Adani To Purchase Stake In India's Biggest Aircraft Maintenance, Repair And Overhaul Firm

The Adani Group is considering investing in the Mumbai-based Air Works Group in order to bolster its civil aviation portfolio.

The Air Works Group is India’s largest independent aircraft maintenance, repair and overhaul (MRO) organisation. It services civil aviation companies like IndiGo, Vistara and GoAir amongst other international airlines like Etihad, FlyDubai, Lufthansa, Turkish Atlantics and Virgin Atlantic.

The company has also tied up with Boeing for heavy maintenance checks on three P-81 long-range maritime patrol aircrafts of the Indian Navy.

“The Adani Group has started its due diligence into Air Works Group,” a source in the know of developments was quoted by The Indian Express.

The Air Works Group has presence across 27 Indian cities and competes against other MRO companies like GMR Aero Technic and the state-owned AI Engineering Services Ltd.

The Gautam Adani-owned conglomerate already manages seven airports in the country in Mumbai, Ahmedabad, Lucknow, Thiruvananthapuram, Mangalore, Jaipur and Guwahati.

“The proposed deal with Air Works is in line with the Adani Group’s plans to leverage opportunities arising from the growing Indian civil aviation market and the increasing need for MRO services,” another source told the aforementioned publication.

Almost 90 per cent of India’s MRO requirements are fulfilled through imports. So, there is reportedly a great growth potential for the indigenous MRO sector. In fact, the GST rate on domestic MRO services was cut down to 5 per cent from 18 per cent in March 2020. They can even avail complete input tax credit and this has come as a huge relief for the industry.

Indian airlines used to otherwise send their aircrafts to China, Singapore, UAE and Sri Lanka for servicing due to higher taxes in the country.

“Adanis have been keen on supplementing their airports portfolio with MRO for some time now. They have an arrangement with Indamer Aviation but that hasn’t really taken of. They have even made some appointments last year to decide on the company’s broader MRO strategy,” an industry source revealed to the Indian Express.

GT Capital Group, with a 25.74 per cent stake, is the biggest shareholder in Air Works Group as of 31^st March, 2021. The Punj Lyod Aviation has a 23.25 per cent holding. The Menon family that founded the company in 1951 has a 15 per cent stake in the Air Works Group as well.

The company had amended its memorandum of association to increase its authorised share capital and create a new class of Series B equity shares in November 2021. It reportedly highlights that the Air Works Group is in the market to raise fresh funds currently.