INDIA BUSINESS WORLD - FEBRUARY 2007
The Month that was ...

AIR INDIA, INDIAN TO BE MERGED INTO NEW COMPANY

Paving the way for creation of India's largest airline company, the Union Cabinet approved merger of Air India and Indian.

With a fleet size of 112 aircraft and an extensive domestic as well as international network, the merged entity will be ready to take on global giants such as Singapore Airlines and Emirates, besides domestic players like Jet.

The merger, which comes at a time when the two carriers have ordered more than 100 new planes for expansion, is expected to result in annual net synergy benefits to the tune of Rs 600 crore starting from the third year of merger.

The merger will enable the two airlines to leverage their combined assets and capital better, and build a stronger and sustainable business, information and broadcasting minister PR Dasmunsi said after the Cabinet cleared the merger. Both airlines would pool together their resources in the Gulf region, South-East Asia and neighbouring markets. While Indian has a strong domestic network, which will serve as the home base for the merged entity, Air India will bring on the table its network in the US and Europe.

The Cabinet also approved raising the authorised share capital of the Indian Renewable Energy Development Agency (IREDA) from Rs 400 crore to Rs 1,000 crore. IREDA, a non-banking finance company under the administrative control of the ministry of new and renewable energy, is intended to extend long-term loans to new and renewable energy projects.

The agency is also planning to increase lending to energy efficiency projects and to open up new lines of business in carbon trading under the Clean Development Mechanism of Kyoto Protocol.

The Cabinet approved introduction of a Bill in Parliament for amending the Motor Vehicle Act, 1988. The new Bill is aimed at improving public transport and enforcing safety-related provisions. The Cabinet approved enactment of a legislation called The Communal Violence (Prevention, Control and Rehabilitation of Victims) Bill, 2005.