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Tuesday, September 28, 2021

Maharashtra govt resumes discussion on buying Air India building

While the MVA government is keen on purchasing the building at Rs 1,400 crore, Air India told the state government in the Tuesday meeting that its internal valuation was around Rs 2,000 crore.

Written by Yogesh Naik | Mumbai |
Updated: August 11, 2021 7:43:32 am
The national air carrier had in the face of mounting losses decided to put up for sale leasehold rights of the land and the building in December 2018. (File)

The state government has reinitiated discussions over the purchase of the iconic Air India building at Nariman Point, with Maharashtra Chief Secretary S J Kunte holding a meeting with Air India CMD Rajiv Bansal on Tuesday to deliberate on the deal.

While the MVA government is keen on purchasing the building at Rs 1,400 crore, Air India told the state government in the Tuesday meeting that its internal valuation was around Rs 2,000 crore.

A senior state official said that the land on which the AI building stands is owned by the state government and AI is supposed to pay Rs 400 crore as various outgoings. As a result, the entire deal will cost Rs 2,400 crore. The state government is said to have asked Air India to give a copy of its valuation report if they want to proceed with the sale of the building.

Kunte acknowledged that a meeting had taken place with AI officials over the proposed sale of the building. “We are examining various legal and valuation issues,” Kunte said.

AI CMD Bansal refused to comment, stating that it was an internal meeting.

The national air carrier had in the face of mounting losses decided to put up for sale leasehold rights of the land and the building in December 2018.

The previous BJP government led by Devendra Fadnavis had evinced interest in buying the building to house its various offices scattered across Mumbai.

The state had bid Rs 1,400 crore for the 23-storey property. The offer, however, is Rs 200 crore less than the building’s reserve price in 2019. AI now claims that the price is Rs 2,000 crore as per current valuation.

The state-owned Jawaharlal Nehru Port Trust and Life Insurance Corporation have also bid Rs 1,375 crore and Rs 1,200 crore, respectively, for the building.

With the change in government, the proposal was stalled with AI not getting any buyers and the MVA government not initiating any discussion over a possible buyout.

At present, AI has vacated the building, and only the top floor is in their possession. They have given the rest of the building on rent, which brings revenue to the airline.

A senior bureaucrat who participated in the discussion said that the location of the building and its proximity to Mantralaya made it worth purchasing. A section of senior IAS officers, however, question whether the structure was worth the investment. “One must not forget that there was an explosion in the building in 1993 and its foundations may have been affected,” an IAS officer said.

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