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The Tata group is in discussions with banks to acquire working capital loans of approximately Rs 15,000 crore for Air India, the airline it purchased from the government last year and is making a valiant effort to revive it, reported The Economic Times.
According to a person with knowledge of the matter, the funds will be used to cover daily air operations and losses, for restoring the fleet, paying for aircraft rentals, and overhauling IT systems.
According to another source, the loan will have a three-year term with an annual reset of between 7.5 and 8 per cent.
Last year, State Bank of India (SBI), HDFC Bank, and Bank of Baroda provided a Rs 23,000 crore, unrated, unsecured loan to Talace, a Tata Sons company that won the bid for Air India, at a rate of 4.25 per cent. At the end of January, the loan is due for renewal.
According to a bank official, rising interest rates and a lack of liquidity in the system will increase borrowing costs. The Reserve Bank of India website lists 6.91 per cent as the cut-off for 364-day Treasury Bills.
Tata Sons, through Talace, won the bid to purchase Air India for Rs 18,000 crore in October last year. About 69 years after the government nationalised the airline in August 1953, it took the ownership of the carrier in January this year.
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