Lok Sabha Question No. 1311 (UNSTARRED), answered on 2021-12-06
Subject: Disinvestment of Air India
Ministry: FINANCE
Asked by: Manish Tewari

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF INVESTMENT AND PUBLIC ASSET MANAGEMENT (DIPAM)

## LOK SABHA

## UNSTARRED QUESTION No.1311 TO BE ANSWERED ON MONDAY, DECEMBER 6, 2021

## Agrahayana 15, 1943 (Saka)

## Disinvestment of Air India

1311:  SHRI MANISH TEWARI:

Will the Minister of FINANCE be pleased to state:

- (a) the  details  of  the  Terms  of  Disinvestment  of  Air  India  and  its subsidiaries;
- (b) the  details  on  amount  of  haircut  on  reserve  price  in  the  deal  to disinvestment  Air  India  as  compared  to  the  price  originally  set  in 2018-19;
- (c) the  details  of  Equity  that  Tata  Sons  will  bring  in  to  Air  India  after assuming control of the airline;
- (d) the details of the upfront amount that the government will receive for the sale;
- (e) whether it is a fact that according to the terms of the deal signed, there  is  no  obligation  on  Tata  Sons  to  retain  even  permanent employees beyond a period of one year; and
- (f) the  details  of  the  steps  that  are  taken  to  protect  the  jobs  of permanent  employees  along  with  retirement  benefits  and  other remunerations that they receive or would have received?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (DR. BHAGWAT KISHANRAO KARAD)

(a):  The  financial  bid  criteria  for  the  competitive  bidding  process  for  the  strategic disinvestment transaction of Air India and its identified subsidiaries was Enterprise Value  of  Air  India  including  AI's  100%  shareholding  of  AIXL  and  AI's  50% shareholding in AISATS.

(b):  As per the process of strategic disinvestment, Reserve Price is fixed only after

sealed financial bids have been received in the second stage. However, during first iteration of disinvestment, the process could not even proceed to the second stage as there was no Expression of Interest (EoI).

(c): As per the terms and conditions of the transaction, the buyer shall ensure that Air India and its subsidiary (AIXL) continue their business of providing air transport services on a going-concern basis for a period of three years at the least from the closing  date.    No  specific  stipulation  regarding  equity  infusion  by  the  buyer,  post transfer, has been made in the SPA.

(d): The highest bidder M/s Talace Pvt Ltd, a wholly owned subsidiary of M/s Tata Sons  Pvt  Ltd  quoted  an  Enterprise  Value  of  Rs.  18,000  crore  of  which  the  cash component is Rs 2700 crore and the balance is the debt component.

(e) & (f): The sale is on a 'going concern' basis and the employees shall continue to be employees in terms of the agreed SPA signed on 25 th October, 2021. Employees cannot  be  retrenched  for  a  period  of  one  year  from  the  closing  date  and  will  be eligible for voluntary retirement scheme  with  maximum  benefits  in case of retrenchment in the second year from closing. The employees will also be eligible for other benefits like gratuity, provident fund benefits, passage rights, in accordance with applicable law/ industry practice. Employees have been allowed to stay  in  the  residential  colonies  for  a  six-month  period  from  closing.  There  is  a provision  post-closing  for  ESOP  scheme  for  employees.  Medical  benefits  will  be provided  to  existing  employees  by  the  strategic  buyer  as  per  industry  practice. Government has the obligation to provide medical facilities to all retired employees (as on closing date) and eligible existing employees (who have attained 55 years of age  or  above  or  have  completed  20  years  of  service)  and  their  spouses,  post retirement.

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