By Raju Vernekar
New Delhi, Nov 9:
The government has changed a bidding parameter for state-owned airline Air India, allowing potential buyers to quote enterprise value instead of equity value. Simultaneously, the deadline for submitting bids has been extended to 14 December which was 30 October earlier.
The decisions were taken in a recent meeting of the group of ministers led by Union Home Minister Amit Shah.
Civil Aviation Minister Hardeep Singh Puri has said that this would entice bidders who till now had constructed the debt amount as a minimum threshold bid amount. The Tata group, which operates two airlines “Vistara” and “Air Asia India”, is a favourite for acquiring the national carrier. The bidding process is expected to be completed by end of December.
Enterprise value of a company includes the equity value, debt as well as cash with the company. Equity value measures the value of a company’s shares. However, the government has mandated that a willing bidder will have to pay 15 per cent of his quote as upfront cash payment, disinvestment secretary Tuhin Kanta Pandey said.
Air India’s accumulated losses in the past decade stood at about Rs.69,575.64 crore. Subsequently the losses were slashed down to Rs 23,286 crore. The remaining liabilities are to be adjusted to ensure that there are assets against them. As part of disinvestment, the bids were invited in March, for a 100% stake in Air India. However the bid process was deferred due to the pandemic. Apart from Air India, also on sale are Air India Express and a 50% stake in ground-handling company Air India Singapore Airport Terminal Services.
The deadline for placing bids for Air India was extended till 30 October as the Covid-19 fallout has disrupted economic activity globally. Besides the date for intimation to qualified interested bidders (QIB) was extended till 20 November, by the Department of Investment and Public Asset Management (DIPAM).
In fact the process of 100 per cent stake sale in the national carrier has remained inconclusive for the last nearly one year. It was initiated on 27 January 2020. Then it was extended till 17 March, then till 30 April, 30 June, 31 August and 30 October,2020.
