Is the government planning to push through the Air India sale this year?

The government is perhaps racing against time to pick up as much of proceeds as possible from the disinvestment process in this year. With LIC likely to get put off to the next year, Air India and BPCL are the two big stories that the government is counting on.

In a bid to monetize the government holding in Air India with a simpler and more elegant model, the government has once again relaxed bidding norms. To begin with, it has extended the deadline for submitting bids from October 30 to December 14.

In addition, the bidders can now also quote based on enterprise value or EV rather than equity value. The aviation minister has also confirmed this and hopes that it would attract bidders since they used debt amount as the minimum bid till date.

EV includes the equity, debt and the cash in the books of the company so the valuation of the enterprise gives a broader picture and a wider platform to play on for value. The only condition laid by the government is that any willing bidder will have to pay 15% of the quoted amount upfront.

It is estimated that the buyer will have to assume Rs.23,285 crore of debt of Air India, where the government guarantee will be withdrawn post the sale. The debt will subsequently be priced on market driven formula. Tatas are supposed to be ahead in the race for Air India.