NEW DELHI: Indian conglomerate Tata Group has emerged as the leader in the acquisition of debt-stricken Air India as the government seeks to close one of its most ambitious divestment plans, sources have revealed. The Indian government has yet to officially approve Tata’s winning bid, but people with first-hand knowledge of the matter said the Mumbai-based conglomerate placed the highest bid – over $ 1.029 billion. (Indian Rupee 5,000 crore) more than SpiceJet promoter Ajay Singh, who personally participated in the bidding process.
From tea to steel Tata Group confirmed two weeks ago that it had submitted an offer to buy the debt-crippled national carrier Air India, which it owned decades before the airline’s nationalization. . The Indian government has sought to sell its entire stake in the struggling company, setting a deadline for offers for Wednesday after previously failing to secure interest in majority stock.
A senior government official said that once the winner is announced, the share purchase agreement will be signed with the winning entity within 15 days and the transfer process will begin immediately thereafter. Representatives of the two bidders were called to meetings twice earlier this week, where the share purchase agreement was discussed to help them get a long-term view of Air’s various liabilities. India and plan the funding accordingly.
The Ministry of Civil Aviation issued a preliminary information memorandum in January 2020 requesting an expression of interest, initiating the divestment process. A key change from the government’s previous attempt to sell Air India in 2018 was that it announced it would divest 100% of its stake, up from 76% earlier. The sale of the stake includes Air India’s 100% stake in AI Express Ltd and 50% in Air India SATS Airport Services Private Ltd.
An official announcement is expected after Air India’s Specific Alternative Mechanism (AISAM), a group of ministers led by Home Secretary Amit Shah, ratified the winning bid. The other members of AISAM are Minister of Finance Nirmala Sitharaman, Minister of Commerce Piyush Goyal and Minister of Civil Aviation Jyotiraditya Scindia. Tata has already invested in airlines AirAsia India and Vistara.
SpiceJet did not respond to an AFP request for comment. The secretary of the government department of investment and public asset management, Tuhin Kanta Pandey, confirmed that the offers had been received. “The process is now moving into the final stages,” he tweeted on Wednesday. Tata Group in 1932 pioneered commercial air transport in India with Tata Airlines.
Once affectionately known as the “Maharaja of the Heavens,” the airline was later taken over by the government and renamed Air India. But it has been bleeding money for more than a decade, taking billions of dollars in debt and losing market share to its low-cost rivals in one of the fastest growing airline markets, but very competitive.
Besides Air India, the government also plans to raise billions of dollars through the privatization of Bharat Petroleum and the sale of shares of a major insurer. In August, New Delhi said it was looking to lease state-owned assets from the private sector to raise six trillion rupees ($ 81 billion) to fix the public finances affected by the pandemic and finance new infrastructure. . – Agencies