The land monetisation exercise at debt-laden Air India seems to be picking up pace as the airline is eyeing big-ticket items for sale in order to cut its loan burden by around Rs 7,000 crore, a senior government official aware of the development told CNBC-TV18.
"We have issued two advertisements over the last one month for sale of properties. The first had properties worth about Rs 400 crore and the other was about Rs 200 crore. We are looking at big real estate items now in New Delhi, Mumbai and some overseas,” the official said requesting anonymity.
The airline is now in discussions with City and Industrial Development Corporation of Maharashtra (CIDCO) for sale of its residential land at Nerul in Mumbai and is hopeful of generating around Rs 1,500 crore from the sale.
"CIDCO had given this 20-acre land to Air India years ago. We have asked CIDCO to dispose it on our behalf. It will take about six months, because a lot of permissions are needed. We expect our share at around Rs 1,500 crore from this land sale," the official said.
Another major land monetisation programme for Air India will be in New Delhi and this includes the 16,188 square meter land at the prime location of Baba Kharak Singh Marg near Connaught Place and staff quarters spread over 30 acres at Vasant Vihar.
The project was stuck for over a year due to "documentation issue", but some days back, NBCC Ltd, which has been entrusted with the task of redevelopment of these properties, has issued advertisement inviting bids for architectural designs and the airline is expecting to reduce its debt burden by Rs 4,000-5,000 crore on the back of these two, the official added.
The Cabinet Committee on Economic Affairs (CCEA) had approved a financial restructuring and turnaround plan for Air India in 2012. Under this, monetisation of real estate assets in Air India to the tune of Rs 5,000 crore was also approved over a period of 10 years with an annual target of Rs 500 crore from 2012-13 (April-March) onwards.
However, till March, the airline could only sell properties worth over Rs 500 crore as against expectation of Rs 3,000 crore.
“Air India was unable to meet the target under asset monetisation plan due to problem with the land titles. The high-value properties were allotted to Air India for specific purposes, which had end-use restrictions and did not have clear marketable titles as they were allotted on perpetual lease basis,” minister of state for civil aviation, Jayant Sinha, said in a written reply to Lok Sabha in March.
Further till July, sale of 30 properties have been taken up by eauction through MSTC, a public sector undertaking and revenue of Rs 724 crore was realised by the airline, as per government data.
While the airline has already put most of its overseas properties for sale, the next lot for monetisation would be for the remaining global real estate and then, the focus will now be largely on its domestic spread.
“Now in the next lot, we are talking about selling our properties in Japan, London and Nairoboi to generate about Rs 100 crore. Most of the properties in overseas have been sold. This is the last lot left. There are two flats in Tokyo, office space in London and some open land in Nairobi," the official said.
The Maharaja carrier has also recently entered into a redevelopment agreement with Maharashtra Housing and Area Development Authority (MHDA) for some of its old flats. Proceeds from sale of redeveloped flats will be again used to reduce the debt.
"Under this, MHADA will demolish and redevelop some of our old flats and they will give us over 60 ready-made flats. These flats can then be sold. We are also talking about redevelopment of Juhu complex as well,” the official said.
The efforts to maximise sales from land monetisation come at a time, when the government is working on a financial assistance programme for it and steps are being taken to reduce the debt to make the airline financially viable. The government had failed to elicit even a single bid when it initiated a divestment process in March for 76 percent stake in Air India.
Gradually, the airline, which is reeling under a debt of over Rs 48,000 crore, also plans to sell more properties across Jaipur, Jodhpur, Udaipur, Chandigarh, Pune, Bengaluru, Hyderabad and Chennai pushing for it in an attempt to maximise revenue from land monetisation.