Tatas to nominate 4 of the 6 directors

Four to be nominated by Tata Sons, remaining 2 directors would be representatives of Singapore Airlines

The board of the proposed Tata SIA Airlines Ltd would eventually have six directors, Tata Sons and Singapore Airlines have said in an application to the Foreign Investment Promotion Board.

While four of the directors would be nominated by Tata Sons, the other two would be representatives of Singapore Airlines. The chairman of the board will always be a Tata nominee, the partners have said in their application. The chairman and at least two-thirds of the directors of the Tata-SIA board will be Indians, to conform with foreign direct investment guidelines.

According to the memorandum of understanding between Tata Sons and Singapore Airlines, the board of the proposed joint venture company is initially to comprise three directors. While Tata Sons will nominate Prasad Menon and Mukund Rajan, the third, Mak Swee Wah, is the initial director nominated by SIA. The board will be chaired by Menon. Subsequently, the board would be expanded to six.

Tata Sons and SIA are looking to leverage synergies. SIA would provide access to the new airline to its global network. SIA would additionally share personnel for developing the expertise in the JV company and aid in cost savings in procurement of aircraft, engineering services, spares and infrastructure from its own vendors. SIA would also provide the proposed airline with its technical expertise and know-how of best practices in the civil aviation industry.

The Tatas would support the venture by providing knowledge of the Indian market and synergies between the JV company and other affiliates of the Tata Group. The latter would also help leverage economies of scale offered to it by its vendors in relation to goods and services for the JV company.

Tata Sons tied the knot with SIA last Thursday, to launch a full service carrier in India at an initial investment of $100 million. The Tatas will be the driving force in the JV with a 51 per cent stake; SIA would take the rest for $49 million.

The JV company will be incorporated in New Delhi and its principal place of business shall be India at all times. The airline has made Delhi its operational hub because of the huge capacity constraints at Mumbai airport and better infrastructure facilities at the airport here.

Tata-SIA has said it would like to operate international flights from India, depending upon government approvals.