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tata: Amit Shah-led panel of ministers to take final call on AI sale in a week’s time


NEW DELHI: State-run carrier Air India could be headed back to its founder Tata group, which has outbid the other contender, a consortia comprising of SpiceJet promoter Ajay Singh. Final approval for the keenly awaited sale is likely to come from a panel of senior ministers led by Union home minister Amit Shah within a week, sources said on Friday.
A panel of secretaries that met earlier this week had fixed the reserve price for the sale and the Tata group is learnt to have emerged as a front-runner.
“They (the Tata group) bid aggressively. A final call will be taken by the Air India specific alternative mechanism,” a source said, referring to the panel of ministers that will decide the winner, but did not elaborate.
Efforts are on to get the meeting convened within a week and the sale is likely to be wrapped within this month, the first privatisation of a state-run entity almost 20 years since the Atal Behari Vajpayee government pushed ahead with a raft of such transactions. The other members of the panel of ministers are finance minister Nirmala Sitharaman, commerce & industry minister Piyush Goyal and civil aviation minister Jyotiraditya Scindia.
Several attempts have been made to sell off the loss-making Air India in the past 20 years but those attempts had to be aborted due to a string of factors, including lack of interest from investors for the cash-guzzling airline. Almost 21 years ago, an attempt to sell a stake in the airline had to be abandoned by then disinvestment minister Arun Shourie after Singapore Airlines, which bid with the Tata group for a 40% stake in the airline, pulled out of the consortium.
Earlier on Friday, finance ministry officials said the winner will be shortly decided, while terming media reports of having approved any party’s bid as “incorrect.”
“Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorrect. Media will be informed of the government decision as and when it is taken,” department of investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey said on Twitter.
In the last one week, the government has set the reserve price for AI, which is learnt to be in the range of Rs 15,000-20,000 crore. Tata bid is learnt to be higher than the reserve price and much more than Ajay Singh-led consortia’s bid.
The airline was nationalised in 1953 and if the sale goes through, it is now looking at a home-coming to the Tata group after almost 68 years. On October 15, 1932, J R D Tata had flown the first-ever flight of Tata Air Services from Karachi’s Drigh Road Aerodrome to Mumbai’s Juhu Airstrip via Ahmedabad on a single engine De Havilland Puss Moth carrying 25 kg of 4-anna airmail letters. Tata Aviation Service was the forerunner to Tata Airlines and Air India.
The winner will get AI’s intangible assets like 4,400 domestic and 1,800 international landing and parking slots at Indian airports; and 900 slots at airports abroad. The winner will also get AI Express and AI’s 50% stake in AI-SATS ground handling company.
AI had a total debt of Rs 60,074 crore as on March 31, 2019. The buyer will need to take on debt of Rs 23,286.5 crore. The remaining amount will be transferred to an SPV, Air India Assets Holding Ltd (AIAHL). The SPV will monetise AI’s assets like property and land bank and use those funds to pay off the debt.
The sale of Air India is expected to spur the government to put other stake sales such as BPCL, Shipping Corporation of India, Concor, BEML on the fast track.
It is also expected to bring in greater urgency to accelerate work on the privatisation of two state-run banks and an insurance company. Work is on in full swing for the mega initial public offer (IPO) of state-run insurance behemoth LIC. The government has set a target of raising Rs 1.75 lakh crore from disinvestment of state-run firms for the current fiscal year and also has a wider agenda of privatisation in the pipeline. In addition, it is also working on a Rs 6-lakh crore asset monetisation pipeline over the next fours years to raise much needed funds to shore up infrastructure across the country.





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