Tata Sons JV Exposure Capped at Rs 49 crore

February 21
10:45 PM 2013

It what it called a as a mere 'financial investment', Tata Sons announced it was placing a ceiling on its joint venture into the airline business at Rs 49 crore. This was formalized through a memorandum of agreement between Air Asia, Tata Sons and Telestra Tradeplace, the three major shareholders in the joint venture.

The memorandum read that Tata Sons participation in the joint venture is through subscription of shares of the joint venture, limited to an aggregate of Rs 49 crore or US$9 million in equity investment. This allays any fears that the automotive giant would re-enter the airlines business. Furthermore, Tata sons would 'not be required to provide any guarantee letter of comfort or other direct or indirect shareholder support in any form in relation to any debt or further equity funding' in the joint venture.

ccording to experts, this agreement limits any sort of exposure liability on Tata Sons to a mere US$9 million and its current thirty percent stake would be diluted should new funding be accepted by the joint venture.

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