Virendra Pandit
New Delhi: Finally, Air India is returning to the Tata Group.
Industrialist Ratan Tata said his uncle JRD Tata, who once headed the airline, would have been overjoyed with this decision. The Tatas will try to rebuild Air India to convert it into a world-class airline.
The Union Government has decided to sell the national carrier Air India to Tata Sons for Rs 18,000 crore, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said on Friday.
This would put an end to the government’s prolonged attempt to sell and turn around the airline burdened with whopping debts.
The sale would be at an enterprise value of Rs 18,000 crore, out of which Rs 15,300 crore would be the debt retained by the winning bidder. Tata Sons will pay Rs 2,700 crore in cash.
The second bidder, a consortium led by SpiceJet Chairman Ajay Singh, in his personal capacity, had placed a bid of Rs 15,100 crore, out of which Rs 12,835 crore would be the debt to be retained, and Rs 2,265 crore would have been the payment in cash.
Tata Sons and Singh were the only two bidders.
According to the plan, Air India’s debt of Rs 46,262 crore would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle set up to transfer the national carrier’s debt. The transaction will not include non-core assets including land and building valued at Rs 14,718 crore, which will be transferred to AIAHL.
Pandey said the government had set a reserve price for the airline at Rs 12,906 crore.
The winning bidder (Tata Sons) will retain all 12,085 employees for one year, Aviation Secretary Rajiv Bansal said. Starting the second year, if employees are retrenched, they will be offered a voluntary retirement scheme.
The Air India Specific Alternative Mechanism (AISAM), headed by Home Minister Amit Shah, had cleared the proposal to sell the airline to Tata Sons. AISAM has the Union Ministers for Finance, Commerce, and Aviation as members.
The government is seeking to sell 100 percent of its stake in the state-owned national airline, including Air India’s 100 percent shareholding in AI Express Ltd and 50 percent in Air India SATS Airport Services Pvt Ltd.
The Centre is targeting completion of the sale of Air India by December end. The sale will need approval from the Competition Commission of India (CCI).