House panel again asks aviation min about value of A-I disinvestment

A Parliamentary panel asked civil aviation ministry to explain about how enterprise valuation of Rs 18,000 crore was arrived for the disinvestment of Air India that was completed in January last year

A Parliamentary panel on Thursday again asked the civil aviation ministry to explain about how the enterprise valuation of Rs 18,000 crore was arrived for the disinvestment of Air India that was completed in January last year.

The matter has been mentioned by the Department-Related Parliamentary Standing Committee on Transport, Tourism and Culture in its report tabled in the Rajya Sabha.

The report pertains to the action taken by the government on the recommendations/observations of the committee in the report on Demands for Grants (2023-24) of the civil aviation ministry.

Tata Group's Talace Pvt Ltd has acquired Air India, Air India Express and a 50 per cent stake in Air India Airport Services Pvt Ltd (AISATS) through the disinvestment process.

"The committee notes that the Enterprise Valuation method was adopted for inviting bids for disinvestment of Air India, which afforded the prospective bidders an opportunity to resize the balance sheet. The committee would like to know as to how the enterprise valuation of Rs 18,000 crore was arrived at," the report said on Thursday.

Further, the panel has asked the ministry to apprise it about the assets of Air India, including office buildings, and whether all the assets were taken into consideration for valuation.

On the issue, the ministry, in its reply earlier, said that in view of the excessive debt and other liabilities of Air India arising out of huge accumulated losses, the bidding construct was revised to Enterprise Value (EV) in October 2020.

This was done to provide prospective bidders an opportunity to resize the balance sheet and increase chances of receiving bids and competition, the ministry said in the reply.

"The EV construct allowed the bidders to bid on the total consideration for equity and debt instead of a pre-determined fixed debt with minimum cash consideration of 15 per cent for equity," it said.

However, the committee on Thursday said it has not accepted the ministry's reply and again sought details about the EV of Rs 18,000 crore was arrived at.

Besides, the committee has sought the details of the disinvestment plans for erstwhile Air India's four subsidiaries -- Alliance Air Aviation Ltd (AAAL), AI Airport Services Ltd (AIASL), AI Engineering Services Ltd (AIESL) and Hotel Corporation of India Ltd (HCI).