With Air India On Its Debt-Bed, Efforts Are On To Flog Four Subsidiaries, To Meet Disinvestment Targets

It is being reported that the government is firming up plans to sell four Air India subsidiaries as it looks to meet the divestment targets for the current fiscal. The Department of Investment and Public Asset Management (DIPAM) has identified Air India Engineering Services Ltd, Air India Air Transport Service, Hotel Corporation of India and Airline Allied Services Limited as the four subsidiaries which will be on the chopping block.

It is expected that the government would also monetise the total investment of Air India in these subsidiaries which is estimated to be in the range of Rs 1,598 crore and trade investments worth Rs. 73 crore. It would be pertinent to note that the government had earlier tried to privatise the airline, but the effort did not succeed as there were no willing buyers in the market. Part of the reason for the lack of interest in the airline is its high debt burden.

Subsequent to the government’s failure to privatise the airline, it was suggested that another means of doing so would involve selling the airline’s assets, which included land, buildings and its subsidiaries like the ground handling unit and engineering services. With the value realised from such a sale, debts can be offset. It appears that the government has heeded this course of action in putting four of the airline’s subsidiaries on the block.

Assets of eight other Public Sector Units (PSUs) are also expected to go under the hammer with the identified PSUs being Pawan Hans, Project & Development India Ltd, Hindustan Prefab Limited, Bridge and Roof Company, Scooters India Limited, Bharat Pumps and Compressors Ltd, Hindustan Newsprints Limited and Hindustan Fluorocarbons.