New Delhi: After the historic privatization of Air India, the government will now start work on monetization of over Rs 14,700 crore of its four subsidiaries including Alliance Air and non-core assets like land and building, said DIPAM Secretary Tuhin Kanta Pandey. .
The government on October 8 announced that salt-to-software conglomerate Tata has won a bid to acquire debt-ridden national carrier Air India for Rs 18,000 crore.
This includes cash payments of Rs 2,700 crore and debt of over Rs 15,300 crore. The deal, which is expected to be completed by the end of December, also includes the sale of Air India Express and ground handling arm AISATS.
Speaking to PTI, Pandey said that the Department of Investment and Public Asset Management (DIPAM) will now work on a plan to monetize Air India’s subsidiaries with special purpose vehicle AIAHL and closing liabilities .
“AIAHL will have a plan to monetize assets. This is again a huge task of settling AIAHL liabilities and assets. AIAHL has a ground handling, engineering and Alliance Air company which is to be privatized,” Pandey said. , who led the privatization of Air India.
“This (sale of subsidiaries) could not be started as they are all interlinked. Unless Air India goes, we cannot go ahead with other things,” he said.
As a precursor to the sale of Air India, the government had set up a special purpose vehicle “Air India Assets Holding Limited (AIAHL)” in 2019 to hold debt and non-core assets of the Air India Group.
Air India has four subsidiaries – Air India Air Transport Services Limited (AIATSL), Airline Allied Services Limited (AASL), Air India Engineering Services Limited (AIESL) and Hotel Corporation of India Limited (HCI) – with non-core assets, Paintings and artifacts, and other non-operating assets were transferred to the SPV.
As on August 31, Air India had a total debt of Rs 61,562 crore. Of this, Tata Sons’ holding company Tales Pvt Ltd will take Rs 15,300 crore and the remaining Rs 46,262 crore will be transferred to AIAHL.
In addition, non-core assets of Air India, including land and buildings, valued at Rs 14,718 crore, are also being transferred to AIAHL. In addition, liability of Rs 15,834 crore towards outstanding dues of operational creditors as on August 31, such as for fuel purchases, will be transferred to AIAHL.
Pandey said the government would prepare the balance sheet of Air India between September 1 and December 31, just before closing the deal.
“The dues of the operational creditors may not move forward in the September-December period if the government continues to fund… they are up to Rs 20 crore/day, if the government stops funding the dues will increase. So more or less it will Won’t grow much.”
After adjustment of all dues to lenders and operational creditors and assets of AIAHL, the net liabilities left with AIAHL is Rs 44,679 crore.
The government is spending Rs 20 crore per day to keep Air India running. The high debt in the airline’s balance sheet had turned the equity value negative at (-) Rs 32,000 crore and the option before the government was to either privatize it or wind it up.
Between 2009-10 and now, the government has invested over Rs 1.10 lakh crore in the ailing airline. This includes Rs 54,584 crore as cash assistance and Rs 55,692 crore as loan guarantee.
While this will be the first privatization since 2003-04, Air India will be the third airline brand in the Tata stable and will give it access to over a hundred aircraft, thousands of trained pilots and crew, and attractive landing and parking slots. all over the world.
Jahangir Ratanji Dadabhai (JRD) Tata founded the airline in 1932. Then it was called Tata Airlines. In 1946, the aviation division of Tata Sons was listed as Air India and in 1948, Air India International was launched with flights to Europe.
Tata will have to retain over Rs 13,500 crore employees of Air India and Air India Express for a year, after which VRS may be offered. Read also: Google Pixel 6 Big Update! Smartphone will get five years update, Magic Eraser
The terms of the deal allow Tata to go ahead with the merger and sell up to 49 per cent stake after one year, but ensure business continuity for three years. The Air India brand and eight logos will also be transferred to Tata, but with a lock-in of 5 years and with the condition that they cannot sell them to a foreign entity. Read also: shocking! Flipkart customer orders iPhone 12 worth Rs 53,000, finds soap worth Rs 5 inside the box