Air India asset sale to be completed in three years

In an attempt to clear its debt early, Air India has decided to expedite the process of monetization of assets, which is expected to give Rs 5,000 crore to the company, and complete it by the end of 2016 fiscal.

"Monetization of assets is a part of the financial restructuring plan and was to be completed over a period of ten years at a rate of Rs 500 crore every year. The airline board has decided to complete the process in three years and also decided to use the money raised through asset sale only for clearing the debt," said a senior Air India official.

Air India chairman Rohit Nandan has entrusted joint managing director Nasir Ali to ensure that the asset sale is complete within a three year period.

To start off, the airline plans to raise Rs 1,200 crore in the 2013-14 fiscal. "Of the Rs 1,200 crore, Rs 800 crore will come from the sale of 4 acre land in New Delhi and the rest will come from sale of flats and land in Mumbai, Chennai and Coimbatore and sale of flats in Hong Kong and Nairobi," said the official.

According to the plan, the airline will raise Rs 2,000 crore through sale of assets in 2014-15 and the rest will be raised in 2015-16.

Air India has a debt of around Rs 30,000 crore and the financial restructuring plan of the airline aims to clear a large part of it over a period of nine years.

Of the total debt, around Rs 25,000 crore are long-term debt and the rest are short-term or working capital debt.

In an attempt to avoid any controversy around the auction of these assets, the Air India management has decided to form a three-member oversight committee to monitor the auction process.

The committee will have a former Supreme Court Judge DM Dharmadikari, former Comptroller and Auditor General VN Kaul and former Chief Vigilance Commissioner Pratyush Sinha as its members.

"We have also decided to carry out electronic auction for all the properties. Three member committee with representation from law, audit and vigilance field will ensure that the system should be flawless," said the official.

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