Air India to conduct auction of assets that went unsold in the February round

Mumbai: National carrier Air India has found buyers for only one-fourth of the 45 properties and land parcels it put for auction across major cities and towns in February, and will now put them under the hammer again to try and raise the targeted Rs500 crore over 2018-19, two officials of the airline said.

“Air India had put up 41 residential properties, which included flats, apartments and houses for auction in February. Additionally, the airline also put up four parcels of land for auctions,” said the first official who didn’t want to be named.

“We found takers for 10 of 41 residential properties and one for the land parcels,” the official said, adding that the airline will put up unsold properties for auction in April again.

The Air India properties that were put up for auction in February included apartments in Cuffe Parade, Santa Cruz, Khar, Mahim and Malad areas of Mumbai; Bengaluru’s KR Puram and Indiranagar; Gurgaon; Pune; and Kolkata as well as a bungalow in Goa. There also were flats in smaller cities like Lucknow, Nashik, Thiruvananthapuram, Bhuj and Ahmedabad. The second official said proceeds from the February auctions are slated to be about Rs30-32 crore.

The properties that found takers during February auctions included residential properties in Lucknow, Bangalore, and apartments in Santa Cruz and Cuffe Parade, the second Air India official said.

Air India has also sold a few flats at a building owned by the airline in Mumbai’s Pali Hills that has a reserve price of Rs200 crore for 14 apartments located in the building.

According to the Air India tender document, the total reserve price for 41 properties put on the block in February, excluding the Pali Hill property, stood at Rs365.89 crore.

Real estate experts said finding buyers for the assets at the existing reserve prices, especially in bigger cities, will be tough, given the current slowdown in the property market.

“Reserve prices offered for these properties are at par with the prevailing market rate, which is already high. By coming up with an auction at the current rate, it doesn’t really ensure there will be a rush of consumers to purchase these assets,” said Pankaj Kapoor, managing director, Liases Foras, a realty advisory firm.

“If they (Air India) offer these properties at a discounted rate, they could find motivated buyers and dispose of these properties faster,” he said.

The second Air India official said government agency MSTC Ltd is helping with the land parcel monetization process, including holding the auctions.

“It is up to the board (of directors) and MSTC to decide whether to bring down the reserve price of the properties that didn’t find any takers during the next round of auctions,” the official said, adding that the airline could look at lowering reserve prices of certain properties.

Air India has been able to raise Rs445 crore from land sales since a government-approved turnaround plan in 2012 set a target of Rs5,000 crore for land monetization over a period of 10 years, minister of state for civil aviation Jayant Sinha told Rajya Sabha in February.

Sinha said the airline had not been able to achieve its land monetization targets due to issues with land title deeds.

A senior Air India official had earlier told Mint that most title deeds for properties that the airline is looking to sell in 2018-19 are in place.