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Air India should have been wound up 10 years ago: DIPAM Secretary Tuhin Kanta Pandey

The total debt on the books of Air India was Rs 61,000 crore, of which the government retained Rs 46,000 crore.

Published: 14th October 2021 10:59 AM  |   Last Updated: 14th October 2021 10:59 AM   |  A+A-

DIPAM Secretary Tuhin Kanta Pandey

DIPAM Secretary Tuhin Kanta Pandey (Photo| Facebook)

Express News Service

NEW DELHI: Air India's balance sheet was so distorted that it should have been wound up 10 years ago, says Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (DIPAM).

"Any person with basic knowledge of balance sheets would know for themselves how bad the finances of the airlines were," says Pandey while responding to criticism that the government let go of Air India cheaply even while keeping 75 per cent of the debt on its book.

The successful bidder - Tata Group - paid Rs 18,000 crore which comprise Rs 2,700 crore in cash and acquisition of Rs 15,300 crore debt. The total debt on the books of Air India was Rs 61,000 crore, of which the government retained Rs 46,000 crore.

Explaining the finances of Air India, the DIPAM Secretary said that the airlines’ net worth was negative Rs 44,000 crore and it had losses of Rs 83,000 crore in its books. "Those who are saying they (Tatas) are taking away only quarter of the debt, (they must answer) why they should take on their books the losses. The new acquirer has nothing to do with those losses in last 10 years. Technically, the debt that was there had to be paid by the government because of the sovereign guarantee," says Tuhin Kanta Pandey.

He says that debt was continuously taken to fund the losses.  The government could bring in money in a loss-making company because of the government guarantee. A government guarantee meant any lender would pay because if the company failed to pay, the government would. "This money that you are saying is debt is nothing but government equity which was not paid," he explains.

He further says that the bidding was done through a transparent process and that the government made all efforts to ensure there were more bidders. "We allowed foreign airlines, NRIs could take stake up to 100 per cent, consortium was also allowed. We decreased the Net worth criteria from Rs 5,000 crore to Rs 3,500 crore, so that entry barrier was also expanded," he says.

Pandey says that bidders, based on their assessment of the cost and the earning capacity of the airlines, put in their bid, and highest bidder won.



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