Entities having sufficient networth and the ability to run Air India (AI) can bid for 76 per cent stake in the national carrier, DIPAM Secretary Neeraj Gupta said on Thursday. Prodding venture capital funds to participate in the PSU disinvestment programme, Gupta said such funds may tie up with domestic companies to bid for state-run assets.
“Even in Air India, we are not looking for only an airline to take over…Finance is the main criteria and the capability to take over and run such an asset is the main criteria,” said the secretary in the Department of Investment and Public Asset Management (DIPAM). The government had last month floated a preliminary information memorandum inviting bidders to buy 76 per cent stake in Air India along with transfer of management control.
“We had given a small carve-out for airline, how the domestic airline can be fitted in terms of eligibility of consortium but otherwise anybody who has (required) networth and funds can bid for Air India,” Gupta said at an Assocham event at New Delhi. The proposed disinvestment would also include profit-making Air India Express and joint venture AISATS. The latter is an equal joint venture between the national carrier and Singapore-based SATS Ltd.
Air India has a cumulative debt of nearly Rs 49,000 crore of which over Rs 33,000 crore will remain with Air India and Air India Express post the disinvestment. As per the bid document, bidders would be required to have a minimum net worth of Rs 5,000 crore and should have posted profit after tax (PAT) in three of the previous five financial years from the Expression of Interest (EoI) deadline. The last date for submission of the bids is May 14.
The bids can be put in by a single player or as part of a consortium. The consortium can be along with a bank, venture capitalist, financial institution or fund. An official in the finance ministry said there has been good response from entities in airline industry as well as corporates for buying stake in the debt-ridden national carrier. The ministry would come out with response on the queries it has received from interested parties, he said.
The official further said there should be no concern about retrenchment post sale of 76 per cent stake as the the government will follow best industry practices. Earlier this week, BJP leader Subramanian Swamy had asked the government to defer Air India stake sale to 2019 general elections.
Cautioning the government against “losing control and ownership of its skies”, RSS chief Mohan Bhagwat had said the control and management of the national carrier should remain with an Indian player.