Air India puts headquarters back on block, only govt firms can bid

Air India has put its erstwhile headquarters back on the block. This time again, only state governments and government entities would be allowed to buy the 23-storey building at Mumbai's Marine Drive promenade. The last day to submit bids is February 5.

On January 11, DNA Money had reported that the national carrier, after receiving only one bid in the maiden round, was contemplating a rebid.

Air India has put up sale of the leasehold rights of the land and the building as part of its plan to monetise the real estate assets.

Since the last year, the debt-laden airline has been preparing plans and holding talks with interested parties to sell its prime real estate asset located at the Queen's Necklace.

The first round of bidding opened early last month, with December 31 deadline.

Only Life Insurance Corporation of India submitted a quote. Maharashtra government and Jawaharlal Nehru Port Trust just showed interest but did not bid. Air India then moved a proposal to the Ministry of Civil Aviation to go for a fresh round of bidding.

Under the plan, the airline will keep around 5,000 square feet on 22nd floor for its own use, apart from retaining its logo on the top of its erstwhile headquarters.|

It is estimated that the building may fetch around Rs 2,000 crore, which will go to Air India Assets Holding Ltd, a special purpose vehicle (SPV) created by the civil aviation ministry.

As per the plans, the Union government has decided to transfer Rs 29,000 crore of Air India's total Rs 55,000 crore debt to Air India Assets Holding Ltd. This SPV also has to raise money through land deals and other measures. On transfer of the debt, Air India's annual interest liabilities are likely to reduce to about Rs 1,700 crore per annum as against Rs 4,400 crore now.

The land on which the building stands was taken on lease by the airline from the Maharashtra government and the structure was constructed in 1970.

At present, 17 floors in the building are on lease to different government offices and the airline annually earns around Rs 107 crore rental income.

NO BUYERS

• Only state governments and government entities would be allowed to buy the building. The last day to submit bids is February 5
   
• The first round of bidding, which closed on December 31, saw only bid from Life Insurance Corporation of India