 "Air India expects to surpass its land monetisation target in FY14")
State-owned national carrier Air India is set to surpass its revenue target from asset monetization programmes in the current financial year with Cabinet Secretary Ajit Seth recently clearing the way for sale of a prime plot of land on Delhi’s Baba Kharak Singh Marg. With the go-ahead, the airline is expecting to gain revenues of around Rs 1500 crore from sale of assets as compared to the original target of Rs 1000-1200 crore set for this fiscal year.
A senior official at Air India said, “We have already put up for sale four apartments in Mumbai and a plot of land in Gurgaon. The response is very good. We are receiving 30-40 enquiries every day. The Cabinet Secretary recently gave a go-ahead for us to sell the land on Baba Kharak Singh Marg. We are expecting to exceed our revenue target from asset monetization this year.”
The Ministry of Urban Development had in the draft land transfer deed barred Air India from selling or leasing the land on Baba Kharak Singh Marg despite the plot was being included in the first phase of asset sale under the financial restructuring plan (FRP) approved by the Cabinet. Seth in a meeting recently resolved the dispute and cleared the sale. Public Sector Undertakings (PSUs) Industrial Development Bank of India (IDBI), State Bank of India (SBI), Oil and Natural Gas Corporation (ONGC) and Power Finance Corporation (PFC) had earlier this year evinced interest in securing the land from the cash-strapped airline. The plot alone is expected to fetch the airline around Rs 1000 crore.
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Apart from the land in Delhi, the airline plans to auction the Air India Colony in Kolkata, some land on Sawripalayam road in Coimbatore and in Chennai this year. “We had a target to earn Rs 500 crore every year through asset monetization over the next 10 years. Later it was decided to fast-track the process. But either ways we will exceed earnings of Rs 1000-1200 crore from asset sale”, the official added.
To avoid any controversy over its Asset Monetisation Programme, Air India has formed a three-member oversight committee to monitor the auction process. The committee constitutes retired Supreme Court Judge D N Dharmadhikari, former Chief Vigilance Commissioner Pratyush Sinha and former Comptroller and Auditor General V N Kaul.
Monetization of asset is a part of the financial restructuring plan of Air India and was initially slated to be completed over a period of 10 years at the rate of Rs 500 per year. The airline’s board later decided to complete asset sale by March 2016 and utilize the proceeds to service its debt. Air India Chairman and Manging Director Rohit Nandan has entrusted joint managing director Nasir Ali to complete the asset monetization programme within a three-year period.
The airline has plans to earn revenue of around Rs 1200 crore in FY14, Rs 2000 crore in FY15 and Rs 1800 crore in FY16 through monetization of assets. Air India has debt of Rs 30,000 on its book. While Rs 25,000 crore is long-term debt, the remaining amount is tied in short-term debt and working capital debt.