Tata Sons Allocates 10,000 Crore for Air India with Specific Conditions
Tata Sons has approved a capital infusion of over Rs 10,000 crore (approximately $1.1 billion) into Air India, marking one of its largest financial commitments to the airline since its acquisition in 2021 for Rs 18,000 crore. This decision was made during a board meeting in June, chaired by N Chandrasekaran and attended by Tata Trusts chairman Noel Tata and vice-chairman Venu Srinivasan. However, the approval comes with specific conditions that must be met before the funds are released.
The board’s in-principle approval for the investment is contingent upon Air India and other group companies presenting a solid business case when seeking funding. This marks a shift in strategy, as Tata Sons had paused equity injections into Air India for over a year. The airline’s financial struggles have been significant, with losses more than doubling to Rs 22,238 crore in FY26, contributing to tensions within the leadership, particularly between Noel Tata and N Chandrasekaran.
Tata Sons is scheduled to meet again on September 17, following a Tata Trusts meeting on September 11. Notably, the Sir Ratan Tata Trust (SRTT) has been barred from holding board meetings since May due to an ongoing inquiry into alleged violations of the Maharashtra Public Trusts Act. Despite this ban, the voting rights of Tata Trusts’ nominee directors remain unaffected, as they owe their fiduciary duty to Tata Sons.
Tata Sons’ FY26 report indicates that its investment in Air India has remained unchanged at Rs 22,618 crore, with no new equity injected during the year. The airline has relied heavily on borrowings, resulting in an outstanding debt of approximately Rs 40,000 crore across 11 lenders. The State Bank of India holds the largest exposure at Rs 18,500 crore, followed by Bank of Baroda at Rs 5,938 crore. Additionally, Tata Sons has halted the issuance of corporate guarantees while awaiting RBI approval for its application to surrender its core investment company registration. Tata Sons owns 73.8% of Air India, with employees holding about 1.5% and Singapore Airlines holding 24.7%. To avoid dilution, Singapore Airlines would need to invest around Rs 3,350 crore ($351 million) to maintain its stake.
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