Air India bid result in 3 weeks
The government will select the winner in Air India’s disinvestment in about three weeks and two high-level committees will finalise the reserve price for the national carrier within this period.
The reserve price of the carrier will be soon decided by the inter-ministerial group (IMG) headed by the secretary, Department of Investment and Public Asset Management (DIPAM), based on the inputs from government-appointed valuers. The Core Group of Secretaries on Divestment (CGD), chaired by the cabinet secretary, will then consider the IMG’S recommendation.
The Tata group and Spicejet promoter Ajay Singh are in the race to acquire the loss-making airline.
This process is being targeted to be completed in three weeks, said a top government official. The security clearance of the bidders who have shown an interest by placing financial bids is underway, he added.
After getting clearance from the CGD, the proposal will be placed before the Air India Specific Alternative Mechanism (AISAM), headed by Union Home Minister Amit Shah.
The AISAM has the finance minister, commerce minister, and aviation minister as members.
The government is targeting to complete the transaction by the end of December, the official quoted above said.
However, sticking to this deadline will depend on the fulfilment of conditions the government and the successful bidder agree on. They include parameters that will have to be met by the buyer as well as the government. These terms and conditions have been finalised with the buyers, based on which the bids have been received, the official said.
Key to meeting the transaction timeline is also timely approval from the Competition Commission of India (CCI) and the lenders to the national carrier, the official quoted above said.
“Financial bids for Air India disinvestment received by transaction adviser. Process now moves to concluding stage,” secretary, DIPAM, tweeted on Wednesday.
While Tata placed the bid through their wholly owned subsidiary Talace (TPL), Singh is believed to have partnered other entities for the bid. TPL was incorporated last year and its directors include senior executives of Tata Sons.
The objective of the company, in accordance with its memorandum of association, is to establish, operate, manage, and invest in transportation services. In May TPL’S authorised share capital was increased from ~25 lakh to ~50.25 crore. Equity shares of ~25 crore were issued to Tata Sons in June.
The government is selling 100 per cent of its stake in the state-owned airline, including Air India’s 100 per cent shareholding in AI Express and 50 per cent in Air India SATS Airport Services.
Air India, together with Air India Express, has over 141 aircraft and they are the largest operators on international routes from India. However, the airline’s performance has been affected by high debt and it has been saddled with accumulated losses of over ~70,000 crore. In the last financial year, it is estimated to have posted a loss of ~9,779 crore.