The Indian government may relax the requirement for Air India disinvestment by allowing a company with a proven track record of running a successful airline to bid even if its net worth is negative.
However, non-airline companies may be told to satisfy minimum net worth conditions to prove their financial strength, reported the Business Standard.
Earlier the evaluation committee had suggested that all bidders must meet a minimum net worth criterion, however, member of the Core Group of Secretaries on Disinvestment (CGD) pointed out that setting high net worth as an eligibility condition would block the prospects of many airline companies.
The core group has now suggested that a company with a proven track record of running a successful airline be allowed to bid even its net worth is negative.
“The committee of secretaries opined that aviation as an industry often has to withstand external economic or market downturns and long periods of revenue losses or low profit margins, which can result in a negative net worth despite the airline’s operating performance being strong,” an official was quoted by Business Standard. “A high net worth criterion will disqualify many international airline groups,” he added.
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