AI may rent out Mumbai building
A debt-laden Air India (AI) is looking for desperate measures to stay afloat and is evaluating options to lease out its properties across the world, including the iconic 23-storey headquarter building at Mumbai’s Nariman Point overlooking the Arabian Sea. Tushar Srivastava reports. Ground realitiesindia Updated: Jan 31, 2012 01:41 IST
A debt-laden Air India (AI) is looking for desperate measures to stay afloat and is evaluating options to lease out its properties across the world, including the iconic 23-storey headquarter building at Mumbai’s Nariman Point overlooking the Arabian Sea.The turnaround blue-print for the carrier that has a debt of over Rs 50,000 crore also includes letting out or selling off AI properties in Mumbai’s suburban Nerul and Navi Mumbai and Delhi’s Baba Kharak Singh Marg and Vasant Vihar as "some of the key assets for monetisation."
The projected revenue from such monetisation of properties would yield an estimated Rs 4,000 crore over the first five years, going up to around Rs 10,000 crore in the next ten years, a top government panel, tasked with preparing a blueprint, has recommended.
Average rental rates for prime sea-facing commercial property at Nariman Point is on the upwards of Rs 400 per square feet per month.
Most of the existing tenants, who were paying rents fixed several years ago, have already vacated the landmark building.
The airline is shortly expected to begin the process of leasing out space at rates comparable with current market rents.
Air India’s turnaround plan (TAP), prepared by SBI Caps and reviewed by consultants Deloitte, has identified AI properties in Nerul, Navi Mumbai and Baba Kharak Singh Marg and Vasant Vihar in Delhi besides the Nariman Point building as “some of the key assets for monetisation”.
It has also asked for “thorough review” of AI’s properties in India and abroad and on the “need to maintain them in the present circumstances”.
It has also said that the airline management must undertake “to close down those city offices which are found to be not viable and dispose off assets therein in a time-bound manner.”
The panel, whose report has been submitted to a group of ministers headed by finance minister Pranab Mukherjee, has even linked infusion of fresh equity into the airline to a detailed “asset monetisation plan” to be prepared by AI that has an operating loss of R15 crore per day and accumulated losses of over Rs 20,000 crore.
“AI is endowed with assets, both land and buildings, which could be successfully monetised. Prioritisation of leasing of building which could bring incomes immediately (Nariman Point building) and sale of properties which could help meet with the cash deficits must be taken up immediately,” the panel’s report said.