The government on Wednesday decided on the minimum reserve price for national carrier Air India and met the two bidders for further discussions, said people with knowledge of the matter. Others said that the government may have taken a view on the bids.

“The winner has most likely been identified and a decision on the announcement is to be taken by the government,” said one of them.

There is no clarity on when the winning bid will be announced, said the people cited above. Representatives of the two shortlisted bidders – Tata Sons and

chairman Ajay Singh, in his personal capacity – met government officials on Wednesday, they said. Tata Sons and Singh did not reply to queries. Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey also didn’t respond to queries.

A committee of secretaries (CoS) has taken a call on the reserve price but details weren’t available. A presentation on the valuation was made on Tuesday, said another person.

The Tata Group is believed to be the frontrunner – it’s understood to have submitted a higher bid for Air India. “The high bid is made keeping in mind the national asset,” an executive said.

The Tata Group is said to have included indemnity clauses in its bid to protect itself from unexpected claims. More than 200 Tata Group personnel have been involved in the process, including M&A specialists from units such Vistara, AirAsia India, Tata Steel and Indian Hotels, apart from the Tata Sons M&A team and external auditors, said the people cited above.

Sovereign Guarantee

“Team from AirAsia India has visited Air India’s airport offices as well as maintenance centres of Air India at various airports. They have done a lot of due diligence operationally too,” said one of the persons.

The Tata Group may have also sought a sovereign guarantee against any pre-acquisition claims that Air India faces, as experts said any indemnity in favour of the acquirer may be limited in terms of time and value.

Bids for the carrier are being sought at enterprise value. Of Air India’s total enterprise value, as part of the formula, 15% will go to the government and the balance will be used to reduce existing debt.

The total debt of Air India stands at ₹43,000 crore, an increase of about ₹20,000 crore in the past two years due to the effects of Covid on the industry. The government’s plan is to further clear this increased debt and transfer the airline to the new owners with a debt of ₹23,000 crore.