Tata Group Likely To Ask Govt For Indemnity Clause In Air India Disinvestment Deal

The Tata Group may ask the Government to include an indemnity clause in the Air India privatisation deal to protect it from unexpected claims and risks arising out of the recent claims filed by Devas Multimedia and Cairn Energy, seeking to seize Air India's overseas assets, reports Economic Times.

The development comes at a time when the Tata Group is known to be intensifying the due diligence on the airline. The group is said to be aiming to shield itself from "any resultant court cases" and "hidden contracts" which may suddenly turn up once a deal is closed.

The group has already put in place a crack team comprising merger and acquisition (M&A) specialists from group operating companies like Vistara, AirAsia, Tata Steel and Indian Hotels, apart from the Tata Sons M&A team to examine every trivial detail.

The group has also roped in external aviation experts in the due diligence process.

Meanwhile, it should be noted that the group may even seek a sovereign guarantee against any pre-acquisition claims that Air India faces, as experts say an indemnity in favour of the acquirer may be limited in terms of time and value.

"This is a massive and complicated exercise. But we have done complicated M&A deals with the government in the past such as VSNL and also recently Bhushan Steel NSE 0.44 % which gives us the knowledge and understanding to handle such issues," a Tata Group official close to the development told ET.