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Coronavirus: Why Air India, Concor, BPCL are crucial for India's economic recovery

Coronavirus lockdown 4.0: BPCL's profitability is strong enough to support the government initiatives. The company posted over Rs 8,500 crore profit in 2018-19, on a revenue of Rs 3.4 lakh crore

twitter-logoNevin John | May 16, 2020 | Updated 13:05 IST
Coronavirus: Why Air India, Concor, BPCL are crucial for India's economic recovery
Lockdown 4.0: Air India will be a strategic fit in rekindling the flying habit

Public sector companies (PSUs) that the government is targeting for disinvestment this financial year have crucial roles to play in the post-COVID-19 scenario. The key companies are Container Corporation of India (Concor), Air India and oil refining major BPCL, say experts.

Rebuilding India's logistics network is going to be important in the coming days as private operators in the space have completely withdrawn. Private networks are facing a huge shortage of manpower and constraints in permissions. The situation is not going to be normal at least until the vaccine has been developed.

"Concor will have to amplify its operations immediately for fast movement of cargos across the country. They have terminals, warehouses and yards and rail and road infrastructures to keep the goods moving across the length and breadth of the country. For logistics, Concor is one of the major solutions before the government," said an executive with a private company.

Alsor read: Coronavirus Live Updates: Lockdown 4.0! State brace for phased exit as India's COVID-19 cases top 85,000

At a time when the whole aviation industry is facing headwind, the government would have to model Air India as the frontline facility for air service. The public sector airline would need to start operations in all routes with adequate medical support. "The government cannot dictate private companies to run and make losses. Air India will be a strategic fit in rekindling the flying habit," said an expert.

Similarly, BPCL's profitability is strong enough to support government initiatives. The company posted over Rs 8,500 crore profit in 2018-19, on a revenue of Rs 3.4 lakh crore. The sale of the government's 53 per cent stake in BPCL would fetch around Rs 35,000 crore at the current market capitalisation. Analysts say that the sale would be like killing the golden goose. Besides its financial importance, BPCL's role is crucial for the government in keeping the fuel market under its control especially when private players look to capture more regions and establish the price monopoly.

Coronavirus outbreak and crash of crude price have hit disinvestment plan of the government that aimed to raise about Rs 2.1 lakh crore in 2020-21. The sale of BPCL is in doubt because of the crash of crude price. Additionally, it's tough to find a buyer for Air India, especially when the global aviation sector is in doldrums. The sale of Concor has additional problems as its major part of its valuation comes from the leased land that it took from Indian Railways at subsidised rates. Besides, the stock market crash is not good news for the government that wanted to divest 47 per cent stake in IDBI Bank and 10 per cent stake in Life Insurance Corp of India (LIC). Overall, the government wanted to sell stakes in two dozen central public sector companies in 2020-21.

Also read: Lockdown 4.0: Air India to operate special domestic flights from May 19-June 2

Also read: Vande Bharat: Air India to run flights to 32 countries from May 16

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