Air India signs MoU with NBCC for joint venture

Published on : Friday, December 5, 2014

Air-IndiaAir India today signed a Memorandum of Understanding with NBCC towards implemetation of the monetisation of assests of Air India.


The MoU was signed at Rajiv Gandhi Bhawan by CMD Air India Shri Rohit Nandan and Dr. Anoop Kumar Mittal, CMD, NBCC, in the presence of Minister for Civil Aviation Shri Ashok Gajapathi Raju Pusapati and Minister for Urban Development Shri M. Venkaiah Naidu.


Other dignitaries present were MoS for Civil Aviation Shri Mahesh Sharma, MoS for Urban Development Shri Babul Supriyo.

Shri Gajapathi Raju, speaking on the occasion said that the two companies must work together in such a manner that the project is completed within a deadline.


Shri Venkaiah Naidu said that two great PSUs have come together for a project and that would set benchmarks for the future.


Echoing his words Shri Mahesh Sharma, while addressing the media said that the project must be completed in a time bound manner.


Shri Babul Supriyo was appreciative of Air India’s aircraft and its on-board services which ranked at one of the best.


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 & TAP for Air India has envisaged monetisation of assets in Air India to the tune of Rs.5000 crore over the next 10 years period along with the annual target of Rs.500 crore from Financial Year 2013.

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 3 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 .


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