NEW DELHI (TIP): For Air India, it is homecoming after 70 years. Tatas have won the bid to acquire debt-laden state-run Air India offering Rs 18,000 crore for acquiring 100 per cent shareholding, a senior government official said on Friday, October 8—a development that means that the airline has come a full circle and now heads back to its original founders. An SPV of Tata Sons—the holding company of conglomerate—has emerged as a successful bidder, Tuhin Kanta Pandey, secretary to the Department of Investment and Public Asset Management (DIPAM), the government department responsible for privatization, said. Tata Sons beat SpiceJet promoter to bag Air India. Both bidders had quoted above the reserve price, he said adding the transaction is planned to be closed by December.

The DIPAM secretary said Tatas’ bid of Rs 18,000 crore comprises taking over 15,300 crore of debt and paying the rest in cash.  The rest is being transferred to the government owned SPV AIAHL, Pandey said.

Air India’s non-core assets to the tune of Rs 14,000 crore will be transferred to AIAHL, which means a little over Rs 36,000 crore will be left over for the government to finally pay, the DIPAM secretary said.

He said a group of ministers comprising Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal, and Civil Aviation Minister Jyotiraditya Scindia has cleared the winning bid for Air India on October 4.

“Tata Sons’ winning bid of Rs 18,000 crore for Air India higher than the reserve price of Rs 12,906 crore set by the government,” DIPAM Secretary said.

Tatas will have to retain all employees of Air India for one year, the aviation secretary said. The company could offer them voluntary retirement after that, the official said. Other conditions include a 5-year embargo on Tata Sons from transferring the Air India brand and its logo, and that any transfer thereafter, if ever, should necessarily be to an Indian national.

Tata Sons chairman emeritus Ratan Tata said in a statement to the return of Air India provides the company a very strong market opportunity but admitted it would take considerable effort to rebuild the brand.

This marks the return of Air India to the Tatas.

Jehangir Ratanji Dadabhoy (JRD) Tata founded the airline in 1932. It was called Tata Airlines then. In 1946, the aviation division of Tata Sons was listed as Air India and in 1948, Air India International was launched with flights to Europe.

The international service was among the first public-private partnerships in India, with the government holding 49 per cent, the Tatas keeping 25 per cent and the public owning the rest.

In 1953, Air India was nationalized.

The government is selling 100 per cent of its stake in the state-owned national airline, including Air India’s 100 per cent shareholding in AI Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd.

(Agencies)