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Air India sale: Tata Sons, consortium of employees and US-based fund to submit bid

The last date for submission of EOI submission to buy Air India ends on December 14

December 15, 2020 / 12:05 AM IST

Tata Sons, and a consortium of employees and US-based fund Interups Inc, will be submitting their expression of interest for national airline Air India.

Sources close to the development confirmed with Moneycontrol that the salt-to-steel conglomerate will be submitting the EoI by 5pm on December 14, the deadline.

Tata Sons declined to comment.

It is not yet known if the Tatas have roped in Singapore Airlines, its join venture partner in Vistara, to make a bid for Air India. The conglomerate's other aviation interest, AirAsia India, is in partnership with the Kuala Lumpur-headquartered AirAsia Berhad.

Earlier, Interups Chairman Laxmi Prasad had confirmed the consortium's participation. "We will be submitting a bid later today," he told Moneycontrol.

Close

The expression of interest proposes 51 percent stake under employees and the rest 49 percent with Interups. Employees from multiple departments come together for the consortium.

The bidding conditions of Air India allows bid by employees. However, disinvestment guidelines mandate that the company will not be able to partner any private company. It has to partner with either a bank or a financial institution.

Prasad said that there is no requirement to put further capital into the airline. Instead, the consortium will place some of the profitable assets of Air India into an Infrastructure Investment Trust, or InvIT. These will be monetised, Prasad added.

The fund manages over 27,000 retirement accounts of NRIs in the US.

The government has substantially sweetened the sale terms for Air India. It has offered for sale its 100 percent stake in AI and AI Express — instead of 76% in the first attempt — and the entire 50 percent in ground handling joint venture AI-SATS.

The government on December 10 said it will intimate qualified interested bidders (QIBs) of Air India on January 5 next year, instead of the earlier decided date of December 29, 2020.

While the government has not extended the deadline for EoIs (Expressions of Interest) for the national carrier, the interested entities are required to submit the physical bids within 15 days from December 14 — the last date for submitting EoIs.

As per the Air India EoI floated by DIPAM in January, of the airline's total debt of Rs 60,074 crore as of March 31, 2019, the buyer would be required to absorb Rs 23,286.5 crore, while the rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.

Tryst with aviation

This will not be the first attempt by the Tata Group to retain ownership of Air India, which was founded by the late Tata Sons Chairman JRD Tata, in 1932.

It was initially called Tata Air Services and later, Tata Airlines. While the Government took ownership of the airline in 1953, the founder continued as its Chairman until 1977.

Years later in 2001, his successor at Tata Sons, Ratan Tata teamed up with Singapore Airlines to bid for Air India, when the then government led by Atal Bihari Vajpayee decided to divest stake in the state carrier. But that didn't fructify as the whole divestment initiative was dropped.

Now, nearly two decades later, even though Ratan Tata is no longer at the helm of Tata Sons, he is said to be supportive of present incumbent N Chandrasekaran's interest in Air India.

Read more: Tatas need Air India. Can they revive it and their aviation fortunes
Prince Mathews Thomas heads the corporate bureau of Moneycontrol. He has been covering the business world for 16 years, having worked in The Hindu Business Line, Forbes India, Dow Jones Newswires, The Economic Times, Business Standard and The Week. A Chevening scholar, Prince has also authored The Consolidators, a book on second generation entrepreneurs.
first published: Dec 14, 2020 01:49 pm
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