The iconic Air India building at Nariman Point in Mumbai now belongs to the Maharashtra State government, after the Centre announced the transaction had been completed.

The government of India has approved the transfer of the ownership of the Air India building from AI Assets Holding Company (AIAHL) Ltd to the Maharashtra government for a consideration of ₹1,601 crore, according to a social media post on X by Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management.  He said the Maharashtra government agreed to waive dues of ₹298.42 crore from AIAHL.

Special purpose vehicle

As a part of Air India’s disinvestment, AIAHL was created as a special purpose vehicle for warehousing the accumulated working capital loan not backed by any asset, along with four subsidiaries (Air India Air Transport Services Ltd (AIATSL), Airline Allied Services Ltd (AASL), Air India Engineering Services Ltd (AIESL), and Hotel Corporation of India Ltd (HCI).

AIAHL owns debt of Air India Ltd amounting to ₹29,464 crore. Also, the subsidiaries that are not part of the disinvestment — namely AIATSL, AIESL, AASL — were shifted to AIAHL. Non-core assets, paintings and artefacts, and other non-operational assets of Air India were also transferred to this SPV. The Air India building was one of the core assets.

Disinvestment pre-conditions

On January 27, 2022, the Centre completed the strategic disinvestment transaction of Air India when it received a consideration of ₹2,700 crore from the strategic partner Talace Pvt Ltd, a wholly owned subsidiary of Tata Sons Pvt Ltd. The government retained debt of ₹15,300 crore in Air India and AIXL and transferred shares of Air India (100 per cent shares of Air India and its subsidiary AIXL and 50 per cent shares of AISATS) to the strategic partner.

Following the government’s approval of the highest price bid of Talace Pvt Ltd for the strategic disinvestment of Air India, the letter of intent was issued to the winning bidder on October 11, 2021. The share purchase agreement (SPA) was signed on October 25, 2021. Thereafter, the strategic partner (Talace Pvt Ltd), Air India and the Government worked towards satisfying a set of conditions precedent defined in the SPA, including approvals from anti-trust bodies, regulators, lenders, third parties, and so on. These conditions have since been met to mutual satisfaction.