Veteran banker Deepak Parekh lauded the government’s efforts to find a suitor with a strong price bid for one of its most complex and challenging disinvestment deals – the sale of Air India.
“It is a great achievement by the government to find a winning bidder for Air India and definitely gives them credence with the Tata’s being chosen,” said Parekh, chairman of HDFC Ltd, in a quick tete-a-tete with Moneycontrol shortly after the official announcement by the government. The Tata Sons bid, which had an enterprise value of Rs 18,000 crore, was comfortably above the government’s reserve price of Rs 12,906 crore.
Highlighting the positives for the Narendra Modi regime, Parekh added, “It will stop bleeding the exchequer and the government’s liabilities will come down. The cash losses of Air India every year were being funded by the government and now that will stop.”
Air India, reeling under losses, has for several years survived from a government bailout.
On October 8, an empowered panel of ministers led by home minister Amit Shah approved the winning bid submitted by a wholly-owned subsidiary of Tata Sons. The decision marks the end of a process that began back in June 2017 and encountered many hurdles along the way in terms of deal structure and modalities, not to mention COVID-19, which crippled the travel and aviation segment.
So is the disinvestment of Air India aka The Maharaja a ‘1991’ moment for India?
An optimistic Parekh says, “The government has taken a few hard decisions and hopefully if by March, they are able to do one or two more of such disinvestments, then it will be like a ‘1991’ moment.”
And what about Air India returning to the stable of the Tata Group after a gap of more than six decades?
“Delightful news of Air India returning to the house of the Tatas. The quality of service, fleet, and punctuality will improve,” said Parekh.
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