In what could spell fresh trouble for Air India (AI), banks have expressed concern to the aviation ministry and the airline management on AI’s failure to raise money through sale of properties worth Rs 500 crore per year since 2011-12.
The matter was raised by State Bank of India at a meeting of the oversight committee that is monitoring the implementation of the airline’s turnaround plan. The meeting was attended by senior aviation and finance ministry officials besides AI’s top brass.
According to the turnaround plan, the carrier has to raise Rs 5,000 crore in 10 years by selling properties.
“Banks are extremely concerned that the monetisation target (raising money through sale of properties) of Rs 500 crore per year could not be met by the company since 2011-12 and to that extent long-term loans have not been repaid,” SBI officials said during the meeting.
“As RBI auditors are very strict on restructuring, this could be taken as an event of default for AI for forcing banks to charge penal interest rate. The monetisation programme needs to be, therefore, speeded up to fall in line with these requirements,” they added.
AI did not respond to a mail and text message from HT seeking comments for the story.
According to minutes of the meeting, AI chairman and managing director Rohit Nandan briefed the committee that despite the best efforts made by the airline to regularise the property deeds, the company could not proceed as there were title issues in many properties.
“Sale or commercial redevelopment of prime properties owned by AI is stuck as either the lease agreement is not available or memorandum of agreement with the concerned authorities needs to be reworked. We are hopeful that these problems would be sorted out soon. We won’t go for a distress sale,” a senior AI official said on the condition of anonymity.