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DIPAM invites bids for Air India sale with easy debt

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New Delhi: The disinvestment department or DIPAM has invited an Expression of Interest (EoI) from potential investors for selling 100 percent of Air India and its stake in two subsidiaries with easy bidding norms of debt and eligibility, in its second attempt to privatise the debt-laden state-run airline.

The deadline for submission of EoI for 100 per cent divestment in Air India and the airline’s stake in low-cost unit Air India Express and airport services company AISATS is March 17, according to a preliminary information memorandum issued by DIPAM on Monday.

Since the huge debt had proved unattractive for potential bidders, now, the government has relaxed bidding norms to coax investors to buy the airline. The bidding party will have to bear with only Rs 23,286 crore of the total Rs 60,000 crore debt of Air India.

As for eligibility, the lead member of a consortium can have 26 percent shareholding. The earlier criterion set a holding of 51 percent in a consortium. The minimum shareholding in a consortium has also been eased to 10 percent, potentially enabling more entities to bid as part of a consortium.

The net worth for eligible bidders has been relaxed to Rs 3,500 crore from Rs 5,000 crore.

Air India Express is a wholly-owned subsidiary of Air India. The airline owns 50 percent of AISATS. Individuals and consortia can bid for the airline.

The government has struggled at least twice in the past two years to privatise loss-making Air India due to a lack of interest from bidders.

One reason for the failure was that the government was unwilling to fully exit the airline, looking to sell only 76 percent stake.

The PIM says AI has an aircraft fleet of 121 aircraft (excluding 4 B747-400 aircraft) as on November 1, 2019, mainly comprising Airbus and Boeing aircraft such as A-319, A320, A-321, B-777 and B-787 out of which 65 are owned/on finance lease/bridge loans, 21 are on sale and lease back model and balance 35 are on operating lease.

Consolidated business in the past had a mix of real estate and aviation interests.

Government of India is now carving out real estate assets and other businesses which are not integral to the core airline business into a separate SPV along with part transfer of certain debt and liabilities (modalities have been worked out) thereby resizing the balance sheet, it said.

Earlier this month, the Home Minister Amit Shah-led GoM approved draft for inviting bids.

In 2018, DIPAM did not receive any bid in its EoI for selling 74 per cent stake in Air India.

Prior to the EoI, the stressed airline invited bids for monetizing its land and building assets through MSTC e-auction for sale of its properties across the country including Air India Holiday Home in Lonavala, many residential plots in Mumbai’s upscale areas like Bandra, Khar, Prabhadevi, flats in Asian Games village in delhi, many commercial land, buildings, flats in Bhuj, Bengaluru, Kolkata, Nashik, Pune and Trivandrum.

Cushman & Wakefield is the Property Advisor and the realty consultant of Air India.

The bids closing date is January 31, 2020. Transaction adviser EY is learnt to have advised government that for non-receipt of bids last year included the government’s decision to retain 24 per cent stake and corresponding rights, high amount of allocated debt and profitability track record and all these, sources said have been now taken care of.

Air India’s net loss in 2018-19 is provisionally estimated to be Rs 8,556.35 crore.

The government has been pumping money and hived off some debt to keep the airline aloft and ready for sale.

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Bank credit growth may rise 200-300 bps next fiscal: Crisil

Incremental net domestic credit this fiscal up to December 2019 is just a fifth of what it was a year ago.

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New Delhi, Feb 25 : Bank credit growth is set to bottom out but may rise 200-300 bps next fiscal while retail lending, supported by securitisation, will remain the key driver in the next fiscal.

The prolonged slowdown in bank lending may be bottoming out this fiscal, with gross credit offtake set to rise 8-9 per cent on-year in fiscal 2021, a good 200-300 basis points (bps) over the likely growth of 6 per cent this fiscal.

A gradual pick-up in economic activity, continuing demand for retail loans, and strong growth in lending by private sector banks should drive the uptick.

Recent policy moves announced in the Union Budget, and by the Reserve Bank of India (RBI) are also expected to provide the spur, Crisil Ratings said on Tuesday.

As for this fiscal, some growth momentum is expected in the fourth quarter, after a subdued three quarters — due to traditional fiscal year ending growth.

The RBI’s move to exempt banks from cash reserve ratio requirement for incremental credit to certain sectors for up to five years will also support lending.

Incremental net domestic credit this fiscal up to December 2019 is just a fifth of what it was a year ago.

Lending to the retail segment and non-banking financial companies showed good growth, while credit to corporates (ex-NBFC) and micro, small, and medium enterprises declined, Crisil said.

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Maruti Suzuki launches all new Vitara Brezza

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Maruti Suzuki Vitara Brezza

New Delhi, Feb 24 : Automobile major Maruti Suzuki India on Monday launched the all new compact SUV Vitara Brezza, which was unveiled at the recently held Auto Expo 2020.

The new vehicle has been priced in the range of Rs 7.34 lakh to Rs 11.40 lakh, the automobile major said on Monday.

According to the company, the new compact SUV offers enhanced sportiness, bolder looks, stronger stance, premium interiors and a host of new features.

The vehicle is equipped with the powerful 1.5 litre K-series BS6 petrol engine.

“The compact SUV will be offered with 5-speed manual and advanced automatic transmission with Smart Hybrid,” the company said in a statement.

In less than 4 years of its launch, Vitara Brezza has sold over 500,000 units.

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Dow Jones plunges 1,000 points over coronavirus fears

Earlier this month, Apple, the world’s most valuable company, rang alarm bells on Coronavirus impact on its sales.

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Mumbai, Feb 24 : The possibility of a coronavirus pandemic sent shock waves across global markets on Monday. Dow Jones Industrial Average lost over 800 points within minutes of its opening.

A sharp sell-off in US markets followed worries of further disruption in economic activity as coronavirus related deaths jumped sharply, particularly outside China.

The S&P 500 traded lower by 84.89 points, or 2.54 per cent, at 3,252.86 while the Nasdaq Composite dropped 287.27 points, or 3 Aper cent, to 9,289.32 at the opening bell.

Italy saw virus cases jumping exponentially from three on Friday morning to more than 150 by Sunday. Italy’s spike now marks the biggest outbreak outside of Asia.

In China, the epicentre of the outbreak, the coronavirus related deaths jumped past 2,600. The deadly virus has infected more than 77,000 people in China and was described by President Xi Jinping as the “largest public health emergency since the founding of the country”.

Earlier this month, Apple, the world’s most valuable company, rang alarm bells on Coronavirus impact on its sales.

Jaguar Land Rover CEO Ralf Speth also reportedly said that the company does not have enough parts from China to maintain its British production post two weeks.

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