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Business News/ Companies / News/  Tatas firmly in the driver’s seat to acquire Air India
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Tatas firmly in the driver’s seat to acquire Air India

Tata Sons has quoted a higher price than SpiceJet promoter Ajay Singh for Air India Ltd in the preliminary bidding round, according to people aware of the development

Tata Sons is in the driver’s seat in the proposed disinvestment process of Air India, with the second wave of covid resulting in reduced load factor and suspension of air travel. (MINT_PRINT)Premium
Tata Sons is in the driver’s seat in the proposed disinvestment process of Air India, with the second wave of covid resulting in reduced load factor and suspension of air travel. (MINT_PRINT)

MUMBAI, NEW DELHI : Tata Sons Pvt. Ltd, the holding company of Tata Group, has quoted a higher price than SpiceJet promoter Ajay Singh for Air India Ltd in the preliminary bidding round, two people with direct knowledge of the development said, seeking anonymity. The government hopes to privatize India’s flag carrier by the end of the current fiscal year.

According to the people, Tata Sons is in the driver’s seat in the proposed disinvestment process, with the second wave of covid resulting in reduced load factor and suspension of air travel, constricting the cash flows of Air India and lowering its valuation.

“The qualitative matrices include parameters such as years of experience in managing aviation business, size of airline fleet managed and countries operated in, leadership structure, brand and goodwill, expertise in managing large non-core assets, experience in handling retirement and pension benefits, expertise in managing workforce, among others," said one of the two people cited above.

However, the divestment of Air India could get delayed by a few months as due diligence, such as physical inspection of (real estate) assets by a bidder will have to be deferred due to the pandemic, Tuhin Kanta Pandey, secretary, department of investment and public asset management (Dipam)—the nodal agency running the divestment process—had said on Wednesday.

Speaking on the sidelines of the "Mint India Investment Summit", he said the government was targeting the completion of Air India’s divestment in the first half of FY22, but “there could be a little bit of a slippage in terms of time".

So far, Tata Group and SpiceJet’s chairman and managing director Ajay Singh, in his individual capacity, have been shortlisted to bid for the carrier, as per media reports.

The aviation industry is one of the worst impacted by the pandemic as the surging number of infections hasled to a fall in demand for air travel.

Due to the prevailing situation, Tata Sons is considering a lower valuation for Air India and is likely to urge for a higher absorption of the airline’s debts by the Centre.

Air India has around $10 billion worth of debts, of which Tata Sons may ask the government to take care of more than $5 billion.

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ABOUT THE AUTHOR
Anirudh Laskar
Anirudh reports on significant corporate matters including large mergers and acquisitions, India's emerging e-commerce sector and regulatory issues in the corporate and financial services industry. Over the past 17 years, he has covered many beats including banking, NBFCs, aviation, automobile, insurance, markets, SEBI, IRDAI, mutual funds, investment banking, private equity, deals, and conglomerates.
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Published: 30 Apr 2021, 02:58 PM IST
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