Mumbai :The government is selling a controlling stake in its flagship carrier along with two-thirds of the loss-making airline’s about $7.8 billion debt, as Prime Minister Narendra Modi moves ahead with the nation’s most high profile asset sale in decades.
The government will sell 76% of Air India Ltd, according to a document released by the civil aviation ministry on Wednesday. The airline’s overseas budget carrier will be completely sold in the offer, while the state will sell a 50% stake in the ground handling unit separately. The administration may also ask the buyer to conduct an initial public offering.
A successful sale of Air India, which is surviving on taxpayer-funded bailouts, is seen as test case for Modi to burnish his credentials as a reformist attempting to steer the state away from running businesses and boost spending on health and education. The national carrier has five subsidiaries, a joint venture and a combined workforce of as many as 27,000.
“Selling a 76% stake is the second-best option for the government; the best option would have been to exit completely,” said Kapil Kaul, South Asia CEO at CAPA Centre for Aviation, “There’s also a caveat there that the acquirer will have to list the company, which means the government is looking at exiting through an IPO route, which is fair enough and very positive.”
IndiGo, India’s biggest airline, is the only company to publicly disclose a desire to buy Air India’s airline operations — the most lucrative business that includes prime time slots at airports from New York to Heathrow, as well as bilateral rights to start flights to most countries. Singapore Airlines Ltd and India’s Tata Group, which run a joint venture airline named Vistara in India, said they were also open to look at the sale, but haven’t elaborated yet.
Selling a majority stake in the loss-making, 85-year-old company isn’t going to be a cakewalk. At least one attempt almost two decades ago failed amid fierce political opposition. The latest offer will include Rs 333 billion ($5.1 billion) of debt that the buyer will have to take over with the balance going to the government.
India intends to sell the remaining stake in Air India, which may include selling shares during an initial share sale. The government will not sell shares in a block, according to the document.
Air India has been unprofitable since its 2007 merger with state-owned domestic operator Indian Airlines Ltd. The company made an operating profit of about Rs 3 billion ($46 million) in the year through March 2017, primarily due to a slump in oil prices. It still posted a net loss of Rs 57.7 billion, junior aviation minister Jayant Sinha told lawmakers on Feb 8.
Indian regulations allow a foreign airline to buy as much as 49% of a local carrier, while overseas investors other than airlines can buy an entire carrier. Modi in January tweaked rules in January to include Air India which wasn’t a part of those rules until then.
Air India started as Tata Airlines in 1932 and later became state-owned. Founded by Jehangir Ratanji Dadabhoy Tata, it took off flying mail between Karachi in then-undivided, British-ruled India and Bombay. Once it turned commercial, the airline quickly became popular with its advertisements featuring Bollywood actresses, high-end champagne and surrealist painter Salvador Dali-designed porcelain ashtrays.
India can’t achieve 9-10 per cent GDP growth without agri-revolution: Kant
New Delhi: India cannot achieve 9-10 per cent GDP growth without revolution in the farm sector, Niti Aayog CEO Amitabh Kant said.
Addressing Mahindra Samriddhi Agri awards, he said there is a need to boost investment in the agriculture sector as well as to introduce new technology and market reforms.
Kant also stressed on scrapping Agriculture Produce Marketing Committee and some old laws like Essential Commodites Act, which restrict movement of farm produces.
However, he said agriculture is a state subject and the central government has limited role in it.
“In India 50 per cent of our population is dependent on agriculture. If India’s GDP has to grow at 9-10 per cent for the next 30 years, then it cannot be without bringing revolution in the agri sector,” Kant said.
He also emphasised on eliminating middlemen in marketing of farm produces to boost farmers’ income.
Kant expressed confidence that farmer income will be doubled by 2022.
He said there is a need to spread good agriculture practice and success stories of farmers across the country.
“The second revolution in agriculture will come from technology and marketing,” Kant said.
Pawan Goenka, Managing Director, Mahindra & Mahindra Ltd,, said: “The contribution made by our farming community is a manifestation of this new age of farming which we celebrate through our annual awards”.
As part of Mahindra Agri Village (MAV) programme, he said the company has worked closely with more than 50 villages.
“Our Prerna initative has empowered nearly 2,000 women farmers over 40 villages, through the introduction of gender-neutral farm tools for reducing farm drudgery, and dissemination of knowledge and essential capabilities,” Goenka said.
Mahindra Samriddhi Krishi Shiromani Samman (Lifetime Achievement Award) 2019 was conferred upon E A Siddiq for his immense contribution to Indian agriculture. The award was handed over to recognise his contribution of enhancing productivity of paddy (Both Basmati & Non Basmati).
The group gave awards in total 11 categories.
Mukesh Ambani bails out Anil in Ericsson payout case day before SC deadline
Mumbai: Billionaire Mukesh Ambani stepped in to bail out younger brother Anil Ambani by helping him repay Reliance Communications’ (RCom’s) dues to Ericsson. The last-minute rescue spares the younger Ambani a three-month jail term for contempt of court.
RCom cleared the entire dues to Ericsson India to purge the contempt of a Supreme Court order. The debt-ridden company had already paid Rs 118 crore of the Rs 550-crore dues. In addition, the company had paid around Rs 3 crore in penalties to Ericsson.
“My sincere and heartfelt thanks to my respected elder brother, Mukesh, and Nita for standing by me during these trying times and demonstrating the importance of staying true to our strong family values by extending this timely support,” said Anil Ambani in a media statement. RCom had time until Tuesday to make the payment, failing which Anil Ambani, its chairman, would have had to serve a three-month jail term, according to the court’s order.
Probing Amazon, Flipkart for alleged violation of foreign exchange law: ED
New Delhi : Investigation has been initiated against e-commerce giants Amazon and Flipkart for alleged violation of foreign exchange law, the Enforcement Directorate (ED) Monday informed the Delhi High Court.
A bench of Chief Justice Rajendra Menon and Justice A J Bhambhani noted the submissions of the ED that a case has been registered under provisions of the Foreign Exchange Management Act (FEMA) against the two companies and disposed of a PIL which has alleged that the e-commerce giants were violating foreign direct investment (FDI) norms.
The court had earlier sought response of the central government, Amazon and Flipkart to the plea which has sought a probe into the alleged FDI violations.
The ED, in its reply filed through central government standing counsel Amit Mahajan, has said the “department has already registered and initiated investigation under the provisions of FEMA against the two companies to ascertain whether they have been contravening any provisions of FEMA or contravening any rule, regulations, notification, direction or order issued in exercise of the powers under FEMA….”
The agency also sought dismissal of the petition.
The petition by an NGO, Telecom Watchdog, also asked for initiation of legal proceedings against the two e-commerce companies under the FEMA for alleged violation and circumvention of FDI norms.
The plea, filed through advocate Pranav Sachdeva, has claimed that Amazon and Flipkart have created multiple entities to circumvent the FDI norms and route the hot-selling stock at cheaper rates.
The petition has contended that according to Press Note 3 of 2016, which regulates FDI in e-commerce, entities like Amazon and Flipkart are not to exercise ownership over stock, nor directly or indirectly influence price of goods and services sold on their marketplace.
It claimed that by creating name lending companies, Amazon and Flipkart buy branded goods in bulk at discounts from manufacturers and render small sellers uncompetitive by a wide margin, thus influencing the prices in violation of the FDI norms.
“As a consequence of this FDI norms violation, smaller sellers are unable to participate in the fast growing e-commerce sector,” the plea has contended, adding that due to subsidised prices on such platforms, small sellers are unable to sell in the brick-n-mortar world too.
Besides, the plea has also claimed that the two e-commerce firms have created several other group companies in the chain to divide discounts and losses.
“Exchange offers, EMI costs and bank offers are funded completely or substantially by Amazon and Flipkart and constitute a clear influence on price in violation of FDI norms,” it has alleged.