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Panel seeks enhancement of IA, A-I equity base

A parliamentary panel has recommended enhancing of the equity base of Air-India and Indian Airlines and asked the government to come up with a proposal for financial restructuring of the two carriers if required.

Stating that both the airlines had an authorised capital of Rs 5 billion each and paid up capital of over Rs 1 billion, the Standing Committee on Transport and Tourism said, "this low equity base has resulted in curtailing their borrowing ability".

Hence, it was of "immediate necessity to enhance the equity base of both the airlines to enable them to achieve a healthy debt-equity ratio and also enable them to go in for further borrowings", the 45-member panel said in its report tabled in Parliament on Tuesday.

While appreciating the government decision "to strengthen the airlines instead of going in for divestment", the Committee, headed by Communist Party Marxist leader Dipankar Mukherjee, said the civil aviation ministry "should come up with the proposal of financial restructuring, if necessary, for both the airlines".

The Committee said it had been informed that the finance ministry had "committed" to contribute to the Indian Airlines equity linking it to the acquisition of aircraft.

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