No AI disinvestment, IPO for at least 5 yrs

Belgaum, Karnataka: Despite equity support from the government, the financial mess at Air India is unlikely to abate soon, as the cash-strapped carrier would not be able to bring in funds through disinvestment or an IPO for a period of at least five more years.
This is because of two reasons: the Union Cabinet’s decision to list only profit-making public sector enterprises (PSUs), and Air India being expected to suffer substantial losses for a period of at least two more years.
When asked whether Air India’s divestment is possible under a policy announced on November 5, Civil aviation minister Praful Patel on Saturday told FE, “Not at all. That is not on the cards.” “The Cabinet policy on disinvestment is only for profit making CPSUs. Air India divestment is not possible in this framework,” he said, after inaugurating India’s first aerospace special economic zone built in Belgaum by Karnataka-based QuEST Global. The 300-acre SEZ, founded by Aravind Melligeri and Ajit Prabhu, involves an initial investment of Rs 150 crore.
Patel has so far maintained that the government will try to list Air India on the stock exchange in the ‘near future’ but this is the first time he has ruled out any divestment. The minister however, said the government has agreed to provide equity support of Rs 800 crore to Air India in the next two months. The Rs 800-crore equity infusion requires a Cabinet clearance, and it is likely to come in two tranches of Rs 400 crore each.
17/11/09 Sunny Verma/Financial Express

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Categories: Foreign Nov 2009, NACIL Nov 2009