Air India and Bharat Petroleum Corporation, two debt-ridden state-owned companies, are expected to be sold by the government by March next year, Finance Minister Nirmala Sitharaman said in an interview with The Times of India. The Finance Minister's statement comes at a time the ailing national carrier is facing financial stress, sitting on a debt pile of around Rs. 58,000 crore.
"We are moving on both with the expectation that we can complete them this year. The ground realities will play out," Ms Sitharaman was quoted as telling the daily.
Earlier this month, Air India chairman Ashwani Lohani, in an open letter to Air India employees, had said that the divestment may enable the airline's sustainability.
For Air India, there is a "lot of interest" among investors, Ms Sitharaman said.
Air India, Bharat Petroleum Corporation to be sold by March: FM Nirmala Sitharaman - Times of India https://t.co/8FbWsiSdSH— Nirmala Sitharaman (@nsitharaman) November 17, 2019
Recently, the cabinet approved changes in the process of disinvestment where the prospective bidders will be heard in roadshows before the expressions of interest (EoIs) are floated so that concerns of the prospective buyers are addressed.
Last year, the government had floated the Expression of Interest (EoI) for Air India to offload a 76 per cent stake and management control in the airline but it did not get a single bidder. The government currently owns 100 per cent equity of Air India.
The Air India stake sale also did not get any response last year as investors feared government interference with the remaining 24 per cent stake, aviation consultancy firm Centre for Asia Pacific Aviation had said in a report. Now that hurdle has been removed.
Air India posted an operating loss of around Rs. 4,600 crore in the last financial year mainly due to higher oil prices and forex losses but the debt-laden carrier expects to turn operationally profitable in 2019-20, according to senior officials.
In the case of Bharat Petroleum Corporation Limited (BPCL), a group of secretaries had agreed for the sale of the government's entire 53.29 per cent stake in the company in October.
Bharat Petroleum has a market capitalisation of about Rs. 1.02 lakh crore. With the sale 53 per cent of its stakes, the government is hoping to mop up around Rs. 65,000 crore including any entry premium. That can take care of major part of the sell-off target.