Air India to raise Rs5,000-cr through land sale; signs MoU with NBCC

National flag carrier Air India has signed a memorandum of understanding (MoU) with National Buildings Construction Corporation Ltd (NBCC) for monetisation of its surplus land assets. This is expected to help Air India raise around Rs5,000 crore over a period of 10 years.

It will be a non-binding, non-exclusive agreement and each land asset will be individually evaluated for a particular mode of monetisation process.

Air India has vast surplus land assets and the MoU is intended to leverage NBCC's huge expertise in successful completion of several prestigious projects, according to a civil aviation ministry statement.

Air India CMD Rohit Nandan said Air India has 106 properties across the country, out of which some are on lease basis and many are lying idle.

The agreement to develop and redevelop some of these properties is an attempt to monetise to the tune of Rs5,000 crore over a period of 10 years, he added.

The MoU has provided for three models of development of properties.

Under Model 1, the land value will be the Air India's share in the partnership. Money on development of the project will be the share of NBCC. The sale proceeds will be shared by NBCC and Air India in the ratio of partnership interest.

Under Model 2, NBCC will pay Air India a portion of the value of the land as upfront money. NBCC's interest in the project would be the project cost and upfront money paid to Air India. The sale proceeds will be shared by NBCC and Air India in the ratio of partnership interest.

Under Model 3, NBCC will construct the project on behalf of Air India and development cost will be borne by NBCC. It will charge fixed internal rate of return (IRR) on the project on its investment on mutually acceptable terms. This will help Air India realise full potential of its surplus land assets in partnership with NBCC.

Speaking on the occasion civil aviation minister Ashok Gajapathi Raju Pusapati said Air India and NBCC should synergise their strengths and that team work was the key to success.

He also said outdated regulations are holding back further progress of the aviation sector.

Minister for urban development and parliamentary affairs Venkaiah Naidu who was also present on the occasion said that, development of smart cities was one of the important goals of the present government and this agreement was a small step in that direction.

Minister of state for civil aviation Mahesh Sharma stated that the ministry of civil aviation would set a target of six months to set the house in order especially the problems facing Air India.