A senior government official announced on Friday that salt-to-software conglomerate Tatas had won the tender to buy the indebted state-run Air India by offering Rs 18,000 crore for acquiring a 100 percent interest.
Tuhin Kanta Pandey, secretary of the Department of Investment and Public Asset Management (DIPAM), the government agency in charge of privatization, announced that an SPV of Tata Sons , the conglomerate’s holding company, had won the bid.
According to the DIPAM secretary, the 18,000 crore deal from Tata includes taking on 15,300 crore in debt and paying the remaining amount in cash. Tatas will pay the government Rs 2,700 crore in cash for the sale of its 100% interest, according to the DIPAM Secretary. The winning offer for Air India from Tata Sons was Rs 18,000 crore, which the official said was greater than the government’s established reserve price of Rs 12,906 crore. According to Pandey, the deal should be finalized by the end of December 2021.
He added that both bids were above the reserve price and that the sale will likely close before the end of the month of December.
He said that on October 4, the winning offer for Air India was approved by a committee of ministers made up of the Home Minister Amit Shah, the Finance Minister Nirmala Sitharaman, the Commerce Minister Piyush Goyal, and the Civil Aviation Minister Jyotiraditya Scindia.
With this, the Tatas will once again own Air India. After the announcement, Ratan Tata, chairman emeritus of Tata Sons, posted on Twitter, “Welcome Back Air India.”
Dadabhoy Jehangir Ratanji (JRD) In 1932, Tata launched the airline. Tata Airlines was its previous name. The aviation arm of Tata Sons was established as Air India in 1946, and Air India International, with operations to Europe, debuted in 1948.
The international service was one of the first PPPs in India, with the government owning 49%, the Tatas keeping 25%, and the general public owning the remaining 31%. Air India was nationalized in 1953.
The state-owned national airline, Air India, together with its 100% ownership in AI Express Ltd. and its 50% stake in Air India SATS Airport Services Private Ltd., are all being sold by the government.
Due to the COVID-19 pandemic, the share sale process, which had started in January 2020, was delayed. The government requested financial bids from prospective bidders in April 2021. The last day to submit financial offers was September 15.
Tata Group was one of the numerous organizations that submitted a first expression of interest (EoI) for the purchase of the Maharaja in December 2020.
The government sweetened the EoI clause relating to the transfer of Air India’s debt to the new investor in October last year after previous attempts since 2017 failed to generate any significant interest and following feedback from potential investors. This gave bidders flexibility to choose how much of the enormous debt they want to absorb.
According to the Air India EoI published by DIPAM in January 2020, the buyer would have to take on Rs 23,286.5 crore of the airline’s total debt, which stood at Rs 60,074 crore as of March 31, 2019.
The remainder would be given to a special purpose vehicle called Air India Assets Holding Ltd (AIAHL). Since its 2007 merger with domestic airliner Indian Airlines, Air India has been losing money.
In addition to 900 slots at foreign airports, the airline will give Tata authority over 4,400 domestic and 1,800 international landing and parking slots at domestic airports.
LOVELY READER, Business Standard has always made a strong effort to present current information and analysis on events that are important to you and have broader political and economic ramifications for the nation and the globe. Our resolve and dedication to these ideas have only grown stronger thanks to your support and ongoing suggestions for how to improve our product. Even in these trying times following Covid-19, we remain dedicated to keeping you informed and updated with reliable news, reputable opinions, and sharp analysis on pertinent current events.
But we have a request.”
We depend even more on your help as we fight the pandemic’s economic effects to keep providing you with high-quality material. Many of you who have subscribed to our online material have responded positively to our subscription approach. More people subscribing to our online content can only aid us in achieving our objectives of providing you with stuff that is even better and more pertinent. We support trustworthy, impartial, and free journalism. More subscriptions from you will enable us to continue practicing the journalism to which we are dedicated.