JNPT hikes bid for Air India tower to Rs. 1,300 cr.

State-owned Jawaharlal Nehru Port Trust (JNPT), India’s biggest container gateway, has raised its offer price to over Rs. 1,300 crore to buy debt-ridden Air India’s iconic 23-storey tower at Mumbai’s Nariman Point.

JNPT’s initial bid of about Rs. 1,200 crore was higher than the one quoted by state-run Life Insurance Corporation of India (LIC), the only other bidder to participate in the auction, but was below the reserve price set by the cash-strapped national carrier.

“During negotiations, JNPT raised its price bid to over Rs. 1,300 crore,” at least two people familiar with the development said, asking not to be named.

In December 2018, Air India issued a tender to sell its 23-storey building as part of a larger asset monetisation plan. It allowed only government entities to participate in the bidding to acquire the lease hold rights on a “as is, where is basis”.

The move to sell the 2,20,000 sq ft building came after a plan to privatise the loss-making carrier fell through last year for lack of bidder interest, forcing the government to abandon the move in view of the general election.

The idea behind the sale of the tower is to give a much-needed liquidity boost to Air India while ensuring that the iconic building remains in government hands.

The airline has identified residential and commercial properties for sale in at least 16 cities.

Air India posted a standalone net loss of Rs. 5,337 crore in FY18, compared to a loss of Rs. 6,281 crore in FY17. At the end of last fiscal, it had Rs. 21,955 crore in short-term borrowings and Rs. 30,227 in long-term loans.

The Shipping Ministry has been nudging some of the dozen ports owned by the Centre to use their cash reserves to fund waterway and rail connectivity projects as well as for setting up new ports or buying stressed private ports.

In FY18, the 12 major ports earned a combined net profit of Rs. 3,413 crore.

JNPT is part of a consortium of four major port trusts that acquired state-run Dredging Corporation of India (DCI) from the government. Separately, JNPT has secured backing from a lenders panel to buy debt-laden Dighi Port, located a few kilometres away, through the Insolvency and Bankruptcy Code (IBC) process.

Business investment

The bid to buy the Air India tower is more of a “business investment” for India’s biggest container port, rather than an expansion from its core area of port operations.

“It’s a government-to-government investment,” a Shipping Ministry official said. “The basic philosophy behind the concept is it’s an iconic building. So it should remain with the government. It’s already rented out. It will be a business investment.”

HBL