The iconic Air India building at Nariman Point in Mumbai may soon be taken over by the Maharashtra government, in what is a rather unusual instance of the state buying back land it had leased.
The government has offered the loss-making airline Rs 1,400 crore to acquire the building, which might soon be the new address for offices of the Maharashtra secretariat, The Indian Express reported.
While the state’s offer is Rs 200 crore less than the reserve price Air India had set, sources quoted by the report said that the national carrier has decided to go ahead with the sale in a bid to liquefy its real estate assets.
Maharashtra had leased the sea-facing 23-storey property to Air India in 1970 for a 99-year tenure.
Mounting Debts Force Move
Before the government’s offer, state-owned Jawaharlal Nehru Port Trust (JNPT) and the Life Insurance Corporation had quoted Rs 1,375 crore and Rs 1,200 crore, respectively, for the property, as per a News18 report.
The state government used its status as the land’s owner to invoke the “first right to refusal” condition to edge past JNPT.
The carrier has amassed debt worth Rs 50,000 crore, and is struggling to recover. It had put the leasehold rights of the building on sale in December 2018 after its request for a Rs 30,000-crore bailout package from the finance ministry was rejected.
“If everything goes as planned, we may take possession before June-end,” a senior state government official told The Indian Express.
Even if the sale goes through next month, the government might not get to use most of the floors for two years.
The airline had rented out nearly 5 lakh square feet of office space on 17 of the 23 floors in the Mumbai building.
(With inputs from Indian Express, News18)
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