New Delhi: After a failed attempt last year, the Finance Ministry is re-working the proposal for the strategic sale of Air India, incorporating factors like crude oil prices and exchange rate volatility. The ministry's revised proposal could also include the option of selling either 100 percent or 76 percent of the government stake in the national carrier.
After the proposal is ready, it will be placed before the Air India Specific Alternative Mechanism (AISAM) for an approval. The new proposal would incorporate the issues that were flagged by EY last year as possible reasons why the government failed to attract bidders for the national carrier.
The AISAM is basically a group of ministers. However, the mechanism needs to be reconstituted now that former Finance Minister Arun Jaitley and former civil aviation minister Suresh Prabhu are no longer part of the new government. They will be replaced by new Finance Minister Nirmala Sitharaman and Civil Aviation Minister Hardeep Singh Puri. Road Transport minister Nitin Gadkari is likely to continue on the panel when it is reconstituted.
The government had last year invited bids to sell off 76 percent stake in Air India, alongwith transfer of management control. However, the offer had failed to attract any bidders. After that, transaction advisor EY had prepared a report citing probable reasons for the failure of the sale process.
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The reasons listed by EY included 24 per cent government stake and corresponding rights, high debt, volatile crude oil prices, fluctuations in exchange rate, changes in macro environment, profitability track record of bidders and restriction on bidding by individuals.