Saturday, October 09, 2021

AI sale leaves nearly 45k crore worth liabilities for government

New Delhi: The Centre will be left to tackle uncovered liabilities of a little under Rs 45,000 from Air India, largely comprising loans, after factoring in the debt being taken over by the Tata Group and the equity value being paid by the new owners to the government.

More than the Rs 2,700 crore that it will get from the sale, the Centre is drawing comfort from the annual budgetary savings it will have from the fourth quarter of the current fiscal year that ends in March. Since 2009-10, the airline has been given cash support of Rs 54,584 crore and government guarantees of Rs 55,692 crore — leaving the Centre with an overall liability of over Rs 1.1 lakh crore. The guarantees were used to borrow from banks as the national carrier remained in the red for years.

At the end of March 2021, it had piled up accumulated losses of Rs 83,916 crore — more than the Rs 74,602 crore that the Centre had budgeted to spend on health during the current financial year. The losses meant that the company had a negative net worth of Rs 44,507 crore, which means the value of assets was lower than the value of liabilities.

For the Centre, the mammoth losses and liabilities were not the only challenge in finalising the reserve price of Rs 12,906 crore — worked out using five valuation methods — as the impact of Covid-19 and projections of a full-scale recovery complicated matters. Once the Air India sale is completed, the Centre will get down to monetising some of the assets, including real estate and paintings, with the airline. Simultaneously, Air India Asset Holding (AIAHCL) will begin dealing with the liabilities.

09/10/21 Times of India

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