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April 18, 2001
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Tata, SIA end due diligence of Air-India

Singapore Airlines, which is bidding for a 40 per cent stake in state-run Air-India in tandem with India's Tata group, has finished examining the company's financial records and internal workings, an Air India official said on Wednesday.

The only other bidder, the billionaire Hinduja brothers, will start performing due diligence on the long-haul airline on Wednesday, the Air-India official added. The Hindujas are being advised by Lufthansa Consulting GmbH, a unit of the German air carrier Lufthansa.

"Tata-SIA group has finished performing due diligence. The Hindujas start now and end the process on April 30," the Air-India official said.

The Indian government hopes to complete the sale by June.

Analysts have not put a price tag on the money-losing airline, saying not enough is known about its finances and operating costs.

Air-India has said it expects to post a loss of Rs 500 million for the year ended on March 31, marking its seventh consecutive year in the red.

Management control

India's Department of Divestment has started preparing a shareholders' agreement for Air-India in consultation with the two bidding groups, a department official said.

The shareholders' agreement will spell out how much management control the winning bidder enjoys as against the control exercised by the Indian government.

Though the Divestment Department is pressing ahead with the Air-India sale process, analysts have said that ultimately political issues will dominate this high-profile privatisation.

The government has failed thus far to settle a six-week-old strike at newly privatised aluminium maker Balco, which was seen by economists and political commentators alike as a test of the federal government's ability to press ahead with privatisation.

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