NEW DELHI: The Tata Group and SpiceJet promoter Ajay Singh (in his personal capacity) on Wednesday submitted financial bids for acquiring Air India.
A Tata Sons spokesperson confirmed this. Sources said Singh also did the same on the last day for submitting bids by qualified bidders.
While the government is keen on the new owners taking over by December, sources say the entire process may happen by the end of this fiscal.
In a tweet, the department of investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey said: “Financial bids for Air India disinvestment received by transaction adviser. Process now moves to concluding stage.”
Financial bids for Air India disinvestment received by Transaction Adviser. Process now moves to concluding stage. https://t.co/0NxCJxX5Q1
— Secretary, DIPAM (@SecyDIPAM) 1631706122000
Top government sources say the next steps will include reserve price fixation and security clearances.
“We cannot give numbers but there has been more than one financial bid. Ajay Singh has bid as part of a consortium. Evaluation of bids will take 2-3 weeks… will wrap up the sale very soon,” they said.
The Tatas — who founded Air India in 1932 — are seen as the frontrunner for getting the airline back.
Air India was nationalised in 1953. The then chairman of Tata Group J R D Tata had described the nationalisation move as “government taking it through the back door.”
In a note to the then Prime Minister Jawaharlal Nehru, he had said: “I can only deplore that so vital a step should have been taken without giving us a proper hearing.”
J R D Tata remained at the helm of Air India for many years and took the airline to new heights under his command.
Counted among the best in the world then, Air India’s expertise was sought by many airlines during their take off phase, many of them are now global giants.
In 1977, the then Janata Party government removed him from the airline. Air India’s gradual decline began a few decades after that and accelerated after 2007 when the airline was merged with Indian Airlines that saw its financials nosediving.
The government has made it clear that failure to sell off Air India — which has a combined debt and losses of almost Rs 1 lakh crore — will mean shutting it down.
However, with the Tata Group bidding for it, Air India seems set for a new beginning under its founder.
While the government — which is offering to sell its 100% stake in Air India and Air India Express and its entire (50%) stake in AI SATS — is keen to hand over the airline to the highest bidder by end of calendar year 2021. Sources say the same is likely to happen by the end of this fiscal.
Instead of being required to take on a pre-fixed level of Rs 23,000 crore debt of AI, eligible bidders under current terms of sale will quote an enterprise value (EV) based on their estimate of the combined value of AI’s equity and debt in their financial bid.
Winning bidders will be decided on the basis of who quotes the highest EV value. At least 15% of this value will need to be paid in cash while the rest can be taken on as debt.
The state is also likely to offer indemnity to successful bidder from lawsuits filed by foreign mega corporations against AI to recover arbitration awards they have won against India.
Recently, British oil firm Cairn Energy and Devas Multimedia sued Air India in order to recover arbitration awards they had won against the government of India.
Devas petition filed in a New York court says AI is the “alter ego of the Republic of India” and “therefore jointly and severally liable for the debts and obligations of India itself.” AI is contesting these claims.
The aviation ministry has asked AI to prepare for post-divestment issues like getting employees to vacate staff colonies within a certain timeframe; transfer PF accounts to EPFO and ensuring continuance of health benefits to them through CGHS.
Watch Air India sale: Tata Group and SpiceJet submit financial bids