All privatization doesn’t make big money: Deepam K Pandey

What will happen between now and the end of December when the Air India transaction is completed?

First, the share purchase agreement will be signed. Then the clock starts. A lot of clearances are required in case of contracts. The company (Air India) has to do certain things, and the bidder (Tata Sons) has to do certain things because many contracts have a clause that if there is a change of control, permission has to be taken. Now we are proceeding with the authorization letter, and one by one both the parties have to settle the contracts.

Meanwhile, the approvals of lenders and lessors have to be taken. Approval of Competition Commission of India is required. Then, the Balance Sheet is to be prepared. The debt portion is now gone, but reconciliation of current and non-current assets and debt plus current and non-current liabilities has to be done. Suppose they pay the fuel company, then the liabilities will be reduced. Once the balance sheet is prepared, it will be given to them, agreed upon, and this is to be done before the long-stop date, which is the last date. This means that the date we will say will be the closing date. On that day, the board will meet, our board will resign, and the shares and guarantee will be issued to the bidder.

Given the huge debt that the government is yet to repay, what do you think it achieved through the privatization of Air India?

Firstly the jobs of the employees have been saved. Second, all the economic repercussions that could have happened to an airline that was faltering (have been saved). This is taxpayers’ money, and we have been giving oxygen for a long time. It was going to be a terminal. Now things will start again.

Do you think the delay in privatization due to Kovid also affected the valuation of Air India?

When you do valuation valuations, you’re actually looking at fairly long-term prospects. If you say, once taken, will there be no harm? No, there will be loss. There will always be a turnaround plan which will again be subject to the aviation scenario. When someone bids for an airline, he doesn’t see two months or three months. He will also look at the longer term.

Will Air India Assets Holding Limited (AIAHL) assets, such as Air India buildings, be monetized to pay off debt?

Yes, because liabilities are coming in, and some assets are also coming. We also know that liabilities are much more than assets. But whatever it is, it will be closed. Something will be found. To the extent we sell the property, we will recover the loss.

disinvestment entry will be ₹18,000 crore or ₹2,700 crore received from Air India?

This is an accounting issue, but since the debt remains in Air India, it will not be shown as disinvestment proceeds. ₹2,700 crore, which is the cash consideration, will be shown as disinvestment proceeds.

Air India has been privatized. Why is the privatization of Bharat Petroleum Corporation Limited (BPCL) taking so long?

This process takes a long time. It started in January, then the Covid wave happened. Due diligence process is onN.

Apart from BPCL, which strategic disinvestment between BEML, Pawan Hans and Shipping Corporation can be achieved soon?

They are all running parallel. However, the due diligence process isn’t really the same for everyone. Shipping corporations also face specific challenges. Ships are not always around. Inspection of ships is to be coordinated.

What about IDBI Bank?

The Expression of Interest (EoI) for IDBI Bank will be out. We are trying to see if we can get the EOI out by December. It will take nine months to one year to complete the transaction from the EOI stage.

how likely it is to get ₹Look at the 1.75 trillion disinvestment target?

There is a privatization part. Unless it is a big transaction like BPCL or LIC IPO, all privatization doesn’t make big money. Concor, which could have given us big money, unfortunately, is not happening. The shipping corporation may pay, but for a lesser amount; In BEML we are bidding only 26% not completely so we will get that much.