Air India, Indian propose to revalue assets

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New Delhi Feb. 25

Air India and Indian are to undertake a revaluation exercise of their assets ahead of the proposed merger of the two state-owned airlines.

Sources told Business Line that a valuation consultant is to be appointed shortly to put a realistic figure on the assets of both the airlines. "The value of the airlines assets that have been built over the years shows a very depreciated value in their respective balance sheets. Currently, the net worth of both the airlines is in three digits figures, but post valuation the net worth is bound to be in five digit figures," sources said.

Generally, a revaluation of assets is done to show the true rate of return on capital employed and to facilitate loans from banks or financial institutions through a mortgage. The current law allows upward revaluation in the value of fixed assets to bring them in consonance with fair market value.

In the case of Indian, it owns a huge property in Delhi, Airline House that has been on its books for decades. If the value of the property is taken on book value alone, it would be a fraction of the market value that it could command. Apart from property in India and abroad, both the airlines also own aircraft and equipment. The current combined fleet strength of both the airline is more than a 100.

The valuation consultant is to be appointed shortly and the report would be ready before the merger gets underway, sources indicated.

Taken from Business Line

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