"There are no doubts on the equity infusion. It will take place shortly once the aircraft purchase is finalised by IA" he stated categorically to The Financial Express.

Though refusing to comment on President K R Narayanan's objections on the equity infusion in IA, the minister said, "The equity infusion is not a sudden decision by the government. The Kelkar committee report came out in 1996. In 1997, the union Budget was passed with a provision for equity infusion in IA. The 1998 budget again has token provisions. And now the cabinet has cleared the equity infusion."

He added that there are no doubts or clarifications remaining on the subject. President KR Narayanan had conveyed his objections over the infusion of fresh equity in IA to cabinet secretary Prabhat Kumar who had clarified the government'sstance on the subject. Last week in an unprecedented move, the President also summoned IA chairman Anil Baijal for a 30-minute briefing on IA's restructuring.

Ananth Kumar refused to answer questions on what was discussed at the meeting. "I was not summoned by the President" the minister quipped. Baijal, when contacted, also refused to comment on what transpired at the meeting.The aviation minister said that IA was moving ahead on the technical evaluation of the aircraft purchase. Once that is completed, IA will invite financial bids from the aircraft manufacturers. It may be recalled that the Rs 325 crore equity in IA is to be used as margin money to fund purchase of new aircraft.

IA is attempting to replace 12 Boeing 737s and 11 Airbus A 300s. Its in-house evaluation committee, headed by deputy managing director J R D Rao, is currently evaluating several models from Airbus Industrie and Boeing for the replacement.

The technical evaluation will be presented to the board of directors shortly. The Rs 325crore equity infusion is meant to beef-up IA's balance sheet for a slated government disinvestment. The airline is tapping the market next fiscal with an initial public offering. It currently has an equity base of Rs 105 crore. The Disinvestment Commission has recommended divestment of 51 per cent of Government stake in IA.

Ministry-IA tug-of-war over 50-seaters

The civil aviation ministry may prevail upon IA to opt for purchase of 50-seater aircraft as part of the aircraft acquisition programme.

"When all the airlines such as Jet Airways and Sahara Airlines are going in for small aircraft, IA cannot afford to be left behind" said civil aviation minister Ananth Kumar. An internal study by IA had found that 50-seater aircraft will not be cost effective for the airline. The IA top-brass, therefore, is in favour of replacement of Boeing 737s and Airbus A 300s. "The 50-seaters are necessary for a hub-and-spoke arrangement" added Kumar.IA shortlisted the ATR aircraft manufactured by French company Aerospatiale for the 50-seater deal. Aerospatiale has entered into a joint venture with Hindustan Aeronautics Limited for co-production of the ATR aircraft provided IA purchases these aircraft.

Jet Airways has already got a government nod for 64 seater ATR-72. Sahara plans to purchase the 30-seater Embraer 120 aircraft.