THE HINDU Editorial Vocabulary - April 2, 2018 - Topic 1
High
hopes?
Nine months after the Union Cabinet’s
in-principle nod for offloading the government’s stake in Air India, the ball
has finally been set rolling to privatise the bleeding airline. A preliminary
information memorandum was unveiled last week by the Civil Aviation Ministry
for prospective bidders. According to this, the Centre will divest 76% of its
stake in AI. A 100% stake is being offered in its subsidiary Air India Express,
and a 50% stake is on offer in its ground handling operations arm.
Other
subsidiaries, such as Alliance Air, Hotel Corporation of India, which owns the
Centaur properties in New Delhi and Srinagar, Air India Air Transport Services
and Air India Engineering Services, are not being sold — they will be
transferred to a special purpose entity along with roughly a third of AI’s Rs.
48,781 crore outstanding debt. Effectively, the government is offering a
majority stake in AI and AI Express with management control, as well as a
cumulative debt burden worth Rs. 33,392 crore. For prospective buyers, the
attractiveness of AI’s international flying rights and slots would be offset by
the possibility of taking on so much debt and putting a plan in place to
whittle it down or refinance the loans. Details of the reallocation of these
liabilities between AI and AI Express, and the logic behind it, will only be
shared with bidders at a later stage when requests for proposals are issued.
Given the uncertainties over its debt burden, it
will not be a surprise if those bold enough to make a bid for AI find it
difficult to offer a lucrative price to the government. It is worth pausing to
see if serious investors are enthused by the government’s decision to retain
24% stake in the airline (which will possibly come with one or two bureaucrats
nominated to the airline’s board of directors). In 2016-17, the airline
suffered a net loss of Rs. 5,765 crore, owing mainly to its high interest
costs. While debt has been the major reason for AI’s losses in recent years,
operational inefficiencies and poor management have been bugbears for long. The
government is expected to offload its residual 24% stake at a later date,
pinning its hopes on a better valuation after the new owner has fixed the
airline’s legacy issues. The real benefit of privatisation will be that the airline
will no longer drain taxpayer funds, after thousands of crores have been
infused over the years to keep it up and running. That its new owner would get
some room to rationalise its large workforce a year after the transaction and
the government is thinking of footing the bill for some benefits paid to
retired employees, such as complimentary air tickets, sounds good. The
government is understandably keen to close the AI sale transaction soon,
preferably by early 2019, in order to bolster its reformist credentials. But
investors will look for the finer details to ascertain the carrier’s true
worth.
Vocabulary
Stake: support a tree or plant with
a stake or stakes.
Example: Trees are frequently staked for
support after planting
Synonyms: prop up, tie
up, tether, support, hold up, brace, truss
Memorandum: a note or record made for
future use.
Example: The two countries signed a
memorandum of understanding on economic cooperation
Subsidiary: a company controlled by a
holding company.
Example: Most public companies have a
holding company and subsidiaries .
Synonyms: subordinate
company, branch, branch plant, division, subdivision
Purpose: have as one's intention or
objective.
Example: God has allowed suffering, even
purposed it
Synonyms: intend, mean, aim, plan, design, have
the intention, decide, resolve
Entity: a thing with distinct and
independent existence.
Example: Church and empire were fused in a
single entity
Synonyms: being, creature, individual, organism, life
form, person, body
Cumulative: increasing or increased in
quantity, degree, or force by successive additions.
Example: The cumulative effect of two years
of drought
Synonyms: increasing, accumulative, growing, mounting, collective
Refinance: finance (something) again,
typically with a new loan at a lower rate of interest.
Example: Governments have saved billions by
refinancing the national debt at lower interest rates.
Enthused: say something that expresses
one's eager enjoyment, interest, or approval.
Example: They both enthused over my new
look
Synonyms: rave about, be
enthusiastic about, gush over, wax lyrical about
Complimentary: expressing a compliment;
praising or approving.
Example: Jennie was very complimentary
about Kathy's riding
Synonyms: flattering, appreciative, congratulatory, admiring, approving
Ascertain: find (something) out for
certain; make sure of.
Example: An attempt to ascertain the cause
of the accident
Synonyms: find
out, discover, get to know, work out, make out, fathom
