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Last date for Air India divestment plan nears — reports suggest that Tata, Adani and Hinduja Group are interested

Dec 11, 2020, 12:26 IST
BCCL
  • Air India’s privatisation plan is entering its last lap. The government has extended the intimation date for qualified interested bidders (QIBs) of Air India to January 5.
  • However, the bidders are required to submit their Expressions of Interest (EoI) by December 14; and the physical bids by month-end.
  • Reports suggest that top conglomerates, from Tata Group to Adani and even Hinduja Group are looking to bid for the debt-ridden airline. However, no official announcement has been made as of yet.
Air India’s privatisation plan is entering its final lap. The government of India has extended the intimation date for qualified interested bidders (QIBs) for Air India to January 5, from the earlier decided date of December 29.
The intimation date is the deadline for announcing the name of those shortlisted bidders.

However, in an aggressive push to off-load its stake in the national carrier, the deadline for submitting the EoIs (Expressions of Interest) has not been extended and is set for December 14. This was the fifth time the government had extended the deadline after receiving a subdued response for Air India’s divestment plans.
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After submitting the EoIs, the bidders will be required to submit the physical bids within 15 days— i.e., by December 29.

Big corporates are in the fray

The name of the shortlisted bidders will be announced later by the government. But there are many suitors in the fray. Reports suggest that the top corporates like Tata Group, Adani Group, Hinduja Group, and many others are weighing bids for the debt-ridden airline.

The Tata Group also had reportedly started negotiations with Singapore Airlines (SIA), its joint venture partner in Vistara, to abandon a non-compete clause and join it in a proposed bid for the national carrier.
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Earlier this year, reports indicated that with nearly half a dozen airports in his kitty, Gautam Adani-led Adani Group was eyeing to enter the race to buy the airline. However, there has been no official announcement from the company yet.

The Hinduja group also tied up with Lufthansa to become a potential bidder in the privatisation of Air India. And, a group of 209 employees of Air India were on the hunt for a private investor to back their bid for the national carrier. However, Air India's pilots' unions have advised their members not to take part in the employees' bid to take over the airline via the divestment process.
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Air India divestment plans: The timeline so far

It has been a rough road so far for the Indian government’s Air India divestment plans. After an unsuccessful bid to pare 76% of its stake in 2018, the government decided to sell its entire stake in Air India this year.

The buyer will need to absorb ₹23,286.5 crore of the airline’s total debt of ₹60,074 crore as of March 31, 2019, while the rest would be transferred to Air India Assets Holding (AIAHL).
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  • In January this year, the government restarted the divestment process and invited bids for selling 100% of its equity in the state-owned airline, including Air India’s 100% shareholding in Air India Express, which is the international budget arm of the company.
  • Bid timeline was set for March 31. But due to subdued participation, the deadline for bids got extended five times this year.
  • In October, after feedback from potential bidders, the government decided to allow prospective bidders to pick up the level of debt they wish to take on along with the national carrier.
  • In late October, Centre decided to invite fresh bids, based on the company’s enterprise value. The current criteria allowed for the bidding to take place on the current value of the assets and other resources of Air India.
  • The government has now set the final bidding date as December 14 and after that the bidders will have to physically submit the bids by December 29.
  • The intimation date for the announcement of the shortlisted bidders has been extended to January 5.
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