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Air India and NBCC signed MoU for Monetization of Land Assets

Dec 5, 2014 17:00 IST

Air India and National Buildings Construction Corporation Limited (NBCC) on 4 December 2014 signed a Memorandum of Understanding (MoU) for implementation of the monetisation of assets of Air India at various locations on joint venture basis.

The MoU was signed at Rajiv Gandhi Bhawan in New Delhi in the presence of Union Urban Development Minister M Venkaiah Naidu and Civil Aviation Minister Ashok Gajapati Raju.

The MoU will be a non-binding, non-exclusive agreement and each land asset will be individually evaluated for a particular mode of monetization 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 provided three models of development of properties
Model 1: The 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 will be shared by NBCC and Air India in the ratio of partnership interest.

Model 2:
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 3: NBCC shall construct the project on behalf of Air India and development cost will be invested by NBCC and will charge fixed internal rate of return (IRR) on the project on its investment on mutually acceptable terms. This will help Air India in realizing full potential of its surplus land assets in partnership with NBCC.

Benefit of monetisation of assets
• Monetisation of assets is important to any revival plan or Financial Restructuring Plan (FRP) particularly for any loss making company.
• It will help in unlocking the value of unutilised immovable assets of Air India by way of sale or lease of such assets
• This step will help it to bring more revenue making it less dependent on the government for a bail out

CMD of Air India - Rohit Nandan and
CMD of NBCC - Dr. Anoop Kumar Mittal

 

Is this article important for exams ? Yes20 People Agreed
Read more Current Affairs on: Air India , NBCC , Monetization of Land Assets

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