AIR INDIA PRIVATIZATION : FINANCIAL CRISIS
Air India is facing an unprecedented financial crisis, says Civil Aviation Minister Puri. The salary of June 2020 has been paid to the employees by Air India. Specifically, the airline industry worldwide is facing an unprecedented financial crisis due to Covid-19.
Privatization Process :
The multiple expressions of interest from bidders presented to the government for privatization. In January the Department of Investment and Public Asset Management (DIPAM) invited preliminary bids for the strategic sale of NINL. The last date for bid submission was March 29.
“Multiple expressions of interest received for privatization of Neelachal Ispat Nigam Ltd.(NINL). The transaction has now moved ahead to the second stage.”
-Pandey
NINL is a joint venture of MMTC, NSE 9.92 %, NMDC, BHEL, MECON, and 2 Odisha government-owned undertakings – OMC and IPICOL.
In January last year, the Cabinet had approved strategic disinvestment of equity shareholding of MMTC (49.78 percent), NMDC (10.10 percent), MECON (0.68 percent), BHEL (0.68 percent), IPICOL (12.00 percent), and OMC (20.47 percent) in NINL.
The process of privatization of Air India, BPCL, Pawan Hans, BEML, and Shipping Corp moved to the second stage. As the government received multiple expressions of interest (EoI) for these CPSEs.
For 2021-22, the target of Rs 1.75 lakh crore has been set as disinvestment by the government. That is over five times the aimed raise in the current financial year.Besides this in the Revised Estimates, the target has been set at Rs 32,000 crore for the current fiscal.
Total Debt on Air India :
“The total debt stands at Rs 38,366.39 crore after transfer of debt amounting to Rs 22,064 crore to the special purpose vehicle called Air India Assets Holding Ltd in FY20”
– Civil Aviation Ministry told Rajya Sabha.
According to the ministry, the total net fixed assets as of March 2020 were worth Rs 45,863.27 crore. Also including land and buildings, aircraft fleet, and engines. Moreover, adding other fixed assets, right-of-use assets, and intangible assets.
In accordance with the guidance of the Department of Investment and Public Asset Management, the interest of Air India employees will be safeguarded. Also, the current employees would remain employed post divestment, the government added.
Divestment Process
The divestment process of Air India held for which the last date of submission of preliminary bids for the airline ended on December 14, 2019.
The net loss during FY20 as per provisional figures stands at Rs 7,982.83 crore. Differently, the various government departments owe Air India Rs 498.17 crore as of December 2020 as airfares including VVIP flights.
Air India gives a credit period varying from 15 to 30 days from the receipt of invoices to government departments. But does not get any interest in case of non-payment within the credit period.
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