facebook-page-view
Advertisement

Tatas to raise stake in AirAsia India to 49%

By Anuradha Verma

  • 28 Mar 2016
Tatas to raise stake in AirAsia India to 49%
photo-shah-junaid-(17).jpg | Credit: Shah Junaid/VCCircle

Tata Sons Ltd will increase its stake in AirAsia India in a deal that will lead to the exit of Arun Bhatia-controlled Telestra Tradeplace from the budget carrier.

The holding company of the salt-to-software Tata group said on Monday it will raise its stake in AirAsia India to 49 per cent from 41.06 per cent by acquiring a 7.94 per cent stake from Telestra.

Telestra will separately sell its remaining two per cent stake to AirAsia India chairman S Ramadorai and director R Venkataramanan. While Ramadorai will acquire a 0.5 per cent stake, Venkataramanan will pick up 1.5 per cent in the airline.

Advertisement

Malaysia’s AirAsia Berhad will retain its 49 per cent stake in the Indian airline, the statement said.

Telestra’s exit marks the end of a dispute that had led to Bhatia alleging, in December last year, that the airline was controlled by the Malaysian partner--in violation of Indian law--and that its slow growth and mounting losses were mainly due to poor management and costly third-party agreements entered into with companies affiliated to AirAsia Bhd Group CEO Tony Fernandes.

AirAsia India was formed in February 2013 with the Tata group owning a 30 per cent stake, the Malaysian carrier controlling 49 per cent and Telestra holding the rest. Tata Sons increased its stake to 41.06 per cent in August last year when Telestra opted not to subscribe to a rights issue of shares.

Advertisement

Bhatia had previously also expressed his reservations on Tata Sons floating a separate full-service airline, Vistara, in a joint venture with Singapore Airlines. The Tata group owns a 51 per cent stake in Vistara while Singapore Airlines holds the remaining.

AirAsia India is a small player in the country’s aviation market where it competes with budget carriers IndiGo, SpiceJet and GoAir, besides new players such as Air Pegasus. AirAsia India had a 2.2 per cent market share in terms of passengers carried in February, compared with 36.8 per cent for IndiGo, 13.1 per cent for SpiceJet and 8 per cent for GoAir, according to data from the Directorate General of Civil Aviation.

The stake increase by Tata Sons comes within a fortnight of the airline naming Amar Abrol its new CEO to replace Mittu Chandilya, who had led the airline since inception.

Advertisement

The latest transaction is proposed to be completed in April, subject to completion of the relevant corporate approvals and processes, Tata Sons said.

Share article on

Advertisement
Advertisement