Comments
The Civil Aviation Ministry has informed Lok Sabha that disinvestment of Air India is unlikely to be affected by legal action by Cairn and Deavs overseas and it expects financial bid for disinvestment to be received by mid-September.
“Cairn Energy and Devas Multimedia have filed lawsuits in the United States District Court for Southern District of New York (SDNY) seeking declaratory and money judgement against Air India Limited (AIL) as an alter ego of the Republic of India. There is no likely impact of the lawsuits on the ongoing disinvestment process of Air India Limited (AIL) as AIL is a separate corporate entity with its own management and board,” Minister of State in the Ministry of Civil Aviation General (Retired) VK Singh informed Lok Sabha on Thursday in a written reply.
Three advisory groups set up to improve aviation sector
Cairn Energy has filed a lawsuit in US Court against Air India to enforce a $1.2-billion tax arbitration award which it won against India. Similar lawsuit has been initiated by Devas Multimedia.
He also said that the case is being defended by AIL and that the company has appointed lawyers to defend its interests.
The government has decided to go for offloading its entire stake in Air India and Air India Express and 50 per cent in Air India SATS along with management control to private party. Tata Group and a group of investors led by Chairman of Spicejet Ajay Singh are in the race to buy the national carrier.
Baby steps forward in divestment process
On disclosing names of suitors, in response to another unstarred question, Singh said that multiple Expressions of Interest (EoIs) were received by Transaction Advisor. These were evaluated for selection of Qualified Interested Bidders (QIBs). Request for Proposal (RFP) along with draft Share Purchase Agreement (SPA) have been shared with QIBs by the Transaction Adviser on March 31 for submission of financial bids.
“The financial bids are likely to be received by September 15,” he said.
He also informed that a Special Purpose Vehicle (SPV) i.e. Air India Assets Holding Limited (AIAHL), has been set up inter-alia for warehousing non-core assets of Air India Limited. Monetisation proceeds of non-core assets of Air India are to be used to offset the debt of Air India transferred to AIAHL.
Widening losses
As per provisional figures, Air India is likely to incur a net loss of about ₹9,779 crore in FY 2020-21 as compared to the net loss of ₹7,982.83 crore in FY 2019-20. The government has not made any fresh equity infusion during FY21, while it was ₹3,975 crore in FY 2018-19.
The government expects that the disinvestment of the airline will bring private investment, robust management and faster decision-making processes which will improve the efficiency of the airline and build a viable and vibrant Air India.
Earlier, it had said that the interest of the employees of Air India will be safeguarded in accordance with the guidance of DIPAM (Department of Investment and Public Asset Management) on strategic disinvestment of CPSEs and the same will be reflected in the SPA to be signed with new owner, post disinvestment.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.