The Centre has now set March 17 as the deadline for submitting Expression of Interest (EoI) by bidders wanting to buy Air India according to a preliminary information memorandum issued on Monday. The Centre has given ‘in-principle’ approval for strategic disinvestment of the national carrier by way of transfer of management control and sale of 100% equity share capital of the company held by GOI. The stake sale will also include the airline's shareholding interest of 100% in AIXL (Air India Express) and 50 per cent in the airport services company AISATS.
This is the latest attempt by the government to offload the bleeding state-run behemoth with has been surviving on repeated taxpayer bailouts. The government has significantly relaxed bidding norms in terms of debt and eligibility and has allowed individuals as well as consortium to bid for the airline.
In a relief to potential investors, the bidding consortia will be saddled with only Rs 23,286 crore of the total Rs 60,000-crore debt of Air India. As for eligibility, the lead member of a consortium can have 26 per cent shareholding, down from 51 per cent mandated earlier. The minimum shareholding in a consortium has also been eased to 10 per cent, potentially enabling more entities to bid as part of a consortium. The net worth for eligible bidders has been relaxed to Rs 3,500 crore from Rs 5,000 crore.
The disinvestment process is to be implemented through an open competitive bidding route. The government has appointed Ernst & Young (E&Y) as its sole Transactional Advisor (TA) to manage and advise the government throughout the process.
Earlier on January 2, Union Civil Aviation Minister Hardeep Singh Puri at a meeting with the Air India employees' Union, reassured them that AI will be operational till its privatisation process is complete. Last year, an Air India official had stated that the national carrier will be forced to shut down if a concrete solution to save the company is not found. But the Air India chief and the Union Minister have stayed firm that the government has no option but to privatise Air India.
According to the Central Government, it has infused funds to the tune of Rs 30,520.21 crore in Air India from the financial year 2011-12 till December this year. The government is drawing plans to privatise the carrier but has so far failed to get it through. The main hurdle that experts say has derailed the carrier's privatisation plan is investor scare of its oversized staff and debt obligations.
(With inputs from agencies)