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Government releases letters to IA, A-I bidders for access to data room

BS Economy Bureau

The government has dispatched the offer letters for access to data rooms of Indian Airlines (IA) and Air India (A-I) to the four bidders so that they can initiate the process of due diligence for the national carriers.

Following the completion of the due diligence, bidders will be asked to submit detailed technical and financial bids.

Sources on Tuesday confirmed that at a joint meeting of the inter-ministerial groups for the divestment of the two state-owned airlines, that lasted 45 minutes on Friday, it was decided that the four bidders -Hindujas for Air India and Indian Airlines, Videocon for Indian Airlines and Tata-SIA for Air India be granted immediate access to the data rooms for commencing of due diligence before submission of the detailed technical bids.

The technical bids, will then be followed by financial bids. The bidders, along with their respective consortium partners, had submitted their initial technical proposals on February 23.

However, the government took nearly a month to get back to the bidders to invite them for the next stage as it was trying to ascertain the source of funding that the bidders would use for picking up government stake in the two airlines.

Sources further said that the security clearance for the four bidders had been obtained from the intelligence agencies prior to the finalisation of technical partners by the bidders.

At present, there are two companies each in fray for picking up government stake. The cabinet committee on divestment has already cleared the proposal to sell 40 per cent stake in Air India and 26 per cent government equity in Indian Airlines.

In response to its advertisement calling for expression of interest from the prospective partners, with a net worth of over Rs 10 billion, the government received five bids for Air India and four for Indian Airlines. While three bidders for Air India were disqualified for not meeting the net worth criteria, two bids for Indian Airlines were rejected on the same grounds.

The government had initially said that the entire process would be completed during the current financial year but due to the condition of mandatory clearances from the government, the process is now expected to be completed only around the end of the first quarter of the next financial year.

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