How will the picture change with privatization?

The public sector airline has now become the Tata group company Tata Sons.

The public sector airline has now become the Tata group company Tata Sons. Bought a hundred percent stake of this debt-ridden airline for Rs 18,000 crore. On Monday, the government issued a letter of intent. The disinvestment process will be completed by December 2021. Tata Sons will take over Air India’s debt of Rs 15,300 crore. Actually, Air India Company had stopped buying new aircraft from the era of Prime Minister Narasimha Rao. In the opinion of the experts, the government had to sell it in any case and the government had to accept the demand made by the buyer. The key issue in the disinvestment of this company has been the strategic importance of Air India. This company was like a technical partner of the government. Will the strategic importance of this company continue in the future?
What’s in the deal
Despite the losses, Air India has substantial assets. It has its own slot at Heathrow Airport in London. A fleet of 130 aircraft, along with thousands of trained pilots and crew members. With this deal, the Tata group will get 4,400 domestic and 1,800 international landing and parking slots at airports in the country and 900 slots abroad. It was valued at $6 billion in March last year. Air India Colony is spread over 30 acres in Vasant Vihar, Delhi. The value of this asset itself is more than Rs 12,000 crore. The headquarter of Airlines House in Delhi is in crores.
future prospects
India’s aviation sector is growing at an annual rate of 20%. According to experts, the full potential of the Indian aviation market is yet to be tapped. In such a situation, there is a lot of potential for the Tata group in Air India. The government had tried several times to sell Air India in the past, but buyers could not be found. This time the government had made a lot of changes in the conditions. According to experts, it will take at least five to seven years for the Tata family to bring Air India back on track. The Tata group holds 51 per cent stake in aviation giant Vistara (Singapore Airlines holds 49 per cent stake) and 84 per cent in AirAsia Limited.
What are the relaxation of conditions
In 2001, the then government of Atal Bihari Vajpayee tried to sell 40 percent stake in Air India. At that time Lufthansa Airlines, British Airways and Singapore Airlines had shown interest in buying it. When the government said that the bidding company would have to partner with an Indian company, these foreign companies backed down. At present, India has a debt of about 60 thousand crore rupees. To reduce the debt, the government has formed a special loan unit. As per the bid conditions, the Air India buyer must have a minimum asset of Rs 3,500 crore. As per the Bombay Stock Exchange, Tata Sons Private Limited has assets of Rs 6.5 billion.
How the government backtracked
From the era of Prime Minister Narasimha Rao, the company stopped buying new aircraft. Air India is one of the best brand in India, but after nationalization, it started facing difficulties and its condition deteriorated day by day. There were difficulties in the company, but along with it there were many problems in the way the government handled it. In the post-80s, red-tapism increased in the organization and professional methods of working came to an end. In the opinion of the experts, the government had to sell it in any case and the government had to accept the demand placed by the buyer. The condition of the economy is deteriorating and the government now knows that it will not be able to run it, it will have to sell it. The condition of the company had deteriorated earlier but later it got worse, the government was running it under compulsion.

If 72 plants are closed, there can be a reduction of 33 percent in the total consumption. According to the government, before Corona, in August-September 2019, there was a daily consumption of 10,660 crore units of electricity in the country, which has increased to 12,420 crore units in August-September 2021.
During that time, 61.91 percent of the total consumption was being generated in thermal power stations. Due to this, the consumption of coal in these plants has also increased by 18 percent in two years.

Management and Responsibility

Air India and Air India Express will be commanded by Tata. The debt of Rs 46,262 crore on the company’s balance sheet will go to the state-owned AIAHL. Under the deal, the new company will also have to retain Air India employees for a year. After that the company can give them VRS from the second year if they want. The base price of Air India’s bid was Rs 12,906 crore. Air India is not listed on the stock exchange. Maybe Tata will list it in the stock market later. In the year 2018, the government had invited bids for the sale of 76 per cent stake and had talked about keeping the management with itself. When no one showed interest in it, the government decided to sell with managerial control.

  • Procurement is getting limited due to cost of coal, production has also come down. Not stocked before monsoon. According to the government, the companies should have taken this step earlier.
  • Heavy liability on states: Huge dues of companies on UP, Maharashtra, Rajasthan, Tamil Nadu, Madhya Pradesh.

what say
are knowledgeable

Air India has a total debt of Rs 43 thousand crores. Out of this, the debt of 20 thousand crore rupees has increased in the last two years. However, the government will take this loan on its own and the winning Tata will get a loan of only Rs 23 thousand crore.

  • Tuhin Kant Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM)

The condition of the company had deteriorated earlier but later deteriorated further. The problem with being in the hands of the government was that when it needed to be funded, the government would say, it is a commercial organisation, it is natural to have instability in its management.

  • Harsh Vardhan, Aviation Specialist