The national carrier and its subsidiary Air India Express may have together been valued in the range of ?15,000-20,000 crore by Tata, according to people familiar with the bidding process.
“The valuation is a rough estimate of the assets (aircraft) owned by the beleaguered airline being sold by the government,” said the people cited above.
The board of Tata Sons had given a free hand to its chairman on the bid, mentioning a price range the group would be comfortable paying for the troubled carrier. “The bid is quite within that range mentioned,” an official aware of the matter said.
The government will sell 100% stake in Air India and its low-cost subsidiary Air India Express, and 50% in ground handling company Air India SATS. “Financial bids for Air India disinvestment received by transaction adviser. Process now moves to the concluding stage,” Tuhin Kanta Pandey, secretary in the Department of Investment and Public Asset Management (DIPAM), tweeted on Wednesday.
‘Future Plans to Keep Evolving’
The winning bid is likely to be announced before the end of this month and the government plans to transfer the airline by the end of this fiscal year.
Once the government announces the winner, Tata Sons (if it is shortlisted) is expected to create one holding company for all its aviation businesses, possibly under Talace. “Talace has just put in the bid. Future plans will keep evolving. What the group is looking at in terms of valuations is just pureplay aircraft on the books of Air India and Air India Express, especially the ones owned by them,” the people close to the bidding process said.
Talace was incorporated in August 2020 purely to make an official bid on behalf of Tata Sons, sources said. Directors include Eruch Noshir Kapadia, Saurabh Mahesh Agrawal and Nipun Aggarwal.
Tata Sons did not comment.
SpiceJet promoter Ajay Singh has also put in a bid in his personal capacity along with two other investors, the sources told ET.
Singh did not respond to calls and text messages.
The government has finally succeeded in getting financial bids for Air India in its second attempt, as the first in 2018 did not elicit any interest because it had planned to retain 26% stake even after privatising the national carrier.
Debt Transfer
Air India will be transferred with a debt of Rs 23,000 crore, while the rest of its debt will be transferred to government-owned Air India Asset Holdings Ltd (AIAHL), which will house the carrier’s assets like the Air India building in Mumbai, Airlines House in Delhi, four acres of land in Delhi’s Connaught Place and various housing societies in Delhi, Mumbai and other cities.
Subsidiaries such as Air India Engineering Services Ltd and Air India Air Transport Services Ltd will also be part of AIAHL. The government plans to monetise these assets and repay that portion of Air India’s debt which it will hold on to after handing over the carrier to its new owners.
Before the handover, the government may have to take on at least Rs 20,000 crore more of debt which the airline had accumulated over the past two years. In 2018, the government had transferred to itself debt worth about Rs 22,000 crore from the airline.
