Air India stake sale: The government has extended the deadline to receive initial bids for its stake in state-run carrier Air India to May 31 from May 14, and also said that it will retain 24% stake in the carrier as a minority investor.
Air India stake sale: The government has extended the deadline to receive initial bids for its stake in state-run carrier Air India to May 31 from May 14, and also said that it will retain 24% stake in the carrier as a minority investor. The Ministry of Civil Aviation on Tuesday put out its responses to queries received on Air India disinvestment relating to the government holding a 24% stake in the debt-laden carrier. The government has received 160 queries on Air India divestment. “GOI is divesting 76% along with management control. GOI will have rights similar to that of a minority investor as per Companies Act and as per Shareholders’ Agreement. A draft Shareholders’ Agreement will be provided at RFP stage,” the government said in response to a query relating to the key veto and minority rights of the government.
The document also goes on to clarify that the government has no plans of a three-year time frame for the IPO. “There is no reference to “three year timeframe for an IPO” in the PIM. Please refer to Para 11.20 of the PIM. Additional details would be provided at the RFP stage,” it said. Interestingly, the labour issue is being seen as a major reason for domestic airlines to rule themselves out of Air India bidding.
“The way the deal has been structured, its not attractive given the debt and people issues. There are other things, the brand has to be retained, a forced IPO etc, which pose uncertainty. These are things which bidders find very onerous,” Amber Dubey, head -Aerospace and Defence, KPMG India told CNBC TV18 in a recent interview.
The government clarified that the conditions to safeguard employees’ interest will be detailed at the RFP stage. Further, the government has said that “individuals (other than employees) are not allowed to bid.” The release also mentions the current debt position of the airline. “After deducting Rs 88,160 million from Rs 3,33,920 million, the remaining figure of Rs 2,45,760 million is the debt and liability quantum that will remain with AI and AIXL.” “Bidders are advised to undertake their own assessment for the impact of disinvestment process on the existing code share agreement,” the government said.