Chidambaram unhappy with AI’s financial revival plan by SBI Caps

New Delhi: Home minister P Chidambaram, a member of the group of ministers (GoM) on Air India, has expressed doubts over the feasibility of the airline’s financial revival plan prepared by consultancy firm SBI Caps. Finance minister Pranab Mukherjee, who heads the GoM, was also not too happy with the proposal and told Air India in the latest GoM meeting that equity infusion in the airline, one of the components of the revival package, can happen only after the GoM considered all relevant aspects.
The investment banker, SBI Caps, has suggested conversion of 60% of the total working capital debt of the carrier into long-term loan at a lower interest rate and issue of cumulative preference shares for the remaining amount. This has not impressed the home minister, sources said. Chidambaram is learnt to have said in the GoM meeting that the proposal — the short summary of which is that the airline requires a debt write-off and also infusion of equity — might not offer a solution given the present financial performance of the firm.
On his part, Mukherjee asked the civil aviation ministry to expedite the financial restructuring plan of Air India, while addressing the queries raised by the department of expenditure. Mukherjee has made it clear that the next round of equity infusion in Air India will only happen after the report of a Group of Officers was examined. A committee of officers headed by the special secretary (expenditure) in the finance ministry is in the process of vetting the ‘ambitious’ turnaround plan prepared by advisory firm Deloitte.
23/09/11 Ashish Sinha, Nirbhay Kumar/Financial Express

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Categories: Air India Sep 2011