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June 8, 2001
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Money > Business Headlines > Report June 8, 2001 |
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FIs may hold 25 per cent IA stake before public issuePuja Mehra & Mamata Singh The government is considering a proposal to park 25 per cent equity in Indian Airlines with financial institutions for the interim period, pending an initial public offer. The rationale for the move, according to sources, is that since IA shares are presently rated below par, the government will not tap the primary market till the company turns around. The government is, however, expecting the strategic sale of 26 per cent of its equity in the carrier within the next 3-4 months. The parking of 25 per cent stake with FIs would ensure that the government stake in IA falls below the 50 per cent mark, making IA a joint sector company. It would no longer be governed by public sector enterprise rules, enabling a "real" transfer of management control to the strategic partner. The proposal has been endorsed by Videocon International, the frontrunner in the race for the 26 per cent government stake in the national carrier. "We do not want to be (a stakeholder) in a company that is a public sector unit. It would be impossible to turn around IA as per our business plan if it is governed by rules laid down for PSEs and with the CBI investigating all our deals and appointments post acquisition," a senior Videocon group executive said. Civil aviation ministry officials confirmed that the consumer electronics giant has said it would withdraw its bid if the government did not reduce its holding in the national carrier to below 50 per cent before completion of the sale for 26 per cent stake. "A decision on the proposal was pending," an official said. When contacted, a top official from the department of divestment said the proposal had not been submitted to them. He, however, added: "If the ministry of civil aviation does not raise any objections, we are open to the suggestion." The Cabinet committee on divestment had approved sale of 15 per cent government equity in IA to the public and earmarked another 10 per cent as Esop in its meeting in May, 2000. Powered by YOU MAY ALSO WANT TO READ:
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