In a major setback for the Narendra Modi government, there are no takers for its prized Maharajah. The government's high profile asset sale has not been able to take off during its first attempt to sell the national carrier.
This is a rerun of a 17-year old story when the Vajpayee led government tried to sell Air India and Indian Airlines through a strategic sale but failed to attract investors in 2000.
The present government's first attempt has also been a no show despite experts suggesting that some serious bidders approached the government.
"I am surprised there has been no response. We were expecting a last minute rush but this is surprising to me," said Kapil Kaul of CAPA.
Aviation Secretary RN Choubey held a media briefing after a tweet from the aviation ministry's official handle that the future course of action will be decided soon.
"We were looking forward to better participation going by the buzz from investors..current bid process cannot proceed further as there is no interest. This process has been a great learning experience. We are now in a better position to judge what the market wants," said Choubey.
When questioned about what went wrong, Choubey said he would not like to jump the gun, but agreed that divestment norms need to be tweaked.
"We were under the impression that government has not left anything ambiguous. Government has no intention of controlling the airline's operations after its handed over to the buyer...but yes employees need to be protected.. and the government is taking over a substantial portion of debt through the SPV (special purpose vehicle)," he added.
No Indian and foreign Airlines have shown interest since the process began. Debt of Rs 33,300 crore, labour concerns and government retaining 24% stake in the new entity have been major concerns.
Back to Square One:
According to the secretary a new timeline will be set for the Maharajah's divestment. The process now involves gathering information from the transaction advisor about shortcomings in the present divestment terms.
These concerns will then be taken up by the evaluation committee and core group on divestment headed by Cabinet secretary. However, the final decision regarding changing the contours will lie with the Finance Minister led alternate mechanism or group of ministers that will decide the next course of action.
Government will be rethinking its existing divestment architecture, strategy and terms for Air India stake sale and whether retaining 24% stake should be considered once a new timeline is decided.
On asked whether the transaction advisor Ernst & Young will continue to guide the government regarding this big ticket divestment, the aviation secretary said, "for now they will continue but final decision will be taken in due course."
Choubey added that the government does not want Air India to lose its market share and it will be a priority to take a call on airline's current expansion plans.
However, Choubey refused to comment on whether the government will be able to meet its target of divesting Air India by 2018 or will it get pushed to post 2019 general elections.