Four subsidiaries of Air India will need to be hived off before the Centre undertakes a strategic disinvestment in the national carrier. The government has also identified assets of eight other central public sector enterprises (CPSEs) that will undergo a similar exercise before a strategic stake sale is taken up. They are: Pawan Hans, Project & Development India Ltd, Hindustan Prefab Limited, Bridge and Roof Company, Scooters India Limited, Bharat Pumps and Compressors Limited, Hindustan Newsprint Limited, Hindustan Fluorocarbons.

Budget 2018-19 has targeted ₹80,000 crore from disinvestment in State-run companies. This will involve sale of a minority stake in some CPSEs and strategic disinvestment — handing over management control to other entities.

So far, it has managed to net just ₹9,219.91 crore. However, the government claims it intends to go full throttle in coming months to not just achieve the budget target, but even surpass it. “We have our hands full for the next four months,” a top Finance Ministry official told BusinessLine . It is with this in mind that the list of assets to be hived off has been prepared.

Air India subsidiaries

Of the Air India subsidiaries that could be hived off are: Air India Engineering Services Limited (AIESL), Air India Air Transport Services Limited (AIATSL), Hotel Corporation of India (HCI), and Airline Allied Services Limited (AASL). AIESL is involved in the maintenance, repair and overhaul of engines and airframes. AIATSL is a ground and cargo handling service. HCI operates two hotels in Delhi and Srinagar, as well as air kitchen units in Delhi and Mumbai. AASL provides connectivity to Tier-II and Tier-III cities.

As BusinessLine had reported on July 3, the proceeds will be used to strengthen the balance-sheet of the parent firm. Once that happens, Air India’s valuation will improve, which, in turn, will help in its disinvestment.

The Centre, through a Preliminary Information Memorandum dated March 28, 2018, had invited Expressions of Interest from prospective bidders. However, it failed to get any bids, which forced a revision of the government’s strategy. The Centre proposes to offload a 76 per cent equity stake in Air India as well as transfer management control. Air India has over ₹50,000 crore each of accumulated loss and debt.

Assets that could be hived off before a strategic disinvestment will also include buildings of Airlines House in Delhi, the LMD Hangar in Mumbai, the Air India Complex in Mumbai, Hangar 4 (Terminal 1 ) at Delhi Airport, the GSD building complex in Delhi (Terminal 2), and all other land and buildings owned, leased, licensed or possessed by the national carrier, besides various artefacts. The government said the mode and manner of disposal would be made public in due course.

Related Topics
comment COMMENT NOW