‘After disinvestment, national carrier status for Air India is immaterial’

Shishir Sinha New Delhi | Updated on July 07, 2019 Published on July 07, 2019

Atanu Chakraborty, Secretary, Department of Investment and Public Asset Management (DIPAM)


The government intends to re-initiate the disinvestment process for national carrier Air India by early next month as it is waiting for audited financial results. The Budget has hinted at the government’s focus on disinvestment of non-financial CPSUs. Consolidation is an ongoing activity. The 2016-17 Budget referred to integration across the value chain. Therefore, integration across the value chain as well as making a company sharpen its focus on its value chain, both these activities will always go together, Atanu Chakraborty, Secretary, Department of Investment and Public Asset Management (DIPAM), told BusinessLine in an interview. Excerpts:

Will Exchange Traded Fund treated at par with ELSS (Equity Linked Saving Schemes) see more CPSE ETFs?

Even if we get more investment out of it, the impact is likely to be marginal. It is more to create a habit of equity investment and to make retail investors a part of the CPSU shares. Response of retail investors has been good over the last two years — about 4 million retail investors either through IPO route or through ETFs route got CPSU shares. The amount that a retail investor puts is not very large, but they are long-term investors and the ELSS itself provides for a long-term savings that supports a scheme better.

What about Debt ETF?

Debt actually operates like equity here because the ETF itself operates as equity shares allocating unit which is then traded on the exchange. I think the Central Board of Direct Taxes is working along that line, because debt ETF itself doesn't operate like debt, it operates like an equity instrument.

So it can be at par with equity ETF...

Yes, though it’s not exactly linked to equity, but itself is an equity instrument.

What is the timeline for strategic disinvestment in Air India?

It is immediate and we are preparing for re-initiating the process — papers and documents. Everything requires the final audited accounts of the latest year and that would come by middle of July. So thereafter, within 15-20 days, you can expect the expression of interest to be issued.

Will there be segregation of international and domestic businesses for Air India disinvestment process? In the past segregation became an issue.

It was never an issue. Of the 162 queries received by us last time and I say with full knowledge of the queries that were received, none of them asked for anything on this. However, I did read some press reports. Certain buyers have shown greater interest in the international operations. Actually, we have prepared a package whereby the entire international operation comes in the package that is a AIXL (Air India Express Ltd), which operates to West Asia, as well as Air India, which has all the other international operations and the baggage handling joint venture (Air India SATS Airport Services Private Ltd or AISATS). In fact, the regional airline operator — Alliance Air — we have taken out to be sold separately and that's being put on the block. Therefore, for those buyers who may be interested more in the international operation, the package is very much suited to their needs.

Will there be any government equity post divestment in Air India?

One goes by the sentiment of the buyers. The government per se, having decided to completely disinvest from Air India, gives the message fairly loud and clear that we do not want to have any say in the management. Initially the feeling was that lot of buyers will be keen towards government retaining certain equity, so they can be seen through the transition phase. However, if the larger sentiment of the buyers is towards not having any government stake and buy it fully, I guess Air India Specific Alternative Mechanism (AISAM) will take the final call.

Will the national carrier stay with Air India post strategic disinvestment?

What does that yield, market share or anything else? None of these things are protected, so, how does it matter. These things are immaterial.

The Budget has proposed raising minimum public shareholding to 35 per per cent. Will that also be applicable to listed CPSUs? Many of them have yet to achieve the 25 per cent norm.

We will be very keen to apply it to listed CPSUs. Interestingly, about CPSUs, it is said that that lots of their shares are not in public domain, which is not fully correct.

We would need to put about 12 to 14 CPSUs which would have to be taken to 25 per cent norms. Out of that, in last two years, we had IPOs for 12 companies. Now all those companies will have to be brought under the 25 per cent norm. So, that itself is a major chunk. Thereafter, there are only few companies which will be left — some of them are very large, so it will take some time.

Therefore, answer to your first question whether we are going to take to 25 to 35 per cent, we will be very happy to do that. And we are working very hard for the balance, CPSUs that have not achieved 25 per cent to achieve that. Also, you will see there are large numbers of CPSEs where government’s share is already below 60 per cent.

Deadline for achieving 25 per cent public shareholding has been extended many times. Would the remaining be able to achieve so within the latest deadline?

SEBI has extended the deadline till August 2020, before that the norm will be met.

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Published on July 07, 2019
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