The debt-laden airline Air India comes back home after 68 years of governmental control. Tata Sons bags the airline with a winning bid of Rs 18,000 crore, the government said on October 8.
A panel of secretaries and ministers led by Amit Shah gave its approval to the salt-to-software conglomerate’s offer over that of SpiceJet chairman Ajay Singh, who bid in his personal capacity and was the only other bidder in the fray. Singh’s bid was around Rs 15,100 crore.
The transaction for the national carrier is expected to be closed by end of December this year. It was earlier this week, that the central government had begun evaluating the bids.
“M/S Palace Pvt Ltd, a wholly-owned subsidiary of Tata Sons, had the winning bid,” said Tuhin Kanta Pandey, Secretary of Department of Investment and Public Asset Management (DIPAM), at a media briefing.
The reserve price for Air India, below which the government would not have accepted offers, was fixed at Rs 12,906 crore.
The sale of the state-run airline has marked the first privatisation of a state-run entity almost 20 years since the then Atal Behari Vajpayee government pushed ahead with a raft of such transactions.
With this win, Tata group also gets AI’s intangible assets like 4,400 domestic and 1,800 international landing and parking slots at Indian airports; and 900 slots at airports abroad.
Furthermore, AI Express and AI’s 50% stake in AI-SATS ground handling company is also now owned by Tata
AI as of August 31 had a total debt of Rs 61,560 crore. Tata Group will be taking over the debt of Rs 15,300 crore while Rs 46,262 crore will remain with Air India Asset Holdings Ltd, which is a special purpose vehicle created to retain the non-core assets, land, and the debt of Air India which Tata will not be taking on.
The SPV will monetise AI’s assets like property and land bank and use those funds to pay off the debt.