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Sunday, July 9, 2017

Air India break-up an option as Modi pushes for quick sale!

  • Ministerial panel to meet this month to kick off process.
Reuters/New Delhi
India
is considering selling state-owned Air India in parts to make it attractive to potential buyers, as it reviews options to divest the loss-making flagship carrier, several government officials familiar with the situation said.


Prime Minister Narendra Modi's cabinet gave the go-ahead last month for the government to try to sell the airline, after successive governments spent billions of dollars in recent years to keep the airline going.

Air India - founded in the 1930s and known to generations of Indians for its Maharajah mascot - is saddled with a debt burden of $8.5 billion and a bloated cost structure. The government has injected $3.6 billion since 2012 to bail out the airline.Once the nation's largest carrier, its market share in the booming domestic market has slumped to 13 percent as private carriers such as InterGlobe Aviation's IndiGo and Jet Airways have grown.

Previous attempts to offload the airline have been unsuccessful. If Modi can pull this off, it will buttress his credentials as a reformer brave enough to wade into some of the country's most intractable problems.

His office has set a deadline of early next year to get the sale process underway, the officials said, declining to be named as they were not authorized to speak publicly about the plans.

The timeline is ambitious and the process fraught, with opinion divided on the best way forward: should the government retain a stake or exit completely, and should it risk being left with the unprofitable pieces while buyers pick off the better businesses, officials said.

Already, a labour union that represents 2,500 of the airline's 40,000 employees has opposed the idea of a sale even though it is ideologically aligned to Modi's Bharatiya Janata Party.


Following are six Air India businesses which could also figure in the sell-off process.

Loss-making:

- Hotel Corporation of India (HCI) - owns two 5-star Centaur hotels in Delhi and Srinagar.

- Alliance Air - operates flights to 37 destinations in India.

- Air India Engineering Services - runs aircraft maintenance facilities at six airports for Air India and private airline companies.

Profitable:

- Air India Air Transport Services

- Air India SATS - a joint venture providing ground and cargo handling services. Estimated value $185 million.

- Air India Express - a low-cost carrier. Estimated value around $1.16 billion. Also includes Air India Charters, a charter business.



Officials who have to make it happen are grappling with the sheer scale of the exercise. Air India has six subsidiaries â?" three of which are loss-making with assets worth about $4.6 billion. It has an estimated $1.24 billion worth of real estate, including two hotels, where ownership is split among various government entities.

No one has properly valued the company's various businesses and assets before, two officials with direct knowledge of the process said. Earlier this month, about $30 million worth of art, including paintings by artist M. F. Husain, went missing from its Mumbai offices, chairman Ashwani Lohani said.

"The exercise is complex and there is no easy way out," said Jitendra Bhargava, operational head of Air India in 1997-2010. "At this juncture, selling even part of Air India is far from certain."

Lohani declined to comment on the sale process. The prime minister's office and the civil aviation ministry also declined to comment.

BACK TO TATA?

A committee of five senior federal ministers, led by Finance Minister Arun Jaitley, is expected to meet this month and begin ironing out the finer details of the plan. Besides deciding about the size of the stake sale, the panel will set the bidding norms. It will also take a call on the carrier's debt, demerger and divestment of its three profit-making subsidiaries.

Modi's office has said the government has no business being in hospitality and travel, suggesting the prime minister wants to sell as much of Air India as possible, the officials said.

Analysts say the government may prefer to keep the airline in Indian hands. At least two potential Indian suitors " the Tata Sons conglomerate and IndiGo - have shown early interest.

In recent weeks, officials in Modi's office and from the civil aviation ministry met Ratan Tata, the patriarch of the $100 billion-a-year Tata Sons, to gauge the companyâ?Ts interest in a deal, a close aide to Modi said.

Tata would be an attractive buyer for the government. The company founded and operated Air India before it was nationalised in 1953.

"Seems like Tata will come forward and make the best offer," the aide said, adding the government would be keen to see that jobs are not lost.

Tata, however, already has two other airline joint ventures in India, and it's not clear what parts of Air India it would be interested in. A Tata spokeswoman declined to comment.

IndiGo said on Thursday it was interested in the international operations and in Air India Express, a low-cost carrier.

Modi's office has told officials to work out exactly how much each of Air India's subsidiaries are worth to make it easier to break up the carrier if needed, two of the officials said. The government is expected to appoint outside consultants to help with the exercise.

Anshuman Deb, aviation analyst at ICICI Securities, said splitting the airline will maximize value for the government.

"Let us be realistic. It's very clear that a single buyer cannot buy an entire state-owned company," said a senior aviation ministry official involved in the process.

2 comments :

  1. Blunders are a way of life with Narendra Modi - the Tea Vendor PM Of India - whose mother Was a dishwasher.He correlates his mother with Ho Chi Minh who was a dishwasher in London.

    Throughout Indian History - when men w/o pedigree,have ruled over India - they have destroyed India immediately thereafter.They all thought they were special,and from the grass roots.This is a apocalyptic trait peculiar to Hindoos.

    To hide over the "shame of their birth and upbringing" and the "vicious physical and mental torture" as children - they "gravitate to extreme forms of menial thought and cruelty" - ignoring all sage counsel - as they feel it is a sign of courage and fortitude,in the face of adversity and pressures (Like the Kashmir disaster).

    Some Samples

    Ashoka - Born out of wedlock to a dancer (who was not a Kshatriya),was of ugly features,mocked all his life by his brothers (born from wedlock).
    Net Result - Ashoka Killed all his family members,became a murderous savage - and then met a monk and became a Buddhist (easy kill for the monk).The Monk convinced him to set up a "Temple of Hell on Earth" (where insane and cruel forms of torture were witnessed by Ashoka and the Monk - what impact would that have had on Ashoka's cranium).His defective DNA - both his children left India forever and his wife poisoned the roots of the Bodhee Tree.
    Ashoka beheaded 19000 Jain Monks in 1 Day.

    Ade Shankara - Was called a Bastard by Madhavacharya.His mother was a Brahmin - and his father was unknown.All his life he suffered taunts from the lower castes and Kshatriyas w.r.t. his birth.Net Result - he immersed himself in religion and managed to enter the dead body of a king to have sex with the wife of the dead king.This man vented his entire hate of women,Lower castes, harlots. Kshatriyas etc. into his "magnum opus on Hindooism" - which treated women worse than aninals,and Dalits as "not even sentients".His magnum opus was "used to destroy Buddhists and Buddhism" (as his opus was a copy and paste pf Pali scriptures), cement caste and Brahminism - which led to the Mughal invasions and rampages.If the Dalits.in the millions,had stood up against the
    Mughals - history would have been just the reverse.But the Dalits did not care - as the Mughals came to redeem the Dalits , Devdasis and Hindoo women

    The Blunders of the Chaiwala - which you will not read in the media - as the media is owned by Banias and operated by Brahmins - a race of servile slaves and cowards.

    The Chronicles of Narendra (Narnia Chaiwala) Modi

    Make in India = Total Disaster. The man has destroyed the atchitecture of manufacturing.It is no surprise - as Rama used apes to make a bridge to Lanka.Rama knew the worth of Indians
    Exports from India = Total Disaster.So long as PRC exists - and the sea exists (with the commercial principles of Archimedes,for a ship), there is nothing which an Indian can make - which cannot be sold faster,cheaper,better and at a better quality by the PRC.The PRC conquered India 2000 years ago - via the Yueh Chi Tribe (who were kicked out of Imperial China).Indians excel only in making and cleaning toilets - which unfortunately cannot be exported - as Bill
    Gates is making tolets in Africa
    Defense Manufacturing in India = Total Disaster.Pakistan is exporting JF to East Asia and West Asia and Africa and has got orders from Malaysia - and the Hindoos are still struggling to make the Arjuna - MBT .Arjuna was a impotent,coward and a eunuch - as per the Mahabharata ! Touche ! Arjuna - was "cursed by Urvashi ",to be an "impotent and a eunuch"
    The Mahabharata, Book 3: Vana Parva: Indralokagamana Parva: Section XLVI
    O Partha, thou shalt have to pass thy time among females unregarded, and as a dancer, and "destitute of manhood and scorned as a eunuch

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  2. Demonetisation = Total Disaster.The man has wiped out the SME sector FOREVER.That was the aim.The Ego Trip was to Monetise the Grey economy (to bull shit at G-7,via a higher GDP,and to shift the unorganised sector to Ambani and Company)
    GST = Disaster for SME and Unorganised sector.The man has wiped out the SME sector FOREVER.Now the scams will start
    Space = Disaster.ISRO Chandrayaan has doomed all hopes.The problem of the Hindoo - 1 low brain ASAT hit and they start dreaming and jay walking.All the effect of Gau Maut-ram
    Employment = Disaster.Destruction of all SME and Unorganised Jobs - FOREVER.
    IAF = Disaster.IAF completely destroyed by the PAF.The IAF took the advice of Modi.They did not send the best fighter jets against the PAF - Why ? How did 6 PAF - F-16s cross the Indian ADS (in daylight) and almost kill the Indian Army Chief and GOC-in-C Northern Command (and all escaped the ADS on the way back
    and the ADS shit down its own Chopper)
    Banking = Doomed.NPA is at least 400 Billion USD in the organised sector - RBI is defrauding the nation by hiding and lying.MUDRA loans are 150 Billion USD of which at least 40% will disappear.Then there is the informal banking disaster (NBFC/Chit Funds etc.).

    ReplyDelete