M A I N   N E W S

Who will own the ‘Maharaja?’
CCS to decide on Friday
Tribune News Service

New Delhi, July 4
The question of who will own the “Maharaja” — Hindujas or Tata-Singapore Airlines — would be clear when the Cabinet Committee on Security meets here on Friday to finalise the guidelines for the bidders.

The Cabinet Committee on Disinvestment, which met for the second time today, decided that the strategic partner of Air India would not be allowed to sell or transfer controlling interest to any “prohibited person” due to security reasons.

Disinvestment Minister Arun Shourie told newspersons tonight that provisions had been made to ensure the strategic partner would never be able to pass control of Air India to any “prohibited person”, which would be determined by the Home Ministry.

The strategic partner would not be allowed to transfer any share to any new holder without clearance from the Union Home Ministry.

The strategic partner would have to disclose the source of funds and the company to which they would like to transfer the share prior to such transfer.

The CCD also decided the management at all times would be in the hands of the Indians. It was decided that two-thirds of the board members would be Indian nationals and the Chairman and Managing Director of Air India would always be an Indian.

Air India currently had a Rs 3200 crore debt and had been borrowing even for its working capital and its interest on debt ran to about Rs 100 crore per annum, Mr Shourie said, responding to allegations by some political parties on the valuation of Air India.

Tata-Singapore Airlines combine and Hindujas are in the bid for the control of Air India. While the Tatas had allegedly funded the ULFA militants in Assam, the Hindujas are alleged to have received kickbacks in the Bofors gun deal.

The government has decided to offload 40 per cent stake in the national air carrier to a strategic partner with a cap of 26 per cent on foreign investment.

Asked whether the government would go ahead with the disinvestment process if only one bidder was finally left in the race, Mr Shourie said, “If the bid amount is above the reserve price, then the bid would be completed.”

The CCD today approved proposal for the ESOP for Air India employees. The Rs 10 share would be sold to the employee at par. There are about 19,000 AI employees. Those purchasing the share would have a lock-in period of one year.

On the question of retrenchment, the minister said in the first year the strategic partner would not have the right to retrench the employees.

In the subsequent years, the strategic partner could downsize his staff strength, but would have to provide “generous” voluntary retirement scheme and the process of retrenchment should be in accordance with the laws.

In a major policy decision, the CCD decided that it would allow even those companies to bid for such companies whose ownership would result in complete monopoly of the product.

For Hindustan Zinc Limited, whose disinvestment is being considered by the government, and the primary bidder is Benani Zin. The Union Minister said the CCD was of the view that even if the new company by taking over the management control of HZL has the monopoly of the product in the company, the provision of “abuse of monopoly” as per the new Competition Bill would be the guiding principle.

The CCD decided to invite bids for the Hindustan Teleprinters Limited (HTP). The government has 74 per cent stakes in the company.

The CCD also cleared the draft shareholding agreement of CMC and would now call for financial bids.

On the ITDC shares owned by the Tatas, the CCD decided they would be sold along with the share of the government. Tatas own 10 per cent share in the ITDC.

The CCD also decided to form shell companies for the ITDC and IBP, so that they could be de-merged from the parent companies.

“The process is on for disinvesting government stakes in 22 hotels of the ITDC in addition to four hotels to be given on lease. Individual hotels will be demerged and shell companies will be set up,” he said.