Air India asset monetisation plan on track

Leases office space to Income Tax Department, to develop Chennai land parcel

Air India’s 1.3-acre land parcel in Chennai will be taken up first for commercial development in partnership with National Buildings Construction Corporation (NBCC), sources in the airline said.

Air India hopes to raise about Rs 5,000 crore from asset monetisation but its plans have remained stuck in red tape and legal wrangles, evoking a tepid response due to depressed market conditions.

Ten days ago the national carrier signed a “non-exclusive” and “non-binding” memorandum of understanding with the NBCC for joint development of land parcels.

Air India executives are now holding discussions with NBCC to finalise the revenue-share model, which will have to be approved by the Union Cabinet. A fresh valuation will be carried out for all the land parcels, sources said.

Earlier, Air India wanted to sell its land in Chennai as well as a four-acre plot on Baba Kharak Singh Marg in New Delhi but it is no longer pursuing the sale option.

It had invited bids to sell the land in Chennai but the quotations were below its expectations. forcing the airline to redraw its plans. Also, the urban development ministry has opposed the airline’s plans to sell or lease the Delhi land parcel.  

“Our first priority is developing the Chennai land. It is situated in the Teynampet area and has a clear title. There are no issues surrounding it. We will have a discussion with the NBCC for developing an office block or commercial complex,” said an Air India official.

Also it hopes to build a multi-storey building on its Baba Kharak Singh Marg in Delhi. This land parcel was purchased by the airline in 1983 but secured full possession several years later as it got encroached.

“The plot was given to Air India on a low rate to develop its office. We hope to build a multi-storey building and will keep some floors for ourselves," the official added.

Simultaneously, it is leasing office space in  Air India building in Nariman Point. Its latest tenant will be the income tax department, which is taking eight floors in the sea facing building. Service tax department too is likely too move in. Totally it hopes to earn about Rs 75 crore from leasing all the vacant space in that building.

Air India's asset monetisation programme was approved along with its turnaround plan by the Cabinet Committee of Economic Affairs in April 2012 and was then set into motion planning process.

In January 2013, it approved real estate consultant DTZ to help it monetise the assets. The following month the airline's board gave its go ahead to sell its land and properties in Kolkata, Coimbatore, Gurgaon, Chennai (Teynampet area) and Mumbai ( flats in Sterling Apartment, Pedder Road). An oversight committee comprising of former chief vigilance commissioner former comptroller and auditor general too was formed.

Air India has been looking to sell its bungalows and flats in Mauritius, Nairobi and Hong Kong. The sales of these foreign properties was first approved in 2009 but the airline has not been able to conclude the sale. The Hong Kong flats have not been sold till now because of issues concerning property records, a source said.