Notably LIC and EPFO have taken a decision to subscribe to Rs 7,400 crore bond issue of Air India. The beleaguered state-owned carrier is raising these resources to repay short-term loans to the banks from whom it has borrowed Rs 18,000 crore for its working capital needs.
Of Rs 7,400 crore issue, the LIC's share is Rs 3,000 crore while EPFO subscribes to Rs 4,400 crore. On its part, the government has announced Rs 30,000 crore bailout plan to revive Air India. On the other hand, the Kingfisher Airlines (KFA) is being pressurized by the public sector banks and the tax authorities to recover their dues even though the private sector carrier has been grounded and its staff is in distress, says Assocham.
“Both the private and the public sector companies operate in a similar environment. It is agreed that as the largest shareholder, it becomes incumbent on the government to safeguard its PSUs. But at the same time, the banks and other financial institutions should not discriminate against the private sector firms. To the extent additional equity from the main promoters, the UB group is required, we would urge them to bring in these funds so that the lenders’ comfort level is increased,” Rawat said.
The industry body said that whether it is public sector or private sector money, the resources belong to the nation which should not be allowed to go down the drain. “The Satyam Computer is a shining example how the government can effectively intervene and help revive an organization irrespective of its ownership pattern,” noted Assocham.
The apex industry body said that the closure of KFA has also led to untold misery to its employees, who are finding it hard to get new jobs in the wake of the industry itself in a big turmoil. Moreover, the enthusiasm over allowing Foreign Domestic Investment (FDI) in the domestic carriers has not found any favour among the global investors.
“After all, even in the global landscape the investment is hard to come. Except the airlines of the Middle East, the carriers in most other parts of the world are facing difficult times,” added Rawat.
He also said the answer has to be found largely from within the country. Eventually, all the stakeholders – shareholders, lenders, employees and the consumer would be the gainers if a temporary reprieve is extended to KFA.