By Prarthana Mitra
The government recently initiated discussions regarding the sale of the Air India building at Nariman Point, Mumbai, according to sources close to the development. The tentative proposal approved by Prime Minister Narendra Modi will see the building go to the country’s biggest container port Jawaharlal Nehru Port Trust (JNPT), formerly known as the Nhava Sheva Port.
As a part of the initiative to raise funds for the debt-ridden national carrier, the proposal was followed up by the setting up of an inter-ministerial panel to work out the modalities of the same.
Here’s what happened
The proposal to sell the building to state-owned JNPT comes after a decade of grappling with debt. At present, Air India’s debt burden is estimated to be a little more than Rs 50,000 crores. The government’s year-long efforts to strategically divest Air India shares too failed to take off, following which the prime minister gave his in-principle approval for the proposed sale of Air India’s iconic building to JNPT.
JNPT handles around 55% of the container cargo in the country and has annual profit worth Rs 1,300 crores. In 2017-2018, it handled 66 million tonnes of container cargo.
“A committee comprising Secretaries from the Civil Aviation and Shipping ministries has been set up to decide on the valuation of the building,” informed a source. The name of the property shall be retained after the sale considering that everyone refers to it as the “Air India building”, sources informed Livemint. The broader contours of the proposed deal are still being deliberated upon.
On Monday, finance minister Piyush Goyal announced that the government is going to strengthen Air India’s management practices and operational efficiencies in new ways. “In the next 18 months, you will see the visible change,” he remarked.
Change of hands
Air India’s 23-storey building at Nariman Point, Mumbai was also the airline’s headquarters till 2013. Situated alongside Marine Drive, it happens to be a prime property located at one of the choicest points in Mumbai and is likely to fetch high valuations. Overlooking the sea, it was built by John Burgee of the New York City architectural firm Johnson/Burgee and flaunts the airline’s centaur icon on its crest.
It was also the site of 1993 Bombay bombings during which a blast in the garage killed around 20 people. Having already begun leasing several floors to banks, corporations and multinational companies, in 2010, Air India decided to shift base to Delhi in search of cheaper rent. However, the sale marks the end of an era in the history of Indian airlines and legacy.
To assuage the debt, the government has since long been banking on an asset monetisation plan for Air India, which has sold a few properties already. Several properties in prime locations such as Mumbai and Chennai were sold to the State Bank of India with each of these flats fetching Rs 2 crores, the ministry of aviation reported.
The recent move has not been without dissent, according to some Air India officials, with several vehemently against the sale, calling the building a “cash cow” in its present crisis.
Prarthana Mitra is a staff writer at Qrius.
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