Decision On Nacil IPO After 6 Months

It will take six more months for the government to decide on the timing, size and other modalities for the initial public offer (IPO) of National Aviation Company Ltd (Nacil), the merged entity of Air India and Indian.

There has been speculation on the timeframe within which the IPO may be announced, but civil aviation minister Praful Patel clarified on Tuesday, "We will review the merger (of Air India and Indian) after six months and then take a call (on the IPO)."

Patel said decisions on the IPO as well as granting stock options to Nacil employees would be taken keeping in view the prevailing market environment.

The minister's comments come even as officials in his ministry indicate that consultants have been asked to work out the valuations and the method by which equity dilution would happen.

Accenture, the consultant that advised the government on the merger of the two state carriers, has been roped in for conducting the valuation study as well, and its study could take 5-6 months to complete.

Nacil officials have earlier indicated that the company is looking at revenues of $4 billion this fiscal against $3.5 in 2006-07, but it is not clear whether the merged entity would be able to declare any profit as yet. Separately, both Indian and Air India were loss-making entities before the merger.

The performance of Nacil and its ability to report good numbers for 2006-07 would play a crucial role in the timing and the size of the proposed IPO, since a profitable entity would be able to command better valuations.

Nacil managing director V Thulasidas had earlier indicated that the government could look to offload up to 15 per cent stake through the IPO, but no such decision has been taken till date. In fact, senior ministry officials said there was no proposal for an IPO as on date with the Nacil board.

Meanwhile, Patel also said the government was examining a proposal to offer stock options to Nacil employees.