After completing the process of privatization of the crucial Air India, the government will now start work on monetization of its four other subsidiaries, including Alliance Air, and non-core assets such as land and buildings, investments and public assets worth over Rs 14,700 crore. Tuhin Kanta Pandey, Secretary Management (DIPAM) in the department said.
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.
Mr Pandey told the agencies that his department would now formulate a plan to monetize Air India’s subsidiaries with the special purpose vehicle AIAHL and closing liabilities.
“There will be a plan to monetize the assets of Air India Assets Holding Limited (AIAHL). This is again a huge task of clearing AIAHL liabilities and settling the assets. AIAHL has a ground handling, engineering and amalgamation company called Air. Privatization has to be done,” said Mr. Pandey, 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 in 2019 set up a Special Purpose Vehicle (SPV) – AIAHL, 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) – as well as non-core The property, paintings and artefacts 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.
Mr Pandey said that between September 1 and December 31, 2021, just before closing the deal, the government will work on Air India’s balance sheet.