A-I may get phased equity infusion

The government’s financial restructuring plan for loss-making Air India may include a staggered infusion of equity, entailing an initial infusion of around Rs 1,300 crore, going up to around Rs 2,000 crore, depending on the company’s need.
The airline has made losses of Rs 5,000 crore on an equity capital of Rs 145 crore.
In the second stage, the government is also looking at roping in financial institutions to invest in the company’s equity, since an initial public offer has been ruled out owing to the company’s financial mess. Financial institutions will, however, have an exit route when the IPO does take place.
These are some of the key issues expected to be discussed by the committee of secretaries (CoS) that is meeting on Saturday and has been assigned to draw up a financial restructuring plan for Air India.
The CoS is headed by Cabinet Secretary K M Chandrasekhar and comprises Aviation Secretary M M Nambiar, Finance Secretary Ashok Chawla and Principal Secretary to the Prime Minister T K A Nair.
The committee was set up after aviation minister Praful Patel and Air India Chairman Arvind Jadhav made a presentation to Prime Minister Manmohan Singh on the airline’s financial crisis.
Top sources in government said there is no question of deferring the delivery of aircraft that have already been ordered as such a move would force them to pay penalties. Air India had ordered 111 aircraft and have already taken delivery of 48. The total investment for buying the aircraft is Rs 40,000 crore.
24/07/09 Surajeet Das Gupta & Mihir Mishra/Business Standard

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Categories: NACIL Jul 2009