Air India's plan to monetise Rs 5000 crore realty assets fails to take off
Jul 29, 2013
Source : The Economic Times


BANGALORE: Air India's plan to monetise real estate worth Rs 5,000 crore has failed to take off because the state-run carrier has been unable to locate the ownership documents of most of the properties it has shortlisted for sale. "Transactions are getting delayed because the ownership documents for a large number of properties that are expected to be monetised are missing," a person with direct knowledge of the matter told ET.

"This has created a backlog ofRs 1,000 crore through property sales for the last fiscal and this fiscal. The airline is expected to raise the amount by liquidating five assets this fiscal, but any transaction this year is unlikely," added the person. Air India did not reply to a detailed questionnaire emailed by ET. The carrier had earlier said it was looking to sell land assets over 10 years and that it was scouting for top real estate consultants with wide experience in India and abroad for the purpose. In its 2012 tender document, it had said it would develop a land bank through joint ventures and lease surplus land at both international and domestic airports.

"The airline has identified properties, including the Air India colony in Kolkata, Sterling Apartments in Mumbai, land on the Sowripalayam Road in Coimbatore and Mount Road in Chennai, which will be monetised in the first phase, but it is yet to sell these assets," the person said. Earlier last year, Air India identified for sale over 105 properties totalling 7.63 million sq ft across 42 cities in India and three properties across London and Tokyo totalling 27, 993 sq ft, all of which would together fetch Rs 5,000 crore to the airline.

The first transaction with public sector companies Life Insurance Corporation of India and Industrial Development Bank of India is also yet to conclude. The airline has been in talks with these two firms to sell a four-acre plot on central Delhi's Baba Kharak Singh Marg. "The deal could have fetched Air India 800 crore, but is stuck due to the title issue as the documents are missing," the person said.

The airline has mandated global property consultant DTZ to sell its land parcels across India.

 Air India is saddled with a debt of Rs 63,000 crore, including an accumulated loss ofRs 20,000 core. The airline posted an EBITDA of Rs 19 crore in 2012-13, after which the government came up with a bailout package including an infusion of Rs 30,000 crore till 2020, by when the carrier is expected to turn profitable.


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