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28
March 2018
 |
Air India (The Total Investment & Insurance Solutions)
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 Total
Investment & Insurance Solutions
"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 Total Investment & Insurance Solutions
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. The Total
Investment & Insurance Solutions
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. The Total Investment & Insurance Solutions
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. The Total Investment
& Insurance Solutions
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.The Total Investment & Insurance Solutions
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