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NEW DELHI : The sale of Air India to Tata Sons Ltd ends the central government’s long struggle to privatize the loss-making national carrier. In an interview, department of investment and public asset management secretary Tuhin Kanta Pandey spells out what lies ahead in the government’s strategic disinvestment plan. Edited excerpts:

What happens between now and December end when the Air India transaction will be completed?

First, the share purchase agreement will be signed. Then the clock starts. A lot of approvals are required in terms of contracts. The company (Air India) has to do certain things, and the bidder (Tata Sons) has to do certain things because in many contracts, there is a clause that if there is a change of control, then permission needs to be taken. We are now stepping in with the authority letter, and one by one, both parties have to settle the contracts.

Meanwhile, the approval of lenders and leasers have to be taken. The Competition Commission of India’s approval has to be taken. Then, the balance sheet has to be drawn up. The debt part is now gone, but the current and non-current assets and current and non-current liabilities other than debt have now to be matched. Suppose they pay off the fuel company, then the liabilities will come down. Once the balance sheet is drawn, it will be given to them, agreed, and that is to be done before the long-stop date, which is the final date. This means the date we say will be the date of closing. On that day, there will be a board meeting, our board will resign, and the shares and guarantees will be released to the bidder.

Given the huge pile of debt that the government still has to repay, what do you think it achieved through the privatization of Air India?

First, the jobs of the employees have been saved. Second, all the economic fallout that could have happened with an airline that was floundering (have been avoided). It is taxpayers’ money, and we have been giving oxygen for a long time. It was becoming terminal. Now things will revive.

Do you think the delay in privatization because of covid also hit the valuation of Air India?

When you make a valuation assessment, you are actually looking at the fairly long-term prospects. If you say, will there be no losses once they take it? No. There will be losses. There will always be a turnaround plan that will again be subject to the aviation scenario. When somebody bids for an airline, he doesn’t look at two months or three months. He will also look at the longer term.

Will the assets of Air India Assets Holding Ltd (AIAHL), such as the Air India buildings, be monetized to pay off the debt?

Yes, because there is a liability coming, and there is also some assets coming. We also know that the liabilities are far more than the assets. But whatever it is, it will be set off. Something will be recovered. To the extent we sell the assets, we will recover the losses.

Will disinvestment entry be 18,000 crore or 2,700 crore from Air India?

It is an accounting issue, but as debt is retained in Air India, it will not be shown as disinvestment receipts. 2,700 crore, which is the cash consideration, will be shown as the disinvestment receipts.

Air India privatization is now done. Why is the Bharat Petroleum Corp. Ltd (BPCL) privatization taking so long?

This process takes a long time. It started in January, then the covid wave happened. The due diligence process is going on.

Apart from BPCL, which strategic disinvestment can be achieved early among BEML, Pawan Hans and Shipping Corporation?

They are all going on in parallel. However, the due diligence process is not really the same for everyone. The Shipping Corporation has specific challenges also. Ships are not always around. The inspection of ships has to be coordinated.

What about IDBI Bank?

The expression of interest (EoI) for IDBI Bank will be out. We are trying to see whether, by December, we can get out the EoI. It will take nine months to one year from the EoI stage to complete the transaction.

How feasible does achieving the 1.75 trillion disinvestment target look?

There is a privatization part. Not all privatizations yield big money unless it is a big transaction such as BPCL or LIC IPO. Concor, which could have given us big money, unfortunately, is not happening. Shipping Corp. can give money, but of smaller amount; in BEML, we are parting with 26% only and not fully, so we will get as much.

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