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India to ask Air-India suitors for business plans

The Indian government said on Friday that it will soon set a date for shortlisted bidders for state-owned Air-India to submit their preliminary business plans for the money-losing carrier.

The move will be the next stage in the high-profile privatisation of the international airline which the government hopes to complete by the end of March.

The shortlisted bidders will also have to give the government details about any members of their consortiums who have not been announced, a senior government official said.

This is to allow intelligence agencies to vet the names to see whether any pose a threat to India's security interests, the official, who declined to be identified, said. Last month, the government closed bids for sale of Air-India and domestic carrier Indian Airlines. It got at least six bids for the international flag carrier and three for the domestic airline.

Bidders for Air-India include Singapore Airlines, along with India's Tata Group, Dubai's Emirates, Air France in league with Delta Airlines and British-based business barons L N Mittal and the Hinduja brothers.

Set date

"We will soon issue the date by which the shortlisted bidders will have to name their consortium members and submit their technical proposals," the official said. Technical proposals refer to the bidders' business plans.

The government has refused to identify the shortlisted bidders.

However, it said that two to three had been knocked out because they did not qualify on grounds such as minimum net worth.

On Friday, the government invited shortlisted bidders for both Air-India and Indian Airlines to sign confidentiality agreements, the official said.

The agreements precede invitations to carry out due diligence. Only when the bidders have finished looking at the airlines' books will they put a price on their offer and submit a final business plan.

The government has not put a price tag on Air-India or Indian Airlines and analysts say not enough is known about the airlines to come up with a valuation estimate.

The government is selling up to 40 per cent of Air-India. Twenty-six percent can be bought by a foreign airline.

In case of Indian Airlines, it plans to sell 26 per cent stake, but bidding is limited to local firms, non-resident Indians and foreign firms majority-owned by expatriate Indians.

Bidders for Indian Airlines include the Tata group, the Hindujas and consumer durables firm Videocon International.

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