The government is planning to raise Rs 10,000 crore by selling subsidiaries and assets belonging to Air India. The proceeds from the sale will be used to pay off a portion of the Rs 29,000-crore loan which the government had taken over from the flag carrier.
The funds will be raised by sale of Air India subsidiaries Air Transport Services Limited (AIATSL), Air India Engineering Services Limited (AIESL) and Airline Allied Services Limited (AASL), The Economic Times reported. The airline's offices in Mumbai and other cities are expected to raise Rs 1,400 crore, the report said.
The government had transferred Air India's loans worth Rs 29,000 crore, out of the total debt of Rs 54,000 crore, and transferred them to a special purpose vehicle Air India Assets Holdings. The decision to divest in certain Air India subsidiaries and assets was taken after the plan to divest 76 per cent stake in the state-owned carrier received no takers last year. With this move, the government had reduced Air India's annual interest payment liability to Rs 2,700 crore from the earlier Rs 4,400 crore.
ALSO READ: Prepare FY19 financials by June as PMO wants quick disinvestment: Govt tells Air India
Meanwhile, the government has asked the airline to make 2018-19 financials for itself and its subsidiaries by the end of June in order to speed up the divestment process of subsidiaries of national carrier Air India.
The government attempted to sell the debt-laden carrier in May last year but failed. In June, a committee led by Finance Minister Arun Jaitley decided to scrap the stake-sale plan for the time being.
Subsequently, the government decided to carry out additional fund infusion into the airline and pare debt by raising resources by selling land assets and other subsidiaries. Air India has a debt burden of around Rs 55,000 crore.
ALSO READ: Air India cuts last minute flight booking prices, declares 40% discount on tickets
"A meeting was held on April 1 under the chairmanship of the Principal Secretary to PM in which it was, inter-alia, decided to speed up the process of disinvestment of AIATSL, AIESL and AASL," civil aviation secretary Pradeep Singh Kharola told Air India's Chairman and Managing Director (CMD) Ashwani Lohani in a letter dated May 6.
In order to proceed with disinvestment process of Air India and its subsidiaries, audited financials for 2018-19 will be required, Kharola told Lohani.
Aviation secretary Kharola also said the accounts for 2018-19 should be prepared with "utmost caution to reflect the correct financial status" of the airline. They would form the "basis of bidding". Contingent liabilities must be thoroughly verified. Moreover, Kharola added that "account receivables" and "account payables" must be verified and confirmed from the other parties. The secretary also asked Air India CMD to prepare a list of all pending litigations.
ALSO READ: Finance Ministry reworking strategic sale procedure for CPSEs
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today