The government will shortlist three global consultants to invite bids for charting out the finer modalities of divestment in Air-India. The consultants will be shortlisted in 45-60 days.
Speaking to Business Standard Department of Disinvestment secretary Pradeep Baijal said an inter-ministerial group will do the shortlisting and decide upon the tender conditions for inviting bids from the shortlisted consultants.
The government has also shortlisted ANZ Grindlays for carrying out the divestment process of the Indian Airlines. However, the government has not announced it formally as ANZ Grindlays has been taken over by Standard Chartered and the formal merger is yet to be taken place.
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Baijal further said an inter-ministerial group would work together with the selected global consultant to chart a roadmap for further disinvestment in Air-India and other public sector enterprises which experienced a first tranche of divestment decision.
According to Baijal, the global consultant will be a consortium in nature _ with sector-specific consultant, financial institution and merchant banker.
The inter-ministerial group will have representatives from finance and industry ministries, department of disinvestment and the concerned ministry. The department, after getting the minutes of the recent Cabinet decision, would issue an advertisement within two to three days seeking applications for global consultants, Baijal said.
The Cabinet Committee on Divestment has decided to offload 60 per cent of the government equity in Air-India.
Baijal said while 40 per cent stake would be offered to a strategic partner, 10 per cent would be given to AI employees as ESOPS. The rest will be hold by domestic investors.
Of the 40 per cent, 26 per cent can be offered to be a foreign company, including a foreign airline. However, Baijal said the 40 per cent can be retained by an Indian company also.
Baijal said that the strategic partner would take care of the day-to-day management control of Air India including developing
business plan.
The overall details about the management control will be recommended by the global consultant. However, some of the areas would retained by the government as well, Baijal said.
On further disinvestment plan, Baijal said there was no policy decision per se but the department with global consultant would chalk out a road map for more divestment of government equity in AI and other PSEs where one -round of divestment decision has taken place. The government equity needed to go down further, Baijal said.
Earlier, speaking at a seminar on financing and restructuring of airports and seaports, Baijal said, the Instrument of Public Policy has created a severe fiscal stress on the exchequer with an infusion of capital to the tune of Rs 1,20,000 crore over a period of nine years from 1991 to 1999 against a paltry return of Rs 18,000 crore. Continuation of this process would further worsen the fiscal scenario of the Centre, Baijal said.
Stressing upon the need for speeding up divestment, Baijal pointed out that the Instrument of Public Policy has failed to create additional jobs rather total number of employment in PSUs has come down to 1.8 million in 1998-99 from 2.1 million in 1991-92.