The Centre released the Preliminary Information Memorandum (PIM) to invite Expressions of Interest (EoIs) for the strategic divestment of Air India, and its shareholding in Air India Express and Air India SATS Airport Services Ltd, on Wednesday.

As per the over 200-page-long document, the Centre proposes to carry out the the strategic disinvestment of AI by transferring management control and selling its 76 per cent equity share capital in the airline.

This will include AI’s shareholding interest of 100 per cent in Air India Express and 50 per cent in Air India SATS.

Interested parties who qualify will be called to submit Request for Proposals on the basis of which the government will decide the winner. The government has also made it clear that it is its “intention” to divest the residual shareholding through the process of dispersed divestment on terms which will be described at a later stage.

The confirmed selected bidder has to continue using the “Air India” brand for AI business operations for a minimum specified number of years on terms to be detailed at a later stage.

What’s not on sale

The further document clarifies that Air India Engineering Service Ltd, AI Air Transport Services, Hotel Corporation of India and Alliance Allied Services Ltd, all subsidiaries of AI, will not be part of the proposed transaction.

They will be hived off (along with any receivables or payables related to these subsidiaries) through demergers or other appropriate mechanisms which may be determined by the Ministry of Civil Aviation in consultation with the transaction advisers.

To submit an EoI, a bidder must have a minimum net worth of ₹5,000 crore while funds may also qualify on the basis of minimum investible funds.

In addition, a bidder must have shown a positive profit after tax in at least three of the immediately preceding five financial years from the deadline of the EoI.

Any private limited company, public limited company, limited liability partnership, body corporate, whether registered or incorporated in India or outside India or fund in each case which is eligible to invest under the laws of India, can bid either as a sole bidder or as part of a consortium.

Consortium bidders

Each member of the consortium has to hold at least 20 per cent share in the consortium and at least 20 per cent equity share capital of the company (special purpose vehicle) promoted by the members of the consortium for acquiring the government stake being disinvested.

Besides, the lead member has to hold at least 51 per cent of the paid-up equity share capital of the company promoted or to be promoted by the members of the consortium for acquiring the government stake.

However, if the member of the consortium is a Scheduled Airline Operator in India, the condition to meet minimum share of net worth or fund requirement will not apply, provided the equity shareholding of such a member is restricted to a maximum of 51 per cent of paid-up equity share capital of the consortium.

For foreign airlines, the requirement to meet minimum share of the net worth/fund requirement will remain applicable.

Further, bids by management/employees of companies participating directly or by forming a consortium (along with a bank, venture capitalist, a financial institution or fund) will be considered in accordance with the guidelines issued by the Department of Investment and Public Asset Management.

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