Air India Gets A Surprise Bid; What Do We Know About New Bidder?

Air India Sale: For Expression of Interest (EoI), the bidder should have a Rs 3,500 crore net value. So far, Tata Group is said to be the front runner for Air India with strong financials and aviation experience.

Air India | AFP

In a surprise move, India's national carrier Air India is learnt to have received an expression of interest (EOI) from Kolkata-based industrialist Pawan Ruia to buy a 100% stake in the ailing airline. This puts him in competition with the Air India Employee Consortium and Tata Group, considered a front runner to buy the beleaguered airline.

Born in Pipri, Uttar Pradesh, and Chairman of the Kolkata-based Ruia Group, Mr. Ruia's name may not strike a bell outside the Kolkata business circles, but he is known as a turnaround specialist for the financially stressed companies that he took over and made them profitable within a short span. The name includes Dunlop India, Falcon Tyres, and Jessop & Company.

Mr. Ruia, rarely seen without vermilion on his forehead, is credited with the turnaround of the 220-year-old engineering giant Jessop & Company, which he acquired in 2003 while it was facing a downfall. Mr. Ruia, a chartered accountant turned industrialist, silenced all the critics who thought of the acquisition to be an unwise move as the company soon started making profits within a short period.

From negative balance sheets, Jessop had a net profit of Rs 100 million in 2 years. However, he didn't stop there and took over two of the tire industry's biggest names: Dunlop India and Falcon Tyres.

"Within a short span of time, all the 4,000 employees of one of the tyre companies were re-employed, the labour was secured, the legal glitches were resolved and the production began in full swing. Both the companies started to thrive in the midst of a crippling economic downturn," reads the Ruia Group website.

However, the success didn't last long as he has knocked off that pedestal after the companies started making losses and now facing liquidation. Despite the political concerns surrounding the reversal of these three sick firms, Air India would be a different case, as the Center would resolutely back any company that wins the bid to ensure a turnaround for Air India.

Mr. Ruia could not be immediately reached for his comments, but aviation analysts believe that he needs the backing of a strong financial partner to pull off the deal as it may cost at least Rs 15,000 crore to pull off the deal.

Besides, according to the eligibility criteria set by the transaction advisor EY, which is currently assessing potential parties' EoIs, the bidder should have a Rs 3,500 crore net value. On the other hand, Tata Group is said to be the front runner for Air India with strong financials and aviation experience.