Air India has signed a Memorandum of Understanding (MoU) with NBCC towards implemetation of the monetisation of assests of Air India. The MoU was signed at Rajiv Gandhi Bhawan by CMD Air India Rohit Nandan and Dr. Anoop Kumar Mittal, CMD, NBCC, in the presence of minister for civil aviation Ashok Gajapathi Raju Pusapati and minister for urban development M Venkaiah Naidu.
Gajapathi Raju said, “The two companies must work together in such a manner that the project is completed within a deadline.”
Naidu said “Two great PSUs have come together for a project and that would set benchmarks for the future.”
Monetisation of assets is key to any revival plan or Financial Restructuring Plan particularly for any loss making company. It is preferable to unlock the value of unutilised immovable assets by way of sale or lease of such assets. Such a measure would bring more revenue to the PSU and they would be less dependent on the government for a bail out. Cabinet Committee on Economic Affairs (CCEA) while approving FRP and TAP for Air India has envisaged monetisation of assets in Air India to the tune of INR5000 crore over the next 10 years period along with the annual target of INR500 crore from Financial Year 2013. Sharma, said, “The project must be completed in a time bound manner.”
In this pursuit Air India is entering into a MOU for monetisation of its surplus land assets. It will be a non-binding, non-exclusive agreement and each land asset will be individually evaluated for a particular mode of monetisation process. This MOU is intended to blend together NBCC’s huge expertise in successful completion of several prestigious projects and Air India’s vast surplus land assets. The MOU has given three models of development of such properties.
Model-I: land value will be the Air India interest in the partnership. Money on development of the project shall be the interest of the NBCC. The sale proceeds are shared by NBCC and Air India in the ratio of partnership interest.
Model-II: NBCC shall pay Air India a portion of the value of the land as upfront money. NBCC interest in the project would be the project cost and upfront money paid to Air India. The sale proceeds are shared by NBCC and Air India in the ratio of partnership interest.
Model-III: NBCC shall construct the project on behalf of Air India and development cost is invested by NBCC and will charge fixed internal rate of return (IRR) on project on its investment on a mutually acceptable terms. This will help Air India in realising full potential of its surplus land assets with the partnership of NBCC.