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Updated October 8th, 2021 at 19:08 IST

Tata Sons subsidiary Talace to buy Air India with winning bid of Rs 18,000 crore

In a significant development, Tata Sons subsidiary Talace has won the bid for acquiring national carrier Air India, the Aviation Ministry announced on Friday.

Reported by: Gloria Methri
Tata Sons
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In a significant development a long time in coming, Tata Sons, via a wholly-owned subsidiary Talace Pvt Ltd, has won the bid for acquiring national carrier Air India, the Aviation Ministry & DIPAM Secretary announced on Friday at a cabinet briefing. 

How much is Tata Sons paying for Air India?

The salt-to-software conglomerate placed a winning bid of ₹ 18,000 crores to re-acquire the airline more than 65 years after it ceded control to the government. Seven bids were received in total, of which five did not meet the criteria. The bids that lasted were those of Tata Sons and Ajay Singh, the promoter of SpiceJet. The Tata Sons bid amounts to Rs 18,000 crore and will see it take on Rs 15,300 crore of Air India's debt, which currently stands at Rs 61,562 crore.

The remaining Rs 46,262 crore of debt will be retained by a company that will be spun off, called AIHL which will continue to be owned by the Government. Tata Sons winning bid will entail the transfer of all non-core assets, meaning AIHL will retain ownership of the land and building assets valued at Rs 14,718 crore. 

Apart from a 100 percent stake in Air India and its low-cost arm - Air India Express, the winning bid also includes a 50 percent stake in ground-handling company Air India SATS Airport Services Private Limited (AISATS).

The transaction is expected to close by the end of December 2021, said Tuhin Kant Pandey, Secretary, DIPAM.

'Welcome back Air India': Rata Tata

The acquisition marks the return of Air India to the Tatas. The airline was founded by Jehangir Ratanji Dadabhoy (JRD) Tata in 1932 and was called Tata Airlines then.

Industrialist Ratan Tata on Friday reacted to the news that Tata Group has finally won the bid to reacquire Air India. Taking to Twitter, he said Tatas will have the opportunity to regain the image and reputation that the airlines enjoyed in earlier years.

Remembering JRD Tata, under whose leadership Air India had gained the reputation as the most 'prestigious' airline in the world, Ratan Tata said the late Indian aviator would have been overjoyed on this day. 

 

The bidding process for the Air India divestment

In June 2019, the Centre announced the disinvestment of the debt-ridden Air India. Multi-layered decision making was adopted for the disinvestment process, comprising Air India Specific Alternate Mechanism chaired by Union Home Minister Amit Shah and the process was transparent, competitive, supported by professional advice, said Pandey. 

The Cabinet Committee on Economic Affairs had instituted Air India Specific Alternate Mechanism which identified the winning bidder for the national airline. The Air India Specific Alternate Mechanism consisted of Home Minister, Finance Minister Nirmala Sitharaman, Commerce and Industry Minister Piyush Goyal, and Civil Aviation Minister Jyotiraditya Scindia. 

 

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Published October 8th, 2021 at 16:30 IST

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