Air India would be completely disinvested, but the timeline for disinvestment of Air India and Bharat Petroleum Corporation (BPCL) may be pushed by two to three months.
Due to the impact of the second Covid-19 wave, the only focus right now is to stop the spread.
Earlier, Civil Aviation Minister Hardeep Singh Puri declared that Air India would be completely disinvested, adding that there is only one option: disinvestment or shutting down the airline.
“We’ve decided that Air India will be 100% disinvested. The choice isn’t between disinvestment and non-disinvestment, it’s between disinvestment and closing down. Air India is a first-rate asset but has an accumulated debt of Rs 60,000 Crore. We need to draw the slate clean” Hardeep Singh Puri said.
Sale Of Air India and Bpcl By FY22
The government hopes to complete the selling of the two companies by FY22, achieving the Rs 1.75 trillion disinvestment deadline. This would be accomplished by the government selling its stake in core and non-core public sector enterprises (PSUs).
“There may be minor disruptions in short-term goals like quarterly targets of disinvestment but there is no change in the annual disinvestment target,” a government official said.
According to sources, bidders who have been shortlisted for the sale of Air India have requested that the government postpone the deadline for submitting financial bids because they are having problems with site due diligence.
Multiple countries have banned flights to and from India as a second wave of the pandemic has hit the region, preventing the virus from spreading further. This is impacting the travel plans of merchant bankers and lawyers.
“Much of the divestment work can be done online as the virtual data room (VDR) can be accessed from anywhere. However, a lot of the process also depends on physical verification of sites and properties which is currently not possible. Many of our team members, who are involved in the process, are also sick and on leave,” said a person.
The government has begun the process of soliciting financial bids for the sale of Air India, with the transaction scheduled to close by September of this year.
The Tata Group was one of several companies that made initial offers for the loss-making national carrier in December of last year.
Eligible bidders were allowed access to the VDR of Air India and queries were answered, sources said. They added that the transaction has now moved to the financial bidding stage.
Choice Isn’t Between Disinvestment And Non-disinvestment
Air India, despite being one of the world’s oldest airlines with vast route coverage, struggled miserably due to poor management, interference, a high jobs ratio, free subsidies to public employees, and a slew of other negative factors.
In the domestic market, the airline has a fair presence and network coverage, which will help potential acquirers in gaining a substantial size. The airline carries a lot of debt and the government will shoulder the bulk as it is losing money since its 2007 merger with domestic carrier Indian Airlines.
After the sale of the Numaligarh refinery, BPCL’s strategic disinvestment has taken another step forward. And the interested parties will be invited to submit financial bids. The Shipping Corporation of India is in the same boat.
Due to the nationwide lockdown in 2020, several strategic sales of Shipping Corporation were stalled. Virtual meetings between investors from Singapore and Hong Kong were arranged, but the deal fell through.
The disinvestment of Shipping Corporation is in its second level, and many bids have been issued.