Air India Express and gateway services and food solutions units AI-SATS.
In addition, Air India Air Transport Services, Air India Engineering Services and Alliance Air will each form separate entities.
In his Budget speech for 2018-19, Finance Minister Arun Jaitley had said: “The government has also initiated the process of strategic disinvestment in 24 Central Public Sector Enterprises. This includes strategic privatisation of Air India.”
The airline is under a massive debt burden of around Rs 50,000 crore (around $8 billion). The national carrier got a new lease of life in April 2012, when the then UPA government approved a Rs 30,000 crore turnaround and financial restructuring package spanning up to 2021.
Till now budget passenger carrier IndiGo has evinced interest in buying the airline’s international operations and its subsidiary Air India Express.
Besides IndiGo, aviation industry majors SATS, Bird Group and Celebi have shown interest but in buying Air India’s ground handling unit.
Bengal Chief Minister Mamata Banerjee protested against this proposal of the central government. “I am sorry to read in the media about the Govt inviting expression of interest for selling Air India, the jewel of our nation. We strongly oppose this and want this order to be withdrawn immediately. This Govt must not be allowed to sell our country,” she tweeted.
I am sorry to read in the media about the Govt inviting expression of interest for selling Air India, the jewel of our nation. We strongly oppose this and want this order to be withdrawn immediately. This Govt must not be allowed to sell our country
— Mamata Banerjee (@MamataOfficial) March 28, 2018