Saturday, June 16, 2018

Part write-off of Air India loan on radar

New Delhi: The government may consider a proposal to write off part of Air India's huge loan overhang before issuing an IPO in a bid to make the ailing airline attractive.

After its attempts to privatise Air India flopped last month, the BJP-led government is seriously considering the suggestions of RSS affiliate Swadeshi Jagran Manch to revive the state-run carrier by raising capital through an IPO. In the interim, the government will inject the necessary capital and consider giving the loan write-off it was earlier offering as a sweetener to the potential bidders for the airline.

Ashwini Mahajan, the national co-convenor of the Swadeshi Jagran Manch, said, "We are asking for a loan write-off prior to an IPO. Our research on the airline is nearly complete and will be shared with the civil aviation ministry shortly."
"If the government was willing to give a loan write-off to large corporations to make the sale offer attractive, we see no reasons for it not to offer a similar hair-cut to investors who subscribe to Air India shares through an IPO. Our reading is that we can raise far more through a combination of IPO and sale of unused assets than the amount involved in a loan write-off," the think-tank head said.
In its bid document, the government had said it would write-off one-third of Air India's debt, reducing the liabilities to a more manageable Rs 33,392 crore. Officials said this was a proposal being considered by the government along with an infusion of around Rs 3,000 crore.
16/06/18 Jayanta Roy Chowdhury/Telegraph