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State-owned Jawaharlal Nehru Port Trust, India’s busiest container gateway, has been asked by its owner to make a “business investment” in a non-core area to bail-out the floundering national carrier Air India by buying its iconic 23-storey tower in Mumbai.
The moves comes just a few days after a plan to privatise the loss-making carrier fell through due to lack of bidder interest, forcing the government to abandon the move with the next general elections looming.
The plan to use a portion of the about ₹4,500-crore cash reserves of JNPT to buy the 2,20,000 sq feet building fits well with the recent government strategy of using one State-owned firm to buy another, as manifested in the buy-out of Hindustan Petroleum by ONGC, and the current move to get LIC to buy the ailing IDBI Bank.
The sShipping mMinistry has used this mechanism to the hilt by directing some a few of the 12 ports its owns to leverage its cash reserves to fund waterway and rail connectivity projects as well as for setting up new ports.“It’s a government-to-government investment,” a JNPT official said.
“The basic philosophy behind the concept is it’s an iconic building. So, it should remain with the government. Our concept will be if it pays value for the money, we don’t mind buying this. It’s already rented. It will be a business investment which we’ll be doing,” the official said, asking not to be named as it is a sensitive issue.
The transaction is expected to fetch some ₹1,200 crore for Air India based on a recent lease deal for one of the floors in the building having the airline’s trademark ‘Centaur’ icon on top.
However, real estate analysts say that JNPT may not get the kind of rentals the space once demanded a few years ago.
Private firms moving out of South Mumbai to the Bandra Kurla Complex, leaving only the government departments or agencies to rent space in the building. For instance, the Income Tax Department occupies space in the tower.
The tower built in 1974 was designed by John Burgee of the New York-based firm Johnson and Burgee. It was the corporate headquarter of Air India till 2013 when it shifted base to New Delhi following the merger with Indian Airlines, another State-owned company that carried passengers on domestic routes.
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