NEW DELHI: Sixty-eight years after it ceded control of Air India to the government, the Tata group on Friday won the bid to take over the national carrier, thus successfully completing the Centre’s multiple attempts to turn around and sell the debt-ridden airline.
Talace Pvt Ltd, a subsidiary of Tata Sons, made the winning bid of Rs 18,000 crore, said Tuhin Kanta Pandey, Secretary in the Department of Investment and Public Asset Management (DIPAM). Of the Rs 18,000 crore, Rs 15,300 crore would be the debt retained by the winning bidder and Tata Sons will pay Rs 2,700 crore in cash, Pandey said.
The transaction, however, does not include non-core assets such as land and building, valued at Rs 14,718 crore. These will be transferred to the Air India Asset Holding Ltd. Air India has a debt of Rs 61,562 crore at the end of August 31. After payout by the Tatas, Rs 46,262 crore of debt will still remain with government entities.
“The next step will be to issue the Letter of Intent (LoI) and then sign the Share Purchase Agreement following which, the conditions precedent would need to be satisfied by the successful bidder, the company and Government. It is expected that the transaction will be completed by December 2021,” read a finance ministry statement.
“It has been ensured that the interest of the employees and retired employees would be taken care of,” the finance ministry added, clarifying on the fate of 12,000-odd employees of Air India. The Centre added that the winning bidder will retain all employees for one year. If they are retrenched after one year, they will be offered a voluntary retirement scheme.
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On Air India’s brand and logo, the government said the winning bidder will have to retain them for five years. The government had set the reserve price for the airline at Rs 12,906 crore. Apart from the Tata group, Spicejet chairman Ajay Singh had placed a bid of Rs 15,100 crore (Rs 2,265 crore cash payment and Rs 12,835 crore debt takeover).
The process for disinvestment of Air India and its subsidiaries had commenced in June 2017. However, there was no bidder for the first round. The government then reworked the terms and conditions and re-commenced on January 27, 2020.
