Singapore_Air From United Kingdom, joined Nov 2000, 13753 posts, RR: 18 Posted (14 years 1 month 1 day 12 hours ago) and read 4121 times:
Hindujas' Air India bid blocked
Air India's value does not lie in its fleet
The Indian government has disqualified the UK-based Hinduja brothers from bidding for a stake in Air India, leaving just one bidder for the loss-making airline.
The blocking of the Hindujas' bid had been widely expected
Analysts expect Singapore Airlines and the leading Indian industrial group Tata to win the day and take a 40% stake in the carrier, even though the privatisation minister Arun Shourie said the bidding process would now be reviewed.
The blocking of the Hinduja brothers' bid had been widely predicted.
The brothers have faced accusations of involvement in a bribery scandal during the 1980s involving a $1.3bn arms contract with the Indian army which was won by the Swedish weapons maker Bofors.
And although they deny having done anything wrong, they were disqualified on grounds "based on guidelines relating to law and indictments by regulatory authorities," the minister said.
No price tag has been put on Air India by the government or JM Morgan Stanley, the bank advising on the sale, because of its allegedly vague asset register.
At 700 employees per aircraft, job losses seem inevitable following the sell-off
Some reports value it at $2.6bn (£1.85bn).
However, on Thursday the government said at least two-thirds of the board of directors, the chairman and the managing director of Air India should be Indian nationals.
And it said it would retain the right to nominate three board directors, with a further four being appointed in consultation with the buyer of the 40% stake.
Such insistence on retaining control could have a negative impact on the airline's market value.
Even so, last week India's government said it would go ahead with the Air India sell-off as long as the reserve price was met, even if there was only one bidder left in the race.
The airline's true worth does not lie in its 25 aircraft, or even in its 18,000-strong workforce, which at more than 700 workers per plane is double the industry standard. Job losses are expected after the sell-off.
Investors will not be impressed by the company's bottom line either, given that Air India has lost money for seven years and has amassed 38bn rupees in debt.
But underlying the balance sheet are a number of valuable assets.
The airline has bilateral rights to fly to 96 destinations, but only uses 19 because of its small fleet.
These rights, which include London, New York, Paris and Chicago, can be leased to other carriers.
The new stakeholder would also gain a strategic hub, access to a huge and growing Indian travel market, a popular brand name and large, undisclosed land holdings.
In addition, the Indian government has committed to further investment saying it wants to double the number of operating aircraft in the next five to seven years.
Foreign airlines can bid for a maximum of 26% of Air India, while 14% must be held by an Indian partner.
Employees and financial institutions will be offered 10% each, with the rest being retained by the government.
If the Tata group gained control of Air India, the carrier would revert to its original owner. Tata pioneered aviation in India in the 1930s, but the airline was nationalised and renamed Air India in 1953.
Singapore_Air From United Kingdom, joined Nov 2000, 13753 posts, RR: 18
Reply 1, posted (14 years 1 month 1 day 12 hours ago) and read 4114 times:
Hindujas disqualified from race for Air India
By Unni Krishnan
NEW DELHI (Reuters) - The billionaire Hinduja brothers, three of whom face arms kickback charges in India, have been ruled out of the race to buy control of international flag carrier Air India, the government announced on Friday.
The Hindujas were also disqualified from bidding for a 26 percent stake in domestic airline Indian Airlines. Indian consumer durables giant Videocon International, named by regulators in an alleged share-rigging scandal, was eliminated as well from the contest for Indian Airlines.
"On the Hindujas the view was...if you've been charge-sheeted, it wouldn't be right to hand over a large concern, an aviation firm, to such a company," Privatisation Minister Arun Shourie told reporters.
Shourie said Air India's sale would proceed even though only one bidder, Singapore Airlines (Singapore: SIAL.SI - news) in combination with the Tatas, a leading industrial group, was left, as long as the offer met the government's reserve price. The next stage in the sale will be the government's call for price bids.
The loss-making flag carrier's sell-off is seen as a litmus test of the government's commitment to privatisation of large state-run companies.
But Shourie said the government was reviewing the sale of money-losing Indian Airlines which now has no bidders.
Shourie made the statements after a meeting of the government's privatisation panel which set new eligibility rules for companies bidding for state firms. Under the criteria, any firm or sister concern charged or convicted in a security-related matter would be disqualified from bidding.
The Hindujas had made the bid for Air India through Indian vehicle-maker Ashok Leyland which they control.
SETBACK FOR HINDUJAS
The decision was the latest blow for the Hindujas who were at the centre of a bitter political row in Britain earlier in the year over links with the Labour government of Tony Blair and the financing of the Millennium Dome, a key government project.
Last October, three of the four Indian-born Hinduja brothers were charged under India's anti-corruption act over allegations that they received illegal kickbacks from Sweden's Bofors in a $1.2 billion artillery sale to the Indian army in 1986.
Two of the accused tycoons, Srichand and Gopichand Hinduja, are British citizens while the third, Prakash Hinduja, is a Swiss national. The date for their trial has not been set.
There had been widespread media speculation they would be barred from bidding because of the charges. The brothers, whose interests span media, banking and oil, deny any wrongdoing.
"As far as Videocon, which expressed an interest for Indian Airlines, it is out of the race as it is the same company which has been indicted by regulatory bodies," Shourie said.
The Securities and Exchange Board of India barred Videocon from raising capital for three years following a probe into alleged manipulation of its shares.
Shourie said under the new rules any company barred from raising funds would be ineligible to bid for a state firm needing a big cash infusion. The rule would not apply to a firm seeking to buy a state company that did not require a lot of money.
India plans to raise 120 billion rupees ($2.55 billion) through sale of stakes in state-run firms in this financial year. It has consistently failed to meet its target in the past due to political and labour opposition.
Jaysit From , joined Dec 1969, posts, RR:
Reply 2, posted (14 years 1 month 1 day 12 hours ago) and read 4108 times:
The Govt of India will now engage in another endless round of valuation of Air India. The noisy opposition composed of the usual bunch of uber-nationalists, Gandhian noise-makers, public sector license-raj thugs (including the corrupt dunce-ish so-called Aviation Minister), labor unions, etc., are now attempting to value Air India at nearly $ 5 billion so that no bidder in their right mind would purchase this mess of an airline. Morgan Stanley has valuated AI more at about $ 500 million.
Plus, even after 40% is retained by the govt., they have no business appointing their own handchosen directors over the heads of the other new owners.
Airic From , joined Dec 1969, posts, RR:
Reply 3, posted (14 years 1 month 1 day 9 hours ago) and read 4097 times:
Forgive me, I'm a teen and don't know much on business, but I think Air India should be run by an Indian company or Indian nationalists like The Hinduja bothers. I don't know exactly what the H. bros did wrong, but I'm sure they know what's going on and what to do. I just hope someone strong can bring Air INdia back on track.
AI is in the most strategic location yet they only have two flights to Europe. If they can take advantag of AI's location, it could become one of the dominating airliners in the Asian/Pacific region.