L N Mittal may withdraw from AI, IA sell-off race

L N Mittal may withdraw from AI, IA sell-off race
DEV CHATTERJEE

MUMBAI, FEB 13: London-based steel magnate L N Mittal is likely to withdraw from the race to pick up an equity in national airliners Air-India and Indian Airlines. Mittal will be the first to withdraw from the race which leaves only the Tatas and the Hindujas as the prominent bidders for both airlines.

Mittal's reluctance to buy Air-India and Indian Airlines stems from the fact that the government has stipulated some stiff conditions in the shareholder's agreement which includes a 5-year lock-in and the government's first right of refusal if the bidder wants to disinvest from the airline.

Ispat International is expected to inform the government before the deadline to provide details on sources of funds and technical bid expires on February 23rd.

Sources in the disinvestment ministry say that the Mittals have not said anything officially as yet but their withdrawal would be a big blow to the entire disinvestment process of the Indian government. ``Every efforts would be made to keep them in the race,'' say officials.

With Mittal's departure, the race for domestic carrier Indian Airlines is now restricted to very few players which includes the Tatas, the Hindujas and the consumer durable giant Videocon group while Air-India has, apart from the Tatas and Hinduajs, Emirates-Air France-Delta combine which is still looking for an Indian partner.

It was reported in a section of press that L N Mittal would rope in British Airways as one of the partners. But the talks between the two fell through. The Hindujas are also talking to British Airways for buying both airlines.

Mittal is the second bidder to get out of the Air-India and Indian Airlines privatisation race after the Disinvestment Ministry rejected the bid made by Indian Pilots Guild saying that the latter has failed to meet the Rs 1,000 crore net worth creteria.

London-based Mittals could not be contacted for their comments. The government of India is disinvesting 40 per cent stake in Air-India and 26 per cent from Indian Airlines. Bidders are to be shortlisted after they provide details on their sources of funds and disclose other details which concerns the security requirements of the country.

The government was planning to complete the process of disinvestment of both two airlines by March, 2001 and raise over Rs 10,000 crore for the same. But the deadline for sell off has now been revised to June this year after bidders asked for more time to fix up their joint venture and financial partners.