Bidding for Air India to be on enterprise value, says Hardeep Puri

NEW DELHI:  In a renewed effort to privatise Air India, the government on Thursday relaxed some conditions and announced that bids will now be invited on enterprise value. It also extended the deadline for inviting bids till December 14.

Announcing the decision, Civil Aviation Minister Hardeep Puri said, “We have decided to ask for bids for Air India on enterprise value.”  

He said the decision had been arrived at following multiple detailed preparations on the issue.

Aviation Secretary Pradeep Singh Kharola said, “In this enterprise value also, a ratio has been earmarked between how much he (bidder) can take as debt and how much he has to give as cash.”

Explaining further, he said, “It has been decided that whatever enterprise value the bidder quotes, 15 per cent of that has to be given in cash to the government and remaining 85 per cent has to be taken as debt along with Air India.”

Officials explained that the investor quoting the highest enterprise value will get the carrier.

The move is to make the offer as flexible and market linked as possible. It has been done keeping in mind the fact that aviation sector has received a huge jolt amid the Covid-19 pandemic.

The government will not pre-determine the level of debt that Air India will carry with it to the new owner, explained Tuhin Kanta Pandey, secretary in the department of investment and public asset management.

This is the second attempt by the government to sell Air India.

The first attempt in March 2018 failed with investors showing no interest as the government retained a 24% stake in the airline and the bidder was required to absorb Rs 49,000 crore in debt.

In January this year, in its second attempt, the government sought bids for divesting its entire 100% equity in the national carrier.