Date:03/03/2007 URL: http://www.thehindubusinessline.com/2007/03/03/stories/2007030306311000.htm

Back Formalities for merger of AI, Indian begin: Patel

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New entity to seek cut in stamp duty liability for assets transfer

New sbjects
The board of directors apart from the Chairman and Managing Director would also have three functional directors including those looking after finance, personnel and commercial.
There will be no retrenchment and all the employees will continue in the merged company.

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New Delhi March 2 With the Union Cabinet approving the merger of Air India and Indian, the newly merged entity plans to approach at least seven State governments to seek reduction or refund in the stamp duty liability for transfer of properties owned by both of them individually.

Stamp duty liability

Official sources told Business Line that the new company would have to bear a stamp duty liability of Rs 50 crore-70 crore on properties that both airlines have in States such as Maharashtra, West Bengal, Andhra Pradesh, Karnataka and Gujarat in case the waiver was not granted. Meanwhile the Union Minister for Civil Aviation, Mr Praful Patel, told the Parliament on Friday that the technical and procedural formalities for the merger would begin immediately.

New company

"One company, with one name, one logo, one code and single financials is expected to be in place within the coming 16 weeks," the Minister said. Sources indicated that the new company would be registered within the next 15 days.

While the Government will continue to be the sole shareholder of the new company, the share exchange ratio would be decided on the advise of consultants and with the approval of a committee that would include officials of the Finance Ministry and the Ministry of Company Affairs.

The board of directors apart from the Chairman and Managing Director would also have three functional directors including those looking after finance, personnel and commercial.

The Minister added that the Government was committed to ensure that all the legitimate employee interests, including their current compensation and status among others were protected.

"There will be no retrenchment and all the employees will continue in the merged company.

Besides, to keep the exercise as smooth as possible, the integration of manpower would be completed in a phased manner, on the basis of a transparent and objective criteria," the Minister said.

Sources indicated that Mr Patel is expected to shortly meet the employees and unions of both the airlines to explain the process.

The fleet

The merged company is expected to have a fleet of 155 aircraft and an employee base of 30,374, which would help improve the employee to aircraft ratio from the existing 305 to 196.

"The senior management structure of the proposed merged airline would be on lines of other major airlines like Lufthansa and British Airways," a senior Government official said.