JNPT raises offer to buy Air India tower

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

JNPT’s initial bid of some ₹1,200 crore was higher than the one quoted by the state-run insurerLife 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 ₹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 and allowed only government entities to participate in the bidding for acquiring lease hold rights on “as is, where is basis”.

The move to sell the 2,20,000 square feet 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 remained 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 ₹5,337 crore in FY18 compared to a loss of ₹6,281 crore in FY17. At the end of the last financial year, it had ₹21,955 crore in short-term borrowings and ₹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 ₹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.

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. So, there is a future plan which will come up. It will be a business investment,” the official said.

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