The government has started discussions for sale of Air India’s iconic building in Mumbai to the country’s biggest container port JNPT as part of efforts to raise funds for the cash-strapped national carrier, sources said.
Official sources said that the proposal had received in-principle approval from Prime Minister Narendra Modi, following which an inter-ministerial panel had been constituted to work out the modalities.
Air India's 23-storey building at Nariman Point, Mumbai, which was also once the airline's headquarters, is a prime property and is likely to fetch high valuations.
The proposal to sell the building to state-owned Jawaharlal Nehru Port Trust also comes after the government's efforts of Air India strategic disinvestment failed to take off. Sources say the Prime Minister has given his in-principle approval for the proposed sale of Air India's iconic building to JNPT.
"A committee comprising Secretaries from the Civil Aviation and Shipping ministries has been set up to decide on the valuation of the building," one of the sources said. Air India and JNPT comes under the Civil Aviation and Shipping ministries, respectively.
At present, the idea is that the name of the building will not be changed after sale to JNPT since it is commonly known as the 'Air India building', the sources said.
The broader contours of the proposed deal are still being worked out. A query sent to an Air India spokesperson about the proposal did not elicit an immediate response.
According to some Air India officials who are aware about the proposal, a section within the airline is vehemently opposing any such move. They also said that the building is a “cash cow” for the airline.
JNPT at Navi Mumbai, formerly known as the Nhava Sheva Port, is India's biggest container port which handles around 55 percent of the container cargo in the country and has an annual profit worth Rs 1,300 crore. It handled 66 million tonnes of container cargo in 2017-18.
On Monday, Finance Minister Piyush Goyal had said that the government is giving a new thrust to strengthen Air India's management practices and operational efficiencies while the disinvestment plan would depend on various circumstances. "In the next 18 months, you will see the visible change," he had said.
The government has been pursuing the asset monetisation plan of Air India for long and few properties have been sold so far.
In March this year, the Civil Aviation Ministry had informed the Lok Sabha that the airline had mopped up Rs 543.03 crore till from monetisation of its assets in prime locations such as Mumbai and Chennai.
The monetisation included the sale of six flats at Sterling apartment, Mumbai, to the State Bank of India with each flat fetching Rs 22 crore, the ministry had said.
The ministry had also said the carrier had collected Rs 291 crore as lease rental from the Air India building at Nariman Point, Mumbai, between 2012-2013 and January 2018.
Air India's debt burden is estimated to be more than Rs 50,000 crore.
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