The finance ministry has turned down a proposal by Air India to raise Rs 10,000 crore in tax-free bonds to retire its long-term working capital loans citing constraints regarding the government standing as a guarantor for such a bond issue. However, Air India is expected to once again approach the ministry for approval, an official said.
“A proposal has already been moved by ministry of civil aviation to the ministry of finance for issue of guarantee to convert certain long-term working capital debt into non-convertible debentures… The finance ministry has indicated that there are certain constraints regarding the guarantee,” the AI official said, adding, “This issue will be again taken with finance ministry.”
This is the second time such a proposal by Air India has been rejected by the finance ministry. Air India had during 2013-14 made a similar proposal which was rejected by the finance ministry on the ground that such issues were permitted only for infrastructure companies.
08/08/15 Rhik Kundu & Pranav Nambiar/The Financial Express
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“A proposal has already been moved by ministry of civil aviation to the ministry of finance for issue of guarantee to convert certain long-term working capital debt into non-convertible debentures… The finance ministry has indicated that there are certain constraints regarding the guarantee,” the AI official said, adding, “This issue will be again taken with finance ministry.”
This is the second time such a proposal by Air India has been rejected by the finance ministry. Air India had during 2013-14 made a similar proposal which was rejected by the finance ministry on the ground that such issues were permitted only for infrastructure companies.
08/08/15 Rhik Kundu & Pranav Nambiar/The Financial Express
