Current affairs

Tata is the new Maharaja...Air India goes to where it came from: All you must know about the historical takeover!

By alagu, 08 October, 2021
Ratan Tata, Air India

In one of the historical takeovers in independent India, Tata Group had added another crucial feather to its cap after successfully acquiring Air India, the country's flagship airliner, by becoming its new Maharaja. On Friday, Tata won the bid to take over the financially ailing airline company as the years-long race for a deal has come to an end with a significant beginning not only for Air India but for the Indian aviation ecosystem. 

By winning the bid, Tata Group would be inviting back what had gone from its control 68 years ago. Though being India's flagship carrier by serving more international destinations, Air India was gravely suffering in financial crisis and losing its ability to clear its debts. While Air India is suffering the debt of over Rs 60,000 crore and loses Rs 20 crore every day, the Tata Group had won the bid for Rs Rs 18,000 crore and the mega-conglomerate will be getting 100 per cent in the flagship airliner. 

After the episodes of earlier denials that Tata was advancing towards the acquisition, the Union government has on Friday officially announced that Tata Sons had won the bid and it has relished the popular empire and the bid had also increased Tata's stake in the aviation industry. Through the bid, Air India comes back to the control of Tata after 68 years. JRD Tata had founded Air India as Tata Airlines in 1932 and the airline was nationalised in 1953 and split into two- a domestic airline and an international carrier. 

However, after the 2000s, the emergence of various private players in the aviation industry had hit Air India financially and the debt kept increased. In 2009, the then ruling government had appointed the State Bank of India to make a roadmap for the airline's recovery after years of losses under state control and the emergency of new players in the aviation sector. The government had come up with an offer in 2018 to sell a stake in Air India, however, the offer had failed to bring bidders to the table as the sequel of its pile of conditions. 

After extending the deadlines of bidding several times, the government had in October last year got two bids from Tata Sons and from Ajay Singh, the promoter of SpiceJet. After rounds of dialogues, deliberations, and controversies, the Union government has on Friday officially announced that Tata Sons had won the bid to acquire Air India for Rs 18,000 crore and through this, Tata invites Air India under its roof after 68 years. The handover had become historical as the deal was achieved at a high time when the Modi-led BJP regime has been leasing out the government-owned entities to the private players. 

After winning the bid, Tata Group Chairman Ratan Tata had expressed delight over the takeover. He issued a statement in which he wrote, "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. On an emotional note, Air India, under the leadership of Mr JRD Tata had, at one time, gained the reputation of being one of the most prestigious airlines in the world." 

"Tatas will have the opportunity of regaining the image and reputation it enjoyed in earlier years. Mr JRD Tata would have been overjoyed if he was in our midst today. We also need to recognize and thank the government for its recent policy of opening select industries to the private sector. Welcome back, Air India!", Ratan Tata added. According to reports, while the Tata Group quoted a bid of Rs 18,000 crore, the consortium led by SpiceJet's Ajay Singh had quoted a bid of Rs 15,100 crore. After a heavily fought race, the Tata group had finally won the bid. 

Chairman of Tata Sons, N Chandrasekaran has, after winning the bid, said, "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." Spice Jet's Ajay Singh had also congratulated the Tata Group, as it has more height to its empire. During the briefing on Friday concerning the budding, Tuhin Kanta Pandey of the Department of Investment and Public Asset Management has said that the government aims to complete the transaction by the end of 2021. 

Pandey said that the Tata Group will retain Rs 15,300 crore of Air India's debt and pay Rs 2,700 crore cash to the government. As of August 31, Air India has a total debt of Rs 61,560 crore and the debt not absorbed by Tata Sons will be taken over by the government. Pandey further said that the deal doesn't include Air India's non-core assets like land and buildings and Tata Sons will be retaining all of the airline's employees for at least a year. As the Tata group will retain all employees for the period of one year, they will be offered VRS by the company, if they weren't retained in the second year. 

As a part of the conditions from the Union government for accepting the deal, Pandey said that the Tata Group cannot transfer the Air India brand or logo for at least five years. He said that the Central government has put in Rs 54,584 crores since 2009-2010 as cash support and Rs 55,692 crores as guarantee support for Air India, which is a total of Rs 1,10,276 crores. He added that the Tata Sons winning bid of Rs 18,000 crore for Air India is higher than the reserve price of Rs 12,906 crore set by the government. 

On the front of finalizing the bid, Pandey said that a group of ministers comprising of Union Home Minister Amit Shah, Union Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal, and Civil Aviation Minister Jyotiraditya Scindia had cleared the winning bid for Air India on October 4. As Air India has gone into the hands of where it was founded after 68 years, India's aviation ecosystem has witnessed a beginning of a new era where the country won't be having a single government-owned airliner. Union Civil Aviation Minister Jyotiraditya Scindia said, "I want to congratulate the winning bidders, Talace Pvt Ltd of Tata Sons. They have a great responsibility. I believe they would be able to serve the people of the country with excellent service". 

 

 

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