NEW DELHI: With no takers for 74 per cent stake in the debt-laden Air India and after another failed attempt to get the national carrier listed on stock exchanges, the government has finally postponed the plan to divest Air India and has decided to infuse fresh capital in Air India to make it more profitable before listing.
“We have not scrapped the plan to divest Air India. We are reworking on the divestment and are will come up with fresh bids. But it will take some time. Meanwhile, government will infuse fresh funds to make it more profitable and for smooth day to day operations,” senior official from finance ministry told
The New Indian Express on Tuesday.
The decision to infuse fresh funds came after the listing plan of Air India suffered a setback, after the market regulator Securities and Exchange Board of India (SEBI) denied the state-owned carrier exemption from a rule which makes net profit for the past three years mandatory for listing.
The Aviation Ministry wanted SEBI to waive off this clause for Air India.
After SEBI’s rejection, a high-level meeting decided to go ahead with capital infusion in Air India.
The meeting was chaired by Union Minister Arun Jaitley and attended by Piyush Goyal, Civil Aviation Minister Suresh Prabhu, Transport Minister Nitin Gadkari and other senior officials of Finance and Civil Aviation Ministries.
“The funds will be released in instalments and will be used to place orders for new aircrafts and for improving existing infrastructure,” the official told The New Indian Express, without divulging any details about the amount infused.
The government is looking at turning around the company to ensure that it makes profits on an overall basis before going in for listing.
The government had originally proposed to offload 76 per cent equity share capital of the national carrier as well as transfer the management control to private players.
The buyer would have had to take over Rs 240 billion debt or the carrier along with over Rs 80 billion of liabilities.
However, the stake sale failed to attract any bidders when the bidding process got completed on May 31.