India to Complete the Sale of Air India, Bharat Petroleum by March 2020

Published November 18th, 2019 - 12:30 GMT
India to Complete the Sale of Air India, Bharat Petroleum by March 2020
Data shows Air India's total debt was Rs583.52 billion at the end of March 2019. (Shutterstock)
Highlights
Strategic disinvestment of two state-run companies critical for Delhi to meet Rs1T target

The government of India will complete the sale of two iconic public sector companies - Air India and Bharat Petroleum Corporation Limited - by March 2020.


The strategic disinvestment of the two state-run companies is critical for the government to meet its disinvestment target of Rs1 trillion for the current fiscal year, Indian media reports said on Sunday, quoting Finance minister Nirmala Sitharaman.

According to Sitharaman, there is a "lot of interest" among investors about the sale of Air India as seen in the international roadshows although the government had to shelve plans for Air India's stake sale earlier due to lukewarm response by investors.

"We are moving on both with the expectation that we can complete them this year. The ground realities will play out," Sitharaman was quoted as saying in an interview.

Data shows Air India's total debt was Rs583.52 billion at the end of March 2019. The national carrier incurred a net loss of around Rs84 billion in the financial year 2018-19.

In the previous year, the carrier reported an operating loss of around Rs46 billion, mainly due to rise in fuel prices and higher costs as Pakistan closed its airspace for Indian carriers which resulted in higher costs and caused a daily loss of Rs30-Rs40 million.

At the close of market on October 4, leading refiner BPCL had a market capitalisation of about Rs1.11 trillion. A government stake sale could get upwards of Rs600 billion. Ahead of the move to fully privatise the two entities, the government had repealed the legislation that had nationalised the company, doing away with the need to seek parliament nod before selling it off to private and foreign firms.

In 2003, the Supreme Court ruled that BPCL, as well as Hindustan Petroleum Corporation, can be privatised only after parliament amends a law it had previously passed to nationalise the two firms.

She said the government took measures to reverse the economic slowdown at the right time and several sectors are coming out of distress.

The minister added that the industry captains had contributed to improving their balance sheets and many of them were also mulling fresh investments. She expected GST collections to revive following an improvement in sales in some segments as well as government's recent efforts to plug leakages.

Sitharaman also claimed there were indications of revival in consumer sentiment, which was exhibited in demand of around Rs1.8 trillion in loans from banks at the outreach programme during the festival season.


Copyright © 2019 Khaleej Times. All Rights Reserved.

You may also like