Government of India has extended the deadline to submit bids for national carrier Air India Ltd to 30 June. The previous deadline to submit expressions of interest (EoI) for the national carrier was 30 April, before the deadline was extended from 17 March.
The decision by the government comes amidst the coronavirus lockdown. The lockdown was initiated by the government to contain the COVID-19 outbreak which gave a severe blow to the economy and investment sentiments from potential investors.
A senior finance ministry official said that the government has time till 31 March next year for carrying out privatization processes of public sector firms like Air Indian Ltd and Bharat Petroleum Corporation Limited (BPCL).
The government preferred to extend the deadline of the privatization process rather than put off it to a later date, the official added, requesting anonymity.
However, experts tracking the sale said that there is likely to be valuation and market demand concerns with Air India and BPCL sale as aviation, oil and gas sectors have been severely affected by the lockdown.
“What will be important for the government is receiving the right kind of bids which can lead to closing the deals once the economy and market dynamics show signs of stabilization,” said Dipti Lavya Swain, Corporate M&A lawyer & partner at HSA Advocates.
The government, which aims to deprive its entire stake in Air India, had in January began the stake sale process by inviting offers from potential investors after a costly turnaround plan. An earlier effort to sell a controlling stake in the flagship carrier failed. To normalise the deal, the Centre had also reduced Air India’s debt from about ₹56,334 crores to about ₹23,287 crores.
The Union Cabinet had recently approved an amendment to the foreign direct investment (FDI) policy to permit foreign investment in Air India by NRIs up to 100% under the automatic route.
The outbreak of the COVID-19 pandemic has formed a cloud over the divestment plans during the near future. The aviation sector has been heavily affected and demand is expected to remain quiet in the coming months.
Air India
Air India, the largest international airline from India, has been among the worst affected due to the recent travel restrictions and advisories by countries abroad. The government, for now, has advised all airlines to not take any bookings until clarity on flights resumption plan amid the outbreak of COVID-19.
