Air India hopes to land Rs 1,500 crore from Navi Mumbai Plot

MUMBAI: Air India is expected to earn Rs 1,500 crore from the sale of a land parcel in the Nerul area of Navi Mumbai. However, a portion is currently occupied by some retired employees. With the process of privatisation underway, the airline has put the property on sale.

The City and Industrial Development Corporation of Maharashtra is helping the national carrier get a good deal for 100,000 square metre property. “Of the total area, 10% can be developed for commercial activities while rest has to be residential.

With the airport coming and lot of development in the region, we expect the land to fetch a good value,” said an Air India official. However, the airline will first have to deal with about 500 occupants of a residential tower on the property. They had been allotted flats as Air India employees.

“We are sceptical of figures they are expecting. The land rates in Nerul should be less than Rs 5,000 per sq.ft, which makes the Rs 1,500 crore target unlikely. A more conservative figure should be expected given that the real estate sector is already reeling with excess inventory,” said Rahul Grover, CEO of Mumbai-based Sai Estate Consultants.

“Moreover, developers are facing a liquidity crisis and the resulting lack of risk appetite will see limited demand for offerings. It would be advisable to sell the land in phases over the next few years so better prices can be obtained by the struggling Air India as demand picks up.”

In 2011-12, the government prepared a turnaround plan for Air India and tasked it to sell properties worth Rs 500 crore every year. Two years ago, the national carrier put on the block as many as 111 properties with a cumulative price tag of Rs 9,500 crore, hoping to monetise assets to reduce its mounting debt. Several properties have been put on sale multiple times since, but have failed to attract bidders even at the base price.

The government, which did not receive a single bid in its maiden attempt to sell Air India last year, is being cautious this time and has offered various relaxations, such as a 100% in the airline, substantial restructuring of debt and liabilities and allowing the new owner to offer voluntary retirement to staff.