Privatization in business and air India.

1. PRIVATIZATION IN
BUSINESS AND AIR
INDIA
PRESENTED BY :ABHILASH VIJAYAN & ABIN SEBASTIAN,
MIIM KUTTIKKANAM
Mail id: abhilashvijayanunofficial@gmail.com

2. Privatization
• Privatization is the process
of transferring property
from public ownership and
transferring the
management of a service
or activity from
government to the private
sector
• Privatisation can be
partial or complete

3. Reasons For Privatization
• Cost reduction
• Risk transfer
• Source of revenue
• Quality of service
• Expertise
• Timeliness
• Flexibility

4. Major Arguments Against Privatisation
• Focuses on profit
maximization
• Lack of transparency
• Supports corruption
and encourage
malpractices
• High employee turn
over
• Govt loses out an
potential dividends

5. Major Public Sector Companies in India
• Indian Oil Corporation Limited (IOCL)
• Oil and Natural Gas Corporation Limited (ONGC)
• Bharat Petroleum Corporation Limited (BPCL)
• Hindustan Petroleum Corporation Limited (HPCL)
• National Thermal Power Corporation (NTPC)
• Coal India Limited (CIL)
• State Bank of India (SBI)
• Power Grid Corporation of India Limited (PGCIL)
• Gas Authority of India Limited (GAIL)
• Bharat Heavy Electricals Limited (BHEL)
• Air India

6. Maharaja of
misfortunes
is privatization of air India a
good idea?

7. 2018: India govt tried to privatize air India but failed
2020: India govt approved a new proposal to divest 100% stake in air
India.

8. Reasons For Downfall
• No profit
• Debt of ₹58,283 crore
• Poor performance
• Mismanagement
• Too many employees
• Corruption

9. Reasons For Downfall
• Failure of 2012 turnaround
plan
• Market economy
• Opportunity cost
• COVID-19’s impact of Air India

10. A privatized Air India could not possibly
be worse and like will be much better

11. Pros Of Privatization
• Operational efficiency
• Investor sentiments
• Opportunity cost
• Boom in aviation industry
• Paving the way for
disinvestment
• Tourism sector
• Private sector
• Social sector

12. How the government can proceed?
• Excluding debt
• Piecemeal approach
• Equity capital
• SPV
• Selling minority stake

13. Arguments against privatizing Air India
• Interests of employees
• Social obligations
• India needs a national airline

14. Challenges in privatizing Air India
• $4 billion question
• Issues related to current employees
• Restructuring

15. Who can bid for the acquisition of Air India?
• The one who has at least 5 years of experience in
providing similar advisory services for disinvestment,
strategic scale, merger and acquisition activities, private
equity transaction etc.
• Should have advised, handled or successfully completed
at least one transition of merger, takeover, strategic
disinvestment, private equity transition of the size of
Rs.4000 crore or more
• The bids will be invited on Equity and Debt. In the
current PIM, the Debt left in the company would be
Rs23,286 crores

16. Prospective Bidders For Air India
• Indigo
• vistara
• Spice Jet
• Emirates/Qatar/Etihad
• Bird Group

17. Prospective Bidders For Air India
Non-airline
• Adanis
• Vedanta
• Reliance
• Naresh Goyal (Jet Airways
founder) with an investing
partner
• Tata Group
• Bird Group

18. Our Take On The Issues
• Clear the balance sheet
• No involvement of government
• The best owner for Air India
• Special business units, including Air India Engineering,
catering, ground handling etc should be sold
separately to raise capital that can be used to retire
debt.

19. PRIVATIZATION COULD BE BITTER, BUT IT IS LIFE
SAVING DRUG FOR AIR INDIA………………
THANK YOU……..