Amit Shah led GoM clears sale of Air India

by Harish Gupta, National Editor, Lokmat Group

Amit Shah led GoM clears sale of Air India

Bids invited, March 17 deadline 

Hindujas, TATAs keen to enter aviation sector

Harish Gupta

New Delhi, Jan. 27

With the government finally coming out with a public advertisement for sale of 100% equity and management control of Air India today, all eyes are set on prospective buyers. The last date of submission of Expression of Interest (EoI) is March 17, 2020.

Informally, the Tatas, Hindujas, IndiGo, SpiceJet and a few private equity firms including some foreign companies have shown interest in buying Air India.

The 100% sale of Air India also includes its 100% owned subsidiary Air India Express Limited and 50% AI SATS Airport Private Limited. A private company, Ernest & Young, has been appointed sole transaction adviser for the deal. The Modi government had invited the EoI in 2018. But at that time, the government wanted to sell only 76% stake. Secondly, the financial liability was also huge. Thus, no one turned up. 

Later, the PM appointed Union Home Minister Amit Shah as head of the Group of Minister for AI's sale, lock,stock & barrel. The  Amit Shah led committee decided to off-load 100% equity with a rider that AI's control will remain with an Indian entity, limiting the scope of any foreign bidders interested in the asset to 49%.The Indian partner will have to hold 51% equity. It also decided that the buyer will be liable to pay the debt relating to the aircraft AI has in its fleet and not others.

This certainly made it a lucrative offer for any bidder. The aircraft debt is roughly $3.26 billion. The government offered to transfer remaining debt into a Special Purpose Vehicle (SPV) which the buyer won't have to pay.

Air India has a fleet of 125 aircraft and its domestic market share is 11.9 per cent as on December, 2019. A successful bidder would win control of the airline's 4,400 domestic landing and parking slots and 1,800 international slots at Indian airports, as well as 900 slots at airports overseas.

Industry experts are keeping their fingers crossed as the overall environment is not positive in the economy despite the Modi government taking a series of steps.

The Modi government has made it clear that it won't lend further financial support to AI and may shut down if the second disinvestment bid fails. It is incurring a daily loss of Rs 20-25 crore. 

Big Package for J&K in Offing

by Harish Gupta, National Editor, Lokmat Group

Big Package for J&K in Offing

5-member GoM formed for Action Plan

50,000 jobs to be created shortly

Harish Gupta

New Delhi, Aug 28

In a major fillip to development and job creation in Jammu & Kashmir, the Modi government has formed 5-member Group of Ministers (GoM) headed by Law & Telecom Minister Ravi Shankar Prasad.

The government has already decided to implement all 85 Central schemes for the benefit of over 1.30 crore people of the state. After the abrogation of Article 370, the people will now be able to take advantage of these schemes. These schemes included PM-Kisan, Ayushman Bharat and others. Even the government employees of the region, including police personnel, were not getting many facilities enjoyed by their counterparts in other Uts. It will be the Centre's priority that they get the same perks. As of now they were not getting benefits like LTC (leave travel concession), house rent allowance, health insurance and education allowance for their children.

The government intends to create 50,000 jobs immediately in the state.

It is largely because of this very purpose, that the GoM has been constituted which will prepare a blueprint of development of the state and create job opportunities.

Union ministers Ravi Shankar Prasad, Social Justice & Empowerment Minister Thawar Chand Gehlot, Minister of State in the PMO Jitender Singh, Agriculture & Rural Development Minister Narendra Tomar and Petroleum and Steel Minister Dharmendra Pradhan are members of the GoM.

The GoM has been asked to prepare a proposal on how each of these departments can contribute towards J&K's fast growth. The group is expected to submit a report before October 31.

GoM's report could be the basis of another economic package that is expected to be announced by the Prime Minister in the months to come.

The announcement comes a day after reports suggested that the Centre is mulling announcement of a big package aimed at all-round development of the during the J&K an aim to restore normalcy.

The government is also planning to announce massive job opportunities for Kashmiri youngsters in the near future. A delegation of the Ministry of Minority Affairs on Tuesday embarked on a two-day visit to Kashmir to explore and identify the regions where the development projects of the Centre can be introduced.

Air India Divestment process to begin next month

by Harish Gupta, National Editor, Lokmat Group

Air India Divestment process to begin next month

Chairman Lohani task cut out

New GoM formed under Amit Shah

Harish Gupta

New Delhi, July 31

The Air India's divestment process will start next month and fresh bids under the new terms will be invited in October.

Ashwini Lohani, Chairman and Managing Director (CMD) of AI Ashwini Lohani is working overtime to off-load the huge loss making flag carrier at the earliest.

The AI's operating loss is bigger than that at all the private airlines put together during the last financial year 2018-19. The total operating loss of Air India alone losing Rs 4,330 crore during 2018-19. Despite an increase in operating revenue, Air India’s higher operating cost have resulted in losses.

Ashwini Lohani is struggling to bring down this operating cost of the loss making career.

The proceeds from disinvestment will go into paying off the debt of the SPV. The remaining debt of Rs 28,887 crore is going to be set off by the new buyer. When the first bid of divestment failed, the government wanted the buyers to take over Rs 33,392 crore of debt and liabilities of AI and Air India Express as part of debt reallocation. But there were no takers and the efforts failed.

Despite these plus points, the government might find it daunting to divest the Air India.

When Lohani retired as Chairman of the Railway Board, Prime Minister Modi specially chose him for the coveted post as Chairman Air India so that he takes the hard decision to divest it within the time frame that the PM re-constituted Air India Specific Alternative Mechanism (AISAM), a high-powered ministrial committee headed by Union Home Minister Amit Shah. Finance Minister Nirmala Sitharaman, Civil Aviation Minister Hardip Puri and Commerce & Railway Minister Piyush Goyal are other members.

The government has modified several terms including divestment of upto 95% ownership while retaining 5 per cent for the employee stock option. The new buyer can sell the airlines to merge with anybody or reverse merge and sale to others.

If reports are to be believed, Ashwini Lohani's task is cut out to divest by February 2020 and acquire a new mission.

Ends