Selling profit-making subsidiaries of Air India won't be wise, says Gadkari

His statement is significant as he is a member of GoM that is finalising its privatisation process

Union minister Nitin Gadkari on Sunday said selling Air India’s profit-making subsidiaries would not be a wise decision as the government had invested heavily in them and they had started generating revenue.

Gadkari’s statement at an event in Nagpur assumes significance because he is a member of the group of ministers that is finalising the process for the airline’s privatisation. He holds the portfolios of road transport, highways and shipping in the Narendra Modi government.

The government is considering selling the national carrier’s lucrative subsidiaries to repay a portion of the company’s debt. Gadkari’s views, thus, seems to indicate a difference of opinion in the government over the proposed stake sale.

The minister’s comment came in respect of Air India’s engineering services subsidiary, Air India Engineering Services (AIESL), which looks after maintenance, repair and overhaul (MRO) works of aircraft. AIESL has been incurring losses since its inception in 2013 when it was carved out of Air India as a separate business unit. In 2016-17, AIESL’s losses mounted to Rs 653 crore according to provisional estimates.

“I want to urge the (civil aviation) minister that the MRO segment may be kept separately. If tomorrow we take some decision related to Air India, then this company should not go to some private player, and should remain a separate entity,” Gadkari said.

Underlining the importance of the government holding a stake in profit-making businesses, Gadkari cited the example of the successful initial public offering (IPO) of Cochin Shipyard. The initial share sale offer of Cochin Shipyard was subscribed more than 76 times on the last day of its bidding earlier this month, showing “people still have faith in the public sector unit till date”.

When asked about Gadkari’s remarks, Civil Aviation Minister Ashok Gajapathi Raju said, “Discussions on Air India’s stake sale is an ongoing process, and his comments are welcome. I will not divulge my views on his comments in the press.”

AIESL has 31 hangars throughout the country for carrying out its business adjoining the airports. The company pegs its value at Rs 3,000 crore. Significant among them are the Nagpur facility, which has an engine workshop valued at Rs 1,330 crore, and the Shamshabad facility, valued at Rs 200 crore. Besides, it has workshop equipment valued ~200 crore and a large base of skilled engineers.