Plot payment: Jet Air wants more time

Cash-strapped airline scouting for partners for the BKC land purchased in 2008.

Unable to pay for a Bandra Kurla Complex BKC plot it had purchased in 2008 despite several extensions,Jet Airways is now scouting for partners to jointly develop the land.

The airline has approached the Mumbai Metropolitan Region Development Authority MMRDA,which is the special planning authority for BKC,seeking more time to make the payment of Rs 826 crore. If there is a delay in payment,the MMRDA will charge Jet an interest of 14 per cent annually,which works out to be more than Rs 343 crore.

They had previously asked for an extension till March 2012. We have not taken a decision on whether to give them more time, said Rahul Asthana,metropolitan commissioner at the MMRDA.

If we decide not to grant another extension,we will cancel the allotment and forfeit the deposit of Rs 10 crore that they have paid. We will take legal advice on whether to pursue the matter in courts, Asthana said.

Jet Airways was to pay Rs 826 crore for the 5,951 sq m plot it had purchased in an auction sale within 60 days of the purchase. However,it failed to pay the amount despite several extensions. Upfront,it had paid a deposit of only Rs 10 crore.

The cash-strapped airline,which had registered a loss of Rs 101.22 crore for the quarter ending December 2011,will find it difficult to make the payment on its own.

We have to look at it jointly. Currently,the MMRDA is not going to get the price we have agreed to purchase the land ,so there is a possibility they would be willing to give us time to identify the developers, said M. Shivkumar,senior vice president,finance,at Jet Airways India.

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Jet had purchased a plot in BKC in 2006 for Rs 341 crore,but had failed to carry out construction. MMRDA rules however,stipulate that the bidder has to finish construction within four years of signing a lease. The MMRDA has slapped a penalty on the company for being unable to start construction.

Jet had inked the deal with Godrej Properties in August last year to develop the area and carry on its debt obligations. The two firms have decided to share profits equally from the plot.