SBI to buy 4 Air India flats

In an all-cash deal, State Bank of India (SBI) is all set to buy four premium flats in Mumbai's posh Peddar Road area from the loss-making Air India (AI) for Rs 90 crore.

A legal team of Air India is preparing a draft sale agreement which will then be given to the counterparts from the SBI, the country’s largest lender. The Centre recently gave go-ahead to state-owned Air India to sell the flats to SBI for about Rs 90 crore as part the airline's asset monetisation plan.

“Once the purchase agreement is signed by both the parties, the bank will initiate the process to take possession of the flats. It will take a month’s time,” a source told PTI. “SBI is buying these flats in an all-cash deal,” the source said. The asset monetisation plan was approved along with the carrier’s turnaround plan by the Cabinet Committee of Economic Affairs in April 2012 when it also doled out a Rs 30,000 crore bailout. The state-owned lender is planning to allocate these four flats situated at upmarket Peddar road in south Mumbai to its top executives. Each of these three-BHK flats has a carpet area of 2,033 sq ft.

SBI has already taken two floors in the nearly-empty 22-storey Air India Towers at Nariman Point, which till a few years ago was the headquarters of the national carrier.

The cash-starved airline was looking to sell these flats for the past two years. In August 2013, it had floated bids for e-auctioning of these four flats. Under the asset monetisation plan, Air India has to mop up Rs 5,000 crore over a 10-year period, starting from 2013-14, in its bid to bridge the widening mismatch in its revenue and expenditure. Faced with substantial debt burden, the national carrier has been exploring various options to raise money to meet its funding requirements. These include sale of properties and land parcels.  Air India, whose debt burden is about Rs 40,000 crore, is surviving on a bailout package approved in 2012.

The erstwhile United Progressive Alliance government had approved Air India's turnaround plan, with a committed public funding of Rs 30,231 crore, staggered over a period of nine years, with some specific riders.