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After 67 years, Air India heads back to founder Tata Group

After 67 years, Air India heads back to founder Tata Group

After its sale, the government will get around Rs 2,700 crore cash from Tatas, the DIPAM Secretary said, adding that Tatas will take over of Rs 15,300 crore debt while the rest it'll pay in cash.

The loss-making airline will be finally sold to one of India's biggest business houses with deep financial power, after several attempts in the last two decades.  The loss-making airline will be finally sold to one of India's biggest business houses with deep financial power, after several attempts in the last two decades.

After a wait of almost 67 years, the Tata Group has finally won the bid to take back the reins of state-owned Air India. The government decided to sell 100 per cent stake in Air India, which had a total debt of Rs 61,562 crore as of August 31.

The conglomerate, which outbid consortia led by SpiceJet founder Ajay Singh, emerged as the front-runner on the reserve price fixed by a panel of government secretaries. The loss-making airline will be finally sold to one of India's biggest business houses with deep financial power, after several attempts in the last two decades.

"Talace Pvt Ltd of Tata Sons is the winning bidder at Rs 18,000 crore. The transaction is expected to close by the end of December 2021," Secretary, DIPAM, Tuhin Kanta Pandey, said at a press briefing in New Delhi. He said: "7 expressions of interest (EOI) were received by December 2020. Five disqualified because they didn’t meet eligibility requirement."

Pandey said around Rs 46,262 crore debt of the state-owned airline will be transferred to Air India Assets Holding Limited (AIAHL), while 15 per cent of the total debt of Rs 61,562 crore will be retained by Tatas. After its sale, the government will get around Rs 2,700 crore cash from Tatas, the DIPAM Secretary said, adding that Tatas will take over of Rs 15,300 crore debt.

Tata’s will have to maintain a 51 per cent ownership as per the share purchase agreement, said Pandey.

After the formal announcement, Ratan Tata, Chairman Emeritus, Tata Sons, expressed his happiness on Tatas winning the bid, saying: "Welcome back, Air India". "The Tata group winning the bid for Air India is great news! While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong market opportunity to the Tata group's presence in the aviation industry," he said.

Earlier, the Secretaries of Department of Investment and Public Asset Management (DIPAM) and the Ministry of Civil Aviation (MoCA) had confirmed that they'll announce the final winner for Air India today.

The government had tried to auction its majority stake almost three years ago too, but it drew no bids, forcing the government to ease the terms. With the arrival of the Covid-19 pandemic, the government also ended up extending the deadline for bids many times.

The final Air India sale process started early last year and now has finally come to its fruition. With this, there's now a fresh revival hope for the airline, which has been making losses every year since its merger with Indian Airlines in 2007.  

Tata Group's acquisition of Air India was in the news for the past couple of days. The most interesting part about the Tatas winning the bid for Air India is that the conglomerate - which is one of India's oldest -- had ventured into aviation in 1932 with Tata Airlines, which later on became Air India. After the nationalisation in 1953, Air India went to the government, but the Tatas were at the driving seat for as late as 1977.

The deal would make Tata Group the second-largest airline operator in the domestic market with a 26.7 per cent market share and behind the market leader IndiGo, with 57 per cent market share. In the international segment though, Tata Group would emerge as the leader with the largest market share by a long shot.

The Tatas already have two airlines in its kitty -- Vistara and AirAsia. Even though they are facing losses, Tata as a conglomerate has unmatched financial competence.

Ajay Singh congratulates Tata Group

Ajay Singh, Chairman and Managing Director, SpiceJet, congratulated the Tata Group on winning the bid for Air India and wished it all the success. "It was my honour and privilege to be shortlisted for bidding for Air India. I am confident that the Tata Group will restore the glory of Air India and make all of India proud. I would also like to congratulate the Government on the successful disinvestment of Air India," he said.

Singh said the government ran a "transparent and flexible process" and gave new impetus to India’s disinvestment program. "I have been an Air India fan all my life and it’s time for the Maharaja to reclaim its position as a leading airline of the world,” he said.

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