The divestment process of Air India was officially completed on January 27, after the central government handed over the management control and its shares in the airline to the Tata Group.
"The strategic divestment transaction has been completed today with Government receiving a consideration of Rs 2,700 crore from Strategic Partner (M/s Talace Pvt Ltd, a wholly-owned subsidiary of M/s Tata Sons Pvt Ltd)," the government said in a press release.
Apart from the cash consideration, the Tata Group will also take over debt amounting to Rs 15,300 crore, the government said.
The transaction covers three entities – Air India, Air India Express, and AI SATS. Air India is India’s flag carrier and premier full-service airline. Air India Express is a low-cost carrier. AI SATS provides a comprehensive suite of ground handling and cargo handling services.
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"The strategic disinvestment transaction of Air India successfully concluded today with transfer of 100% shares of Air India to M/s Talace Pvt Ltd along with management control," Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (DIPAM), said in a post on Twitter.
Tata Sons Chairman N Chandrasekaran after taking over Air India from the government said that he was delighted that Air India’s takeover process is complete.
He added the group will focus on bringing down operational costs of Air India and improving the performance of the airline in their bid towards creating a world-class airline.
The government has also notified the agreement between Air India and special purpose vehicle Air India Assets Holding Ltd (AIAHL) for the transfer of non-core assets.
Furthermore, the former board of Air India, including ex-Chairman and Managing Director Vikram Dev Dutt have tendered their resignations and a new board will be set up by the Tata Group to manage everyday operations of Air India.
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The successful conclusion of the deal, the country's first major privatisation in nearly two decades, is a big victory for the Narendra Modi government.
The move also marks a homecoming for debt-laden Air India, which was originally launched in 1932 by Tata Group’s former Chairman JRD Tata as the nation's first carrier.
After a competitive bidding process, the government had in October sold Air India to Talace Private Ltd., a subsidiary of the Tata group's holding company, for Rs 18,000 crore. Tatas had beat the Rs 15,100 crore offer by a consortium led by SpiceJet promoter Ajay Singh.
Tata Sons, through its wholly-owned unit Talace Pvt. Ltd., had submitted the winning bid of Rs 18,000 crore as the enterprise value of Air India against a reserve price of Rs 12,906 crore.
The government had earlier planned to hand over Air India by December 2021. However, pending approvals and unresolved dues of the debt-ridden airline posed hindrances to the process, delaying the culmination of the transfer by a month.
As of January 27, the national carrier would have burnt a hole of roughly Rs 1,57,339 crore in the government’s pocket over the past 10 years, according to valuation experts.