Conglomerate Tata Group along with Indian budget carrier SpiceJet founder and promoter Ajay Singh have submitted financial bids for acquiring Air India as the disinvestment process of the debt-ridden national carrier entered its final stage. This comes three years after a failed attempt by the government to sell Air India, setting a deadline for bids for Wednesday after failing previously to secure any interest for a majority share.
The Tata group has confirmed that it has put in its bid. “We have put in a bid,” a Tata Group spokesperson told AFP news agency late on Wednesday, without giving any further details. Ajay Singh also participated in the bid in his personal capacity, according to people familiar with the matter, reports Business Standard.
The government invited expression of interest last January to sell 100 per cent stake in Air India and Air India Express and 50 per cent stake in ground handling arm AISATS, after the failed attempt in 2018.
Initial bids were received last December and a draft share purchase agreement was issued in March. The suitors have shared their comments and there have been discussions with the government to fine-tune the draft agreement.
A group of Air India employees, who had partnered with a Seychelles-based fund, was however disqualified from the bidding process in March.
To sweeten the sale offer, the government made changes in bid conditions last October. Instead of a pre-fixed debt level, bidders were allowed to quote enterprise value.
Further SOPs have come in form of the recent clarification in the Income Tax Act allowing the airline’s new owners to set off profit against the past year losses. The government has also agreed to employees’ demands related to provident fund and medical benefits in a move to prevent a possible confrontation.
“We have received financial bids in sealed covers. The bids will be opened after the reserve price is fixed independently and security clearance of bidders is obtained,” said Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM). “Process now moves to concluding stage,” he tweeted on Wednesday.
The government hopes to conclude the disinvestment of Air India by the end of the year.
EY is transaction advisor for Air India disinvestment.
Air India and Air India Express together have over 141 aircraft and are the largest operators on international routes from India. However, the airline has been saddled with high debt and accumulated losses of over Rs 70,000 crore, impacting its performance. In the last fiscal, its estimated loss was around Rs 9,779 crore.
Despite the mounting debt and losses, Air India has some lucrative assets, including valued slots at London’s Heathrow Airport and thousands of trained pilots and crew.
