Air India receives Rs 10 bn from NSSF, to raise Rs 5 bn loan next week

Cash-strapped Air India has raised Rs 10 billion from the National Small Savings Fund and expects to mop up Rs 5 billion through short-term borrowings next week, an airline source said Thursday.

The ailing national carrier would be utilising the funds to mainly meet its working capital requirements.

The fresh funds are in addition to the Rs 9.8 billion received towards equity infusion by way of supplementary grants from the central government in September.

"We have received Rs 10 billion by way of loan from the National Small Savings Fund last week. This loan has been availed at a lower interest rate. However, we have to repay the the loan amount by March next year," the official said.

In early September, the carrier sought bids for garnering Rs 5 billion through short-term borrowings to meet its working capital requirements. The carrier had fixed September 10 as the deadline for submission of bids.

However, the deadline was extended the date to October 31 after it failed to get any response.

"We are hopeful of raising another Rs 5 billion when we open the bids next week," the source said.

Air India, which is sitting on a debt pile of over Rs 500 billion, has been struggling to raise money since last year. The airline had also defaulted on salaries besides delay in payments to oil companies, engine makers and aircraft lessors.

In June also, Air India borrowed short-term loans worth Rs 10 billion to pay staff salaries and meet other obligations, following a failed privatisation attempt.

The airline raised Rs 62.5 billion from various banks between September and March last fiscal.

The carrier is staying afloat on a bailout package extended by the government in 2012, as part of a turnaround plan and a financial restructuring plan.

Air India is to receive a budgetary support of Rs 302.31 billion over a 10-year period ending March 2021.