Corporate Grapevine

Published: Feb 15, 2022
Updated: Feb 15, 2022

Tatas get Air India (relatively) for a song!

The Tata group has acquired Air India at an enterprise valuation of Rs 18,000 crore. The deal is extremely good for the Tata group as they are not taking over Air India’s entire debt, which was Rs 62,000 crore. The Tatas will acquire only Rs 15,700 crore of the airline’s debt and the rest will be given to the government as equity.

The Centre had paid off Rs 13,000 crore of Air India’s debt just before the Tatas took over the airline. In fact, Indian tax payers will be saddled with the remaining Rs 45,000- crore debt of Air India. Hence, all the assets are with the Tatas but the liabilities are with the taxpayers. This, in a nutshell, is the Modi government’s gift to the ‘loyal’ Tata group. Apart from receiving the entire fleet of 126 aircraft, the Tatas also benefit from the landing rights and slots all over the world. Sooner or later, the deal is sure to come under public scrutiny — considering that the agencies are still investigating the privatisation deals of the erstwhile Vajpayee government.

The Tata group’s track record of running two airlines, Tata Sia Airlines and Air Asia India – both loss-making — is quite dismal. But due to the low debt now on Air India’s books, the airline will be able to turn around fast as the finance costs have come down drastically.