Air India may turn to the public to save divestment plan: report
11 June 2018
After an aborted sell-off plan that so no single bidder take part in the tender offer for Air India, the national carrier is reported to be looking to offload its shares onto the \public in what is termed as a diversified shareholder mechanism.
Air India has called for financial bids by 13 June for a Rs1,000-crore term loan of one-year tenure as a stop-gap arrangement ahead of the stake sale.
"Air India is inviting bids for government guaranteed INR STL totalling to Rs1,000 crore to meet its urgent working capital requirements," the airline said in a statement.
"The tenure of the loan will be for one year (renewable) from the date of availing the STL. The amount of Rs1,000 crore will be drawn in June` 18 in one or more tranches. "The government of India guarantee is presently valid for one year," it added.
Meanwhile a Hindu BusinessLine report quoting NITI Aayog vice chairman Rajiv Kumar said the government is looking to cast the net either by selling shares to the larger public
“One of the options could well be to have a very highly diversified distribution of Air India’s equity. It should be structured in such a way that you get a very wide dispersal and it becomes a truly public limited company with a board that is completely autonomous and not necessarily public in nature. You could get a private corporate board like you have at MNCs,” the report quoted Kumar as saying.
Under the plan proposed by NITI Aayog, Air India would be managed by a bigger board and function on the lines of a private sector enterprise post sale.
The proposal is also in line with the government’s demand that the airline continues to be managed by Indians post sale. The government, according to Kumar, is looking at ways to make the sale attractive to buyers but without sacrificing the airline’s basic character.
Report also suggests that the NITI Aayog proposal is in sync with the suggestions made by Swadeshi Jagaran Mach, a think tack that is affiliated to Hindutva nationalist organisations.
SJM national co-convenor Ashwani Mahajan who recently met senior officials of NITI Aayog as well as the civil aviation ministry, is reported to have said: “Good management is what Air India needs. We are preparing a report suggesting ways and means to revive Air India — correcting the management disorders and other departments of the carrier like the engineering wing.
“A solution is to list it in the stock market and sell shares. Once listed, on the basis of cash flow, revenue generation and future projections based on immediate past improvement in performance indicators, etc., merchant bankers can come out with an offer price. In fact, the Civil Aviation Ministry is also open to this idea.”
Industrialist Anand Mahindra is also reported to have suggested Air India becoming an autonomous organisation in order to overcome its current management shortcoming.
On 31 May, the last date for submitting letters of interest by prospective bidders, the government had said no initial bids were received for the strategic disinvestment for the loss-making carrier. The airline has a total debt of around Rs50,000 crore.