Industry sources said that the move will favour Tatas which has not yet finalized its consortium structure through which it intends to bid for Air India. The government has eliminated the need to disclose the name of entities who have bid for state-owned carrier Air India
by any specified time. According to the existing rules of Air India
sale process, the government had to inform qualified bidders about the names by January 5.
However, the Department of Investment and Public Asset Management (DIPAM) has added a clause that eliminates any deadline by which transaction advisor EY will have to inform qualified bidders.
“Post completion of the evaluation of the expression of interest (EOls) received, the transaction advisor will directly intimate the qualified interested bidders (QIB) in relation to their qualification and the next steps for the proposed transaction,” says the new clause.
Government officials aware of the development said EY sought more time as there were several documents that had to be examined. “The transaction advisor didn’t want any deadline. He can now work on the EoI documents without pressure of a deadline. One or two days here and there will not delay the process,” a government official said.
“The bid has moved to a confidential stage where it is not mandatory for the government to disclose the name of qualified bidders. We obtained legal suggestions and then amended the rule,” the official said, pointing out that even other disinvestment processes like that of Bharat Petroleum Corporation doesn’t have such a requirement.
Without a deadline, there is no certainty as to when the process will be completed.
The finance ministry
missed the disinvestment target of Rs 65,000 crore for the year ended March 31 by Rs 14,701 crore, and it is likely to miss the target again due to the pandemic-induced economic downturn. So far this year, the government has garnered Rs 12,225 crore through minority stake sales and an initial public offering of Mazagon Dock Shipbuilders.
However, a second official said the requirement by the transaction advisor to publicly disclose the name of qualified bidders would have brought down the intensity of competitive bidding. The idea is that the bidders should not know how many have qualified as the quantum of financial bid can be impacted. In case there is less competition, potential bidders can turn conservative, which may impact the financial bids,” the person said.
In the case of Air India, it is more likely that a single bidder situation is emerging as salt-to-software conglomerate Tata Sons
is the only established entity to have submitted an EoI. While an employee consortium led by Air India’s Commercial Director Meenakshi Malik has also submitted an EoI, US-based fund Interups Inc has decided to withdraw from the race.
Industry sources said the move would help Tatas, which has not yet finalised its consortium structure through which it intends to bid for Air India.
The group is still ironing out issues with joint venture partner Singapore Airlines, with which it operates full service airline Vistara. Singapore Airlines is not keen on investing in Air India as its own financials remain precarious due to the impact of Covid-19 pandemic.
Member of Parliament and leader of Congress Manish Tewari has opposed the move. “While the expression of interest was changed by unprecedented 11 times, last one takes the cake. Implies identity of qualified interested bidders need not be divulged publicly,” he tweeted.