MUMBAI, SEPT 28: A net worth (equity plus reserves) requirement of Rs 1,000 crore ($ 225 million) and a 26 per cent stake for foreign partner are the main highlights of `Expression of Interest' advertisement issued by the disinvestment department of Indian government for Air-India privatisation on Thursday. The government intends to sell 40 per cent of its equity holding in the loss-making airliner to a strategic partner while another 20 per cent of the equity will be sold to the employees and financial institutions. As per the offer letter, the Indian entity can either buy 14 per cent stake (with 26 per cent holding for a foreign partner) or the entire 40 per cent stake could be bought by them. The bidders can `express their interest' in the airline by November 10, this year and subsequently the government would invite financial and technical bids. Interestingly, the government has said that the proceeds of Hotel Corporation of India (HCI) privatisation would accrue to Air-India which would easily fetch at least Rs 450 crore to the airline. The advertisement, now available on the airline's website airindia.com, said the domestic holding should be held by Indian nationals (other than non-resident Indians/overseas corporate bodies (OCBs) and/or Indian companies registered under the Companies Act, 1956 which are majority owned and effectively controlled by Indian nationals. ``If a joint venture/consortium is formed specifically for the purpose of this investment, details of the members of the joint venture, consortium and the extent of their interest therein must be provided in the EOI package,'' the advertisement said. Interested parties that qualify would be provided with a package comprising of information memorandum, agreements, and terms of reference to enable them to assess the opportunity of participating in the disinvestment. Qualified parties will be required to submit information (including source of funds) as detailed in the terms of reference. Based on this, a shortlisting process may be undertaken. Qualified parties would be free to form or change the structure of the joint venture/consortium up to the stage of the submission of the initial technical proposal. The airline's disinvestment is set to create a controversy as the Indian Opposition parties led by Congress has opposed the sell-off saying that the both loss-making airliners, Indian Airlines and Air-India should be turned around first in order to fetch better price for shares. Air-India has an equity base of Rs 153.8 crore and reserves and surplus of Rs 266.77 crore as on March 31, 2000. On a turnover of Rs 4,662 crore, the airline made a loss of Rs 37 crore in fiscal 2000 as compared to Rs 4,254 crore turnover and a loss of Rs 174 crore in the previous fiscal. Various foreign airlines including cash-rich Emirates and Singapore Airlines are expected to bid for Air India and are currently looking out for Indian partners. Among the Indian companies, Reliance Industries - which is likely to tie up with Jet Airways - the Tatas and tobacco firm ITC are in the race to buy Air-India. American airliner Delta Airlines and Air France are also expected to put in a joint bid for the Indian flag airline. Virgin is another airliner which has expressed to bid for Air-India which has made hefty profits till mid-1990s.
