The government today extended the deadline for submission of initial bids for Air India stake sale till May 31 and issued a slew of clarifications on the divestment process, including that individuals other than the airline employees are barred from bidding.
Coming out with a set of clarifications in the form of 160 questions and respective answers, the government also made it clear that it would have the rights of a "minority shareholder" with 24 per cent stake in Air India post disinvestment.
Providing more time, the last date for submission of Expressions of Interest (EoIs) for Air India disinvestment has been extended to May 31 from the earlier deadline of May 14. The qualified bidders would now be known on June 15, whereas the earlier date was May 29, according to an official communication.
Starting the disinvestment process of the debt-laden national carrier, the preliminary information memorandum for the proposed sale of up to 76 per cent stake in Air India along with management control to private entities was issued on March 28.
The divestment would include profit-making Air India Express and joint venture AISATS, an equal joint venture between the national carrier and Singapore-based SATS Ltd.
The Air India employees in Mumbai staged a massive protest against the government's disinvestment plan.
As per the clarifications, post stake sale, the government would have "rights similar to that of a minority investor as per Companies Act and shareholders' agreement.
"It is a considered decision by Government of India to divest 76 per cent stake and retain a 24 per cent stake. It is noted that ESOPs will also be provided from GoI's shareholding," the government said.
According to the 19-page document, the government has clarified that "individuals (other than employees) are not allowed to bid".
"Details of existing slots and code share agreements will be provided at RFP (Request for Proposal) stage. It is expected that there will not be any impact of disinvestment on existing slots and bilateral rights.
"Bidders are advised to undertake their own assessment for the impact of disinvestment process on the existing code share agreement," it noted.
This was in response to the queries on whether privatisation would impact renewal of existing slots and bilateral flying rights.
For more than 50 queries, the government has said details would be provided at the time of RFP stage.
To a query related to staff, the government said, "employee concerns are being suitably addressed".
While noting that currently there is no VRS (Voluntary Retirement Scheme) for Air India, the government said employees are eligible for gratuity on completion of 5 years of service or more and the same is capped at Rs 20,00,000. "This limit has been recently increased from Rs 10,00,000 to Rs 20,00,000 based on amendment to Payment of Gratuity Act, 1972," it added.
Further, it has been clarified that majority ownership and control of the consortium should be with resident Indian citizens. "No more than 49 per cent of the 76 per cent offered for disinvestment can be directly or indirectly owned by foreign entities," the document said.
The document noted that "operational synergies span the full range of business activities associated with running a large global airline including inter alia, HR policies, operations, sales and marketing, revenue management, procurement and contracting, financial management and business strategy". Details in this regard would be made available at the RFP stage.
About impact of withdrawal of government guarantees on debt terms, the document said that would "inter-alia, be dependent on the credit quality of the potential bidders".
It is the bidders themselves who are in the best position to estimate the impact, if any, due to government guarantees not continuing post strategic disinvestment, the government said.
"Grounded aircraft are assets of Air India. Successful bidder/ Air India post strategic disinvestment can deal with them/ dispose as deemed fit subject to the terms and conditions of the Shareholders' Agreement," it said.
As per the information memorandum, issued in March, the government would retain 24 per cent stake in the national carrier, the winning bidder would be required to stay invested in the airline for at least three years.
Regarding AISATS, the government said it would be party to the joint venture agreement "even after the change in ownership of Air India from the government to a private investor".
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