The Tatas look all set to clinch Air India, the state-owned loss-making airline. The capital has been abuzz with talk that a committee of secretaries opted for the Tata bid, preferring it over the one put in by SpiceJet owner Ajay Singh along with a few partners.

On Friday as reports swirled that the Tatas had won the bid for Air India, divestment secretary Tuhin Kanta Pandey tried to douse the talk with a tweet that said the government had not reached a final decision.

The bid will now be scrutinised by a group of ministers headed by home minister Amit Shah. This panel includes finance minister Nirmala Sitharaman, commerce minister Piyush Goyal, and civil aviation minister Jyotiraditya Scindia.

“Media reports indicating approval of financial bids by the government in the AI disinvestment case are incorrect. Media will be informed of the government decision as and when it is taken,” Pandey tweeted soon after news channels started reporting the deal.

The government is seeking to sell 100 per cent of its stake in the state-owned national airline, including Air India’s 100 per cent shareholding in AI Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd (AISATS).

AISATS, a leading provider of catering and ground handling services, is a joint venture with SATS Ltd of Singapore.

The stake sale process, which began in January 2020, faced delays due to the Covid-19 pandemic. In April 2021, the government asked potential bidders to put in financial bids.

The core Group of Secretaries headed by cabinet secretary Rajiv Gauba held several rounds of consultations before picking Tata Sons as the best suitor for the national carrier.

Officials indicated that the Tatas had outbid the SpiceJet chairman, adding that Ajay Singh had placed a “competitive bid” for the airline through a consortium.

Tata Sons submitted its financial bid through its subsidiary Talace Pvt Ltd.

Earlier this week, valuation firm RBSA Advisors and EY, the consultant for the disinvestment, had made a presentation to the committee of secretaries. They had reportedly set the reserve price in the range of Rs 15,000-20,000 crore.

The government plans to hand over Air India by the end of December. If they win, Air India will return to the Tata fold after 67 years. The Tata Group founded Air India as Tata Airlines in October 1932. The government nationalised the airline in 1953.

A document floated by DIPAM in January 2020 had estimated the airline's debt at Rs 60,074 crore as of March 31, 2019. Under the initial bidding terms, the buyer was required to absorb Rs 23,286.5 crore. The rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle.

The bidding terms were later revised and the bidder was no longer expected to assume a pre-fixed debt of Rs 23,000 crore. Instead, the eligible bidder was required to quote an enterprise value (EV) based on their estimate of the combined value of AI’s equity and debt in their financial bid. The winning bid will be picked on the basis of the highest EV quotation. At least 15 per cent of this value will need to be paid in cash. The rest can be taken on as debt.

The state is also likely to offer indemnity to successful bidders from lawsuits filed by foreign mega corporations against AI to recover arbitration awards they have won against India. The airline is contesting these claims.