After the Tata Group's successful bid for loss-making Air India, billionaire investor Rakesh Jhunjhunwala, in an exclusive interview with India Today TV, said India's divestment programme is on track.
The Tata group's winning bid was for Rs 18,000 crore. Another contender, a consortium led by SpiceJet founder Ajay Singh, had placed bids worth Rs 15,100 crore. Both the bids were above the reserve price of Rs 12,906 crore.
Jhunjhunwala said details of the Tata group's investment are important. The big bull of the stock market said it gives the stock market confidence that the government's divestment plan is on track. He said airlines are losing money, and something has to improve. "Good scope of profitability despite all troubles," he added.
Tata's placed the winning bid worth Rs 18,000 crore for a 100 per cent stake in Air India, along with its shareholding in subsidiaries Air India Express Ltd (AIXL) and Air India SATS Airport Services Private Limited (AISATS).
The transaction does not include non-core assets, including land and building, valued at Rs 14,718 crore, which will be transferred to the government's Air India Asset Holding Limited (AIAHL).
As part of the deal, the total bid comprises taking over Rs 15,300 crore debt and the rest of the amount, which is Rs 2,700 crore, will be paid in cash.
The transaction saw keen competition with seven EOIs being received in December 2020. Five of the bidders had to be disqualified as they could not meet the requirements set out in the PIM/EOI. The airline's total debt stands at Rs 61,562 crore as of August 31.
Meanwhile, Jhunjhunwala also plans to launch his low-cost airline named Akasa Air by the next year. In August, Jhunjhunwala received NOC from the aviation ministry to launch a low-cost airline, with an initial investment of $35mn and a fleet of 70 planes that will be acquired over 4 years.
His team includes, among others, former IndiGo President Aditya Ghosh and former Jet Airways CEO Vinay Dube, who will be the CEO of Akasa Air and a director in the holding company SNV Aviation Private Limited.
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