The Air India employee consortium that had put in an Expression of Interest for the privatisation of the national airline, hasn’t made it to the next round of divestment.
In a letter to Air India employees on March 8, the airline’s Commercial Director Meenakshi Malik said that the consortium hasn’t been shortlisted.
“As of late last night, I have seen an email from the Transaction Advisor to the Government of India (Ernst & Young LLP), informing the Employees of Air India that we have been unsuccessful in qualifying to the next phase of the ‘Disinvestment Acquisition process’,” she said. Malik was leading the employee consortium.
Moneycontrol has seen a copy of the letter.
“While I write to you with a heavy heart on the outcome of our bid to acquire Air India, I cannot help but be filled with a great sense of pride and admiration for the sincerest efforts we have made over the last few months, together,” Malik said in the letter.
She then proceeds to quote from the mail that was sent to her by EY:
“The EOI and the supporting documents submitted by you have been duly evaluated and have been found to not fulfil the eligibility requirements set out in the Preliminary Information Memorandum (as amended) (PIM) issued in respect of the strategic disinvestment of Air India Limited (AI) and is liable for disqualification, including on account of:
(A) non-submission of required three years audited financial statements for foreign consortium member…….;
(B) non-submission of information or details by IB ……for investments in offshore companies, which form substantial part of Net Worth of foreign consortium member…….; and
(C) the Foreign consortium member not being an appropriately regulated Foreign Investment Fund as defined in the PIM…… Accordingly, we hereby inform you that, you have been disqualified from proceeding to Stage II of the strategic disinvestment of AI.”
With the exit of the consortium, which had later also got support from NRI businessman Laxmi Prasad and his Interups Fund, Tata Sons becomes a clear favourite to buy Air India. Sources added that SpiceJet may also be in the reckoning.
A Business Standard report had said that Pawan Ruia, the Kolkata-based businessman, had also put in an EoI.
The latest development comes after the Government in December 2020 said it will not make an announcement on the short-listed bidders on January 5, as was originally planned.
“Post completion of the evaluation of the EOls received, the Transaction Advisor will directly intimate the Qualified Interested Bidders (QIB) in relation to their qualification and the next steps for the Proposed Transaction,” the Department of Investment and Public Asset Management, or DIPAM, had said on December 30, in the eleventh corrigendum to its invitation for expression of interest (EoI) for Air India.
The deadline to submit physical bids was December 29.
Now the second stage of the privatisation will begin. In this stage, the shortlisted bidders, probably Tata Sons and Spicejet, will be given request for proposal (RFP), which will have additional details on the divestment. This will be followed by the bidders placing a financial bid.
Apart from Air India, the government will also sell Air India Express and of 50 per cent shareholding in Air India Airport Services Private Ltd.