NACIL plans to turn divisions into separate biz units

Mumbai: The new company created from merging state-run airlines Air India and Indian Airlines, National Aviation Co. of India Ltd (Nacil), is proposing a system in which its various divisions will have to pay for the services provided to them within the company.
For instance, a cargo unit will have to pay for the services provided by the ground-services handling units.
This move, termed as transfer pricing mechanism, is aimed at making all divisions as separate profit centres.
The separate divisions and transfer pricing will practically abolish the conventional department system in Air India and Indian Airlines, and will have a linear organization structure based on the different operations. Accenture is advising Nacil on the new structure. There are six business divisions, dubbed strategic business units, or SBUs: low-fare carrier, cargo, maintenance and repair, ground handling, engineering, and other related businesses.
Nacil is also planning to offer employee stock options, better known as esops, to its 33,550 employees.
“Around 5-10% stock dilution may be done through esops before a proposed initial public offering (IPO),” said another Nacil official, also on condition of anonymity.
Nacil chairman and managing director Vasudevan Thulasidas has said the company is considering a proposal, but details are yet to be finalized.
Not all employees of the airline are enthused.
22/09/07 P.R. Sanjai/Livemint

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Categories: Air India Apr 2007, NACL Sep 2007