I have 2 suggestion on capital raising for the debt-laden National Aviation Company of India Limited (NACIL) i.e., Air India. In both cases, the controlling interest will remain with the Air India holding company – NACIL.
1. Stake Sale & Listing of Profitable Subsidiaries
From the point of view of External Business Environment – this appears to be the right time for Indian aviation companies to hit the Dalal Street, with oil prices at their lowest, revival in IPO market and a re-rating of the Indian Civil Aviation Sector post the successful IPO of IndiGo.
Air India Express Limited – which owns and operates the profitable no frills low cost airline serving Middle East and ASEAN – Air India Express and Air India Air Transport Services (AIATSL) which handles the ground handling operations at various Indian Airports – may be listed on the Indian Stock Exchanges with NACIL divesting upto 49% Stake divided appropriately between Fresh Issue (proceeds for expansion of the subsidiary business) and Sale by NACIL (towards debt repayment of Air India and operational purposes of Air India).
2. REIT (Real Estate Investment Trust) issue for the iconic properties of Air India – such as the Air India Building in Mumbai and New Delhi, already let out by Air India. The operational control can be retained by NACIL as Trustees of the REIT.
Notes:
1. The Mint, 5 Feb 2016, Air India Express to clock net profit of Rs 200 crore in FY16.
2. The Economic Times, 8 Feb 2016, Air India ground handling unit reports profits for the first year of its operation.
CA Nirmal Ghorawat's Blog 