New Delhi: Tata Sons’ subsidiary Talace quoted as the highest bid of Rs 18K for national carrier Air India under the disinvestment process. The Union government on Friday declared Talace quoted an enterprise value of Rs 18K crore for 100% equity shareholding of Centre in Air India along with that of Air India Express and AISATS.

            Out of Rs 18K crore, Talace will retain Rs 15,300 crore, while the rest will be paid to the Centre as the cash component. The bid was higher than the consortium led by industrialist Ajay Singh. The consortium had quoted an EV of Rs 15,100 crore. Centre had stipulated a reserve price of Rs 12,906 crore. There were only two bidders in the final stage of disinvestment. Based on the bid results, Centre will enter into a share purchase agreement (SPA) with Talace by December end.

The decision to enter into the sale purchase agreement with the Tata’s was taken by empowered Air India Specific Alternative Mechanism it was announced here by Disinvestment Secretary Tuhin Kanta Pandey. It is expected that the transaction will be completed by December 2021.
Under the SPA, jobs of Air India’s employees will be safeguarded for one year. Air India has a total strength of 12,085 employees, which includes 8,084 permanent ones. In addition, Air India Express has 1,434 employees.

According to Civil Aviation Secretary Rajeev Bansal, no employee will be removed for one-year. In the second year, if an employee has to be removed, then a VRS option will be provided.
Additionally, employees will be provided gratuity and provident fund benefits. The post-retirement medical benefits to employees will be provided.

All in all, Tata Sons’ subsidiary Talace will among other assets such as human resources get more 140 aircraft as well as 8 logos. After the transaction, Tata Sons will have two full service carriers Vistara and Air India along with two low cost airlines Air India Express and Air Asia India and a ground and cargo handling company AISATS.

In terms of fleet, Tata’s will get Air India’s 117 wide-body and narrow body aircrafts and Air India Express’s 24. A significant number of these aircrafts are owned by Air India. It will also get to operate these aircraft on over 4,000 domestic and 1,800 international routes. Air India’s frequent flyer programme has more than three million members. Furthermore, eight brand logos would be transferable to the Tata’s which they have to retail for a period of five years.

In terms of financials, Tata’s will need to take care of the Rs 20 crore losses per day that the company suffers. There is also a three-year business continuity clause in the agreement. Tata’s would also need to maintain 51% stake in the airline for atleast one year. Nonetheless, Tata’s will be given full operational control of the disinvested entities.

On the other hand, the transaction does not include non-core assets including land and building, valued at Rs 14,718 crore, which are to be transferred to GoI’s Air India Asset Holding Limited (AIAHL).

Ratan Tata, the Chairman Emeritus of Tata Sons in his tweet said that Welcome back, Air India! The Tata Group winning the bid for Air India is great news! While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong market opportunity to the Tata Group’s presence in the aviation industry, he said.

Spicejet Chairman and Managing Director Ajay Singh said, I congratulate the Tata Group on winning the bid for Air India and wish them all the success. It was my honour and privilege to be shortlisted for bidding for Air India. I am confident that the Tata Group will restore the glory of Air India and make all of India proud. I would also like to congratulate the Government on the successful disinvestment of Air India. They ran a transparent and flexible process and gave new impetus to India’s disinvestment programme.

N. Chandrasekaran, Chairman Tata Sons said that we are delighted to be declared as the winner of the bid for Air India. This is a historic moment, and it will be a rare privilege for our Group to own and operate the country’s flag bearer airline. It will be our endeavour to build a world-class airline which makes every Indian proud. On this occasion, I would like to pay tribute to J.R.D. Tata, pioneer of Indian aviation, whose memory we cherish.