There is a little bit of SAIL in everybody’s life. This line from Steel Authority of India Ltd’s ad campaign is now familiar to most of the Indians. The share sale of the state-run firm is expected to mop up Rs 6,000 crore at then current market prices around Diwali. Unbelievable! SAIL is the same PSU that in February 2000 posted losses of around Rs 1,500 crore but the government came out with probably the largest-ever bailout package of Rs 8,000 crore and since 2003 the story has been different, so much so that the government plans to come out with SAIL’s FPO.

Why can’t other PSUs learn from the turnaround of SAIL? Why can’t SAIL happen to Air India?

Though the next group of ministers meeting is expected to decide on additional equity infusion in the government-owned airline but the doubt still remains: will they be able to save the ailing carrier?

Will more and more equity infusion help? Along with the equity infusion for the cash-strapped carrier the AI has to learn the tricks to implement the turnaround plan. And the SAIL can be the best case study to learn from.

The government’s record in terms of revival of the sick PSUs is very poor but SAIL is an example to learn from. The government should come as a saviour to save the pride of the nation. It should try to replicate the revival model that has actually worked. No doubt, every case study is different but yet on the principles applied there can be many similarities.

The airline is demanding an equity infusion of Rs 43,000 crore till 2021. For the current financial year, it wants Rs 8,373 crore, an upfront equity infusion of Rs 6,600 crore and support of Rs 1,772 crore in the form of a guarantee on short-term loans for this fiscal. Of this, the government has already announced Rs 1,200 crore in the year’s budget.

The fund requirements of the cash-strapped airline are huge. It has to repay Rs 20,415 crore worth of loans before the end of this fiscal.

AI has Rs 46,950 crore of debts in all — Rs 20,185 crore aircraft loans, Rs 22,165 crore working capital loans, and the others being over dues.

The accumulated loss has also crossed Rs 20,000 crore, with the airline losing Rs 2,226 crore in 2007-08, Rs 7,189 crore in 2008-09, Rs 5,551 crore in 2009-10 and Rs 6,000 crore in 2010-11.

As part of its turnaround and financial restructuring plans, the airline proposes to issue redeemable preference shares for Rs 7,400 crore of the Rs 22,165 crore working capital loans, with eight per cent dividend. It also proposes steps to enable it to repay Rs 11,100 crore of loans at 11 percent interest over a 15-year period.

The figures clearly reveal that the ailing carrier has humungous debts but SAIL’s one-time equity infusion and proper implementation of the plan is the right way to save the Maharaja. A tough restructuring plan besides initiating technological upgradation and capacity expansion enabled SAIL to turn around and post net profit of Rs 6,817 crore in 2004-05 from the net loss of Rs 1,574 crore during 1998-1999.