The group of ministers led by Amit Shah will meet the reserve price of Air India, the debt

NEW DELHI: going completely to sell Indian air this time after the failed offer of the Modi 1.0 government, it is expected that the group of ministers (GoM) led by the interior minister of the Union, Amit Shah, decide the reserve price of the national operator and take care of its large debt .

Among other issues are the golden handshake for personnel who reach a certain age and extend medical facilities to those who have already retired or would retire in the coming years.

Official sources said the government is almost determined by a complete exit and making the necessary changes in the eligibility criteria and other terms to align it with the needs of potential investors.

"Major decisions left are fixing the fair price of Indian air and handling the debt. Then contours of the disinvestment and retaining employees are other issues," said an official.

The meeting schedule of the group of ministers has not yet been decided, but is expected shortly. In addition to Shah, the ministerial panel has as members the finance minister Nirmala Sitharaman, the minister of commerce and railroads Piyush Goyal and the civil aviation minister Hardeep Singh Puri.

The previous Modi government had abandoned the divestment plan citing an adverse operating environment with the increase in world crude oil prices and the weakening of the rupee against the dollar. The sentiment of the investors was also lukewarm.

Above all, an impending general election did not make political sense to go for disinvestment of Indian air which is generally associated with the country's pride and sometimes termed as "jewel of the nation."

While the country's aviation environment has changed in the last one year with Jet Airways out of the scene now, experts see prevailing conditions better than May, 2018 when not a single bidder showed interest for Indian air at EoI (expression of interest) level.

Kapil Kaul, CEO (South Asia) of the Asia-Pacific Aviation Center (CAPA) based in Sydney, sees the current operating and investment environment better than last year. He sees investors showing interest in the national operator whenever some of their problems are resolved.

The closure of Post-Jet Airways, the dynamics of supply and demand are more stable. Oil is expected to remain below $ 60 and is at Rs 71-72, indicating favorable trading conditions compared to the last fiscal year, Kaul said.

Globally, the funds are available for the right project subject to favorable investment conditions, he added.

Indian air has a total debt of about Rs 60,000 crore. The cumulative loss of the national carrier is to the tune of Rs 70,000 crore. In the financial year ending March 31, 2019 the airline is estimated to have reported a loss of Rs 7,600 crore.

In a previous decision, the government had decided to transfer a debt of Rs 29,464 crore along with other non-core assets to the newly created SPV to attract the interest of the bidder to the operator.

Asked if there would be enough investor interest for Indian air this time around, Dhiraj Mathur, partner, PwC said that it certainly gives a good opportunity to anyone planning to enter Indian aviation. But he sounded cautious about foreign entities lining up for the carrier.

"With Jet Airways almost out of the picture now, anyone with aspirations of entering the large and growing Indian market, Indian air is a very attractive option. Now, the issue is fair price. Without going into numbers and the books it is difficult to assess the floor price," he said.

Mathur noted that a lot of things have changed from then (when the bid for Indian air was invited early last year) and now especially on the global market front.

"For various reasons, including the looming trade war there is a lot more uncertainty now than there was earlier. But having said that I am positive. Certainly the fundamental value of Indian air has not diminished and it remains a good asset. It is a very good opportunity for anyone who wants to enter the Indian market," he added.

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