The govt and its advisers for the stake sale are expected to pour over the shareholders' agreement and other details to ensure that the board and key management personnel are appointed by the Indian partner.
NEW DELHI: The government will go for a thorough scan of the credentials of bidders for Air India as it wants to ensure that ownership and effective management control stays with an Indian entity, despite foreign airlines being allowed to hold up to 49% in the national carrier post-disinvestment.
The move is aimed at addressing concerns over day-today management of some of the private carriers with foreign airlines as partners where shareholders were not really with the Indian owners despite the government rules mandating so.
Last week, the cabinet allowed foreign airlines to hold up to 49% stake in AI in an exercise aimed at bringing the overseas investment rules for the bleeding public sector carrier at par with other airlines.
The government and its advisers for the stake sale are expected to pour over the shareholders' agreement and other details to ensure that the board and key management personnel are appointed by the Indian partner, sources indicated.
Although the extent of disinvestment is yet to be firmed up, sources told TOIthat the government will ensure that substantial ownership, which will be 51% if not more, is retained with Indian entities and effective control in managing the day-to-day operations also remain with the domestic partner. This indicates to the possibility of the government exiting AI as a smaller stake sale will mean that the foreign partner becomes the largest shareholder.
Government's presence as a shareholder is also seen as a deterrent for many businesses to bid and may depress valuations, something that the NITI Aayog had said, while recommending Air India privatisation last year.
The extent of government shareholding is something that will be finalised by a group of ministers headed by FM Arun Jaitley. The civil aviation ministry has suggested various options for the ministerial panel, which will be deliberated upon in the coming weeks. Coming ahead of the 2019 general elections, the BJP government is keen to ensure that the process is glitch-free and does not lead to accusations. Sources said that contours of the transaction will be finalised in about 10 weeks and an expression of interest will be called from interested players. Already, there is a buzz of Qatar Airways and Singapore Airlines being keen on investing in AI. Financial details of the deal will have to be finalised.
(This article was originally published in The Times of India)
