Tata Group wins bid to acquire Air India for Rs 18,000 Cr
Salt-to-software conglomerate Tata Group has won the bid to acquire debt-laden state-run Air India, offering Rs 18,000 crore for acquiring 100 percent shareholding, a senior government official said on Friday.
An SPV of Tata Sons — the holding company of conglomerate — has emerged as the successful bidder, Tuhin Kanta Pandey, Secretary to the Department of Investment and Public Asset Management (DIPAM) — the government department responsible for privatisation, said.
Tata Sons beat SpiceJet promoter to bag Air India.
The DIPAM secretary said Tatas' bid of Rs 18,000 crore comprises taking over Rs 15,300 crore of debt and paying the rest in cash.
Both bidders had quoted above the reserve price, he said, adding the transaction is planned to be closed by December.
He said a group of ministers comprising Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal, and Civil Aviation Minister Jyotiraditya Scindia cleared the winning bid for Air India on October 4.
This marks the return of Air India to the Tatas.
Jehangir Ratanji Dadabhoy (JRD) Tata founded the airline in 1932. It was called Tata Airlines then. In 1946, the aviation division of Tata Sons was listed as Air India and in 1948, Air India International was launched with flights to Europe.
The international service was among the first public-private partnerships in India, with the government holding 49 percent, the Tatas keeping 25 percent, and the public owning the rest.
In 1953, Air India was nationalised.
The government is selling 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 Private Ltd.
Emotional Ratan Tata
Tata Group Emeritus Chairman Ratan Tata welcomed the government accepting Tata Sons' bid of Rs 18,000 crore for the takeover of Air India, saying the airline provides a very strong market opportunity to the group even though it will take considerable effort to rebuild the debt-laden carrier.
"Welcome Back, Air India," he said.
"The Tata Group winning the bid for Air India is great news," he said in a statement. "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."
This marks the return of Air India to Tatas' folds. Tatas had founded the airline before it was nationalised.
"On an emotional note, Air India, under the leadership of Mr J R D Tata had at one time gained the reputation of being one of the most prestigious airlines in the world," Tata said.
Tatas, he said, will have the opportunity of regaining the image and reputation it enjoyed in earlier years.
"Mr J R D Tata would have been overjoyed if he was in our midst today," he said thanking the government for its opening of select industries to the private sector.