The September 15 deadline to bid for the distressed Air India has reached conclusion with Tata Group and SpiceJet's Ajay Singh reportedly putting in their bids.
The bidding deadline for the national carrier was extended nearly five times due to the COVID-19 pandemic, and the current bids would set the ball rolling for the much-awaited disinvestment process.
Though the government intends to close the deal by December, there's a whole list of procedures that need to be followed over the next few months.
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As per EoI (express of interest) floated last year, the government will now go into finalising the qualified interested bidders (QIB). There's a list of eligibility criteria that has to be met by the bidders to enter the second stage of the process.
For instance, at the bidding stage, the interested parties were supposed to submit the latest audited financial statements of the past 20 months from the date of EOI deadline. In addition, IB (interested bidders) will have to furnish the net worth details of the past three months. Once the IBs meet the eligibility criteria, the deal will move to the second stage.
At this stage, QIBs will be required to provide a certificate either from the bank/financial institution or from statutory auditors that it has got enough funds to complete the proposed acquisition.
The bidders will get access to the VDR (virtual data room) to review certain additional information (more than the information accessed at the first stage) about Air India, Air India Express and AISATS for conducting a due diligence on these entities.
Tata Group has reportedly done due diligence for Air India a few months ago. The conglomerate had engaged Bain and Seabury Group to conduct due diligence before submitting its bid.
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Most importantly, the QIBs will have to seek approvals from different agencies (MoCA, DGCA, CCI, DIPP) and furnish security clearance before finalising the sale process.
"The closing of the proposed Transaction shall be subject to receipt of all necessary approvals including security clearance as per terms provided in RFP [request for proposal]. The highest bidder, who is in compliance with the terms of the RFP, will be referred to as the confirmed selected bidder," said the EoI.
While the EoI talks about selling the airline to the highest bidder, Jitender Bhargava, former ED at Air India, said that the government will certainly look at more factors than the financial bids.
"Who has the deep pockets to bear costs? The Air India's maintenance has not been up to the mark. There are various costs that need to be incurred in the future. It will be foolhardy on the part of the government to go with the highest bidder. If government believes that Air India name has to be retained, the deal has to view from sustainability standpoint," he stated.