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The state-owned AI Assets Holdings Ltd, a company set up to manage Air India’s debt and assets following the takeover of the airline by the Tata group in January 2022, rejected an earlier proposal from the state government for office space at the Air India -building.

“The new offer from the Maharashtra government has been accepted and the government is in the process of approving the sale. The final approval will come from the ministerial group (headed by Union Minister of Home Affairs and Cooperation Amit Shah),” an official said on condition of anonymity.

The official further said that the Investment and Public Asset Management Department is reviewing Maharashtra’s new bid.

Buying the Air India building makes a lot of sense for Maharashtra as Mantralaya, the administrative headquarters of the state government from 1955, is located nearby.

As part of Air India’s divestment plan, the government assumed Air India’s debt €45,000 crore and all non-core assets (approximately 111 properties), including the office building and residential colonies, estimated at a value of €14,718 crore, according to a 2021 government statement.

It was also decided that assets, where the land’s rights lay with government departments or state governments, would be sold to the respective entity. The government of Maharashtra had transferred the land for the sea-facing property to Air India in 1970 for a 99-year lease.

Air India, the former state-run airline, has made several attempts since 2018 to sell the Nariman Point building, but the process has been unsuccessful. Several state-owned companies, including Life Insurance Corp. of India and Jawahar Lal Nehru Port Trust, had expressed interest in purchasing the 23-storey commercial tower in the past.

The state of Maharashtra is one of the main parties interested in the commercial tower on the Arabian Sea as it is short of space for its departments and the building may become a part of the government secretariat.

The government has also decided to sell Air India’s booking office near Safdarjung Airport in New Delhi to the state-owned airport operator Airports Authority of India. €15 crores. “Ownership of the land, where the building stands, belongs to AAI and therefore ownership has been transferred to the airport operator,” another official said.

So far, most of the properties with clear records have been sold within the framework of four rounds of e-auctions, and a few large properties are currently being processed for monetization, including Vasant Vihar Colony spread over 30 hectares and a large plot of 14,326 square feet at Baba Kharak Singh Marg in Delhi. The decision on Air India’s headquarters in Delhi will be made next year as the Tata Group has the right to use that building until January 2024, the second official added.

All sales proceeds will be used for interest payments on non-convertible bonds issued in the past as part of various Air India debt restructurings and are now part of AI Assets Holdings.