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Tata Sons Wins Bid To Acquire Air India

Tatas' winning bid of Rs 18,000 crore comprises taking over Rs 15,300 crore of debt and paying rest in cash; Air India's handover to Tatas is expected by Dec.

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At 4 PM, October 08, the Secretary of DIPAM and the Ministry of Civil aviation addressed the media and declared the outcome of the process for disinvestment of Air India and its subsidiaries. Talace Private Limited, a wholly-owned subsidiary of Tata Sons has been declared the winning bidder for national carrier Air India. The winning bid was Rs 18,000 crore, Secretary, Department of Investment and Public Asset Management (DIPAM) made the official announcement on October 08, 2021.  

Tuhin Kanta Pandey, Secretary, DIPAM said: "Tata's special purpose vehicle (SPV) Talace Pvt Limited emerged as the winning bidder." As on August 31, 2021, Air India has a total debt of Rs 61,562 crore, out of that Rs 15,300 will be taken over by the bidder, Pandey said. Thereafter, Rs 46,262 crore will be transferred to Air India Assets Holding Limited (AIAHL), he added. AIAHL is an SPV formed by the government.

Civil Aviation Secretary Rajiv Bansal said that the winning bidder will not retrench any employee for minimum period of one year and if retrenched after a year, they will have to be offered VRS (voluntary retirement scheme). Gratuity and Provident Fund (PF) benefits will be provided to all employees, he added.

Bansal also mentioned, "As of today, there are 12,085 employees in Air India out of which 8,084 are permanent and 4,001 are contractual. Besides this, Air India Express has an employee strength of 1,434."

Ratan Tata welcomed Air India back in his Tweet. He added that it will take 'considerable effort to rebuild Air India'.

Meanwhile, N Chandrasekaran, Chairman, Tata Sons Mumbai said, “At the Tata group, we are delighted to be declared as the winner of the bid for Air India.  This is a historic moment, and it will be a rare privilege for our Group to own and operate the country’s flag bearer airline. It will be our endeavour to build a world-class airline which makes every Indian proud. On this occasion, I would like to pay tribute to J.R.D. Tata, pioneer of Indian aviation, whose memory we cherish."

Rival bidder, Ajay Singh who is also the Chairman and Managing Director of leading low-cost carrier SpiceJet said: "I congratulate the Tata Group on winning the bid for Air India and wish them all the success. It was my honour and privilege to be shortlisted for bidding for Air India."

Singh said he was confident that the Tata Group will restore the glory of Air India and make all of India proud. "I would also like to congratulate the Government on the successful disinvestment of Air India. They ran a transparent and flexible process and gave new impetus to India’s disinvestment program. I have been an Air India fan all my life and it’s time for the Maharaja to reclaim its position as a leading airline of the world,” Singh said in an official statement.

As per the details provided by DIPAM, Tata Sons will pay Rs 2,700 crore in cash while the balance amount will be taken over as debt. Ajay Singh and his consortium had bid Rs 15,100 crore as the Enterprise Value of Air India. The transaction is expected to be close by end of December this year.

The central government had started evaluating the bids for the debt-laden national carrier earlier last week. Reports suggest the Tata Group is the front-runner to win the Maharaja, while SpiceJet’s Ajay Singh is the other bidder competing for the airline. The evaluation of bids was done against an undisclosed reserve price.

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