SBI to buy property of Air India

India’s leading public sector bank, State Bank of India has received all necessary approvals from government opportunities to buy residential properties of cash-starved national carrier, AI (Air India) in south Mumbai for Rs. 90 crore.

As per the sources of PTI, “State Bank of India has got all the required approvals as it has conveyed its willingness to buy residential and commercial properties from Air India. Now State Bank of India is waiting for the approvals to complete the procedure from their side. Now this state owned bank is planning to allocate these flats or apartments to its top executives of the rank of general managers and deputy managing directors.

Now Air India had been looking for buyers who can buy their properties which contain their four flats at up-market in Peddar road at south Mumbai since last two years. In August 2013, the Air India has floated e-auctioning bids for four flats. However these 3-BHK flats measures 2,033 sq ft in carpet area. On proposed real estate deal while confirming the communication from the bank, an Air India official stated that Indian airline has sent the proposal to the Civil Aviation Ministry for its approval. The more they added that the proposal is now in the side of Ministry for its approval. Air India has some of the working capital which they have borrowed from SBI, besides long terms loan. it is expected that the funds raised from the sale would help them to reduce their working capital loan besides reducing the interest outgo.

The decision to sell these flats or property is the part of national carrier’s plan to unlock the value in its land assets. Under the land monetization plan, now Air India is planning to mop up Rs. 5,000 crore in the period of 10-year to match the balance between its revenue and expenditure.

SBI sells 130 properties

Country’s largest lender, State Bank of India could sell only about 130 properties in its e-auction of 300 assets to release just about Rs 100 crore.

As per the senior official of SBI, “we sold around 130 properties, largely residential through the e-auction process to release just Rs 100 crore: The more he added that SBI may sell all of the 100 residential properties it had put on the block. According to data, SBI had put on block around 300 properties with the worth Rs 1,200 crore including shops, factory buildings, offices and residential apartments which are spread across 25 cities including four major metro cities through an e-auction last Saturday, as they had put out a public notice on Thursday.

Due to heavy traffic one of the real estate portal which was assigned to carry out the auction, SBI had extended the time for auctions by an hour. This was one of the best innovative ways by any lender that has been fighting a long battle to contain bad loans, to dispose of distressed properties through an e-auction.

According to statement of PK Malhotra, who is Deputy Managing Director of SBI, “Due to heavy traffic on assigned real state portal for e-auction, the site has become slow and we don’t want anyone to miss the chance. Earlier, the bidding time was till 5 pm and we are now going to extend it by an hour” The process was conducted by e-procurement solutions providers C1 India and Auction Tiger.

SBI is planning to include Kingfisher House on its next e-auction block

After getting unexpected response from its mega auction of Rs 1,200 crore worth properties belonging to defaulters, now SBI is planning to include Kingfisher House on its next e-auction block for the next round. On last Friday, State Bank of India put the block 300 pieces of residential, commercial and industrial properties across the countries which it had attached from defaulters in a bid to recover bad debts.

Till now SBI was selling its assets of defaulters in a piecemeal basis, but the problem was that most of the response was coming from localized and specific group of people who specialized in purchasing stressed assets at a discount price. In present economy is turning around and due to that now banks are hoping that investors from all over the country will be drawn to mega auction there will be a genuine price discovery based on demand and supply. According to Deputy Managing Director of SBI, PK Malhotra, “It was too early for us to include and put the Kingfisher House in the e- auction and now we are planning to include this during the next auction. Like other we are also looking for good business house to buy it rather than have a reseller come in. Our valuation of this was quite dated and now we are doing a fresh valuation which is expected to be through in a couple of days.

The latest e-auction included residential units as well as industrial plots from all over the country. While there was a good response to the residential properties, now SBI expecting some work on the larger industrial plots. According to Malhotra, “We are expecting to get over 10 to 14 per cent (over the asking price). Few of the industrial properties are very good with the entire infrastructure available. It is like a `plug and play’ asset for any entrepreneur.”

It is expected that these e-auctions and valuation of assets will add few hundred crores to SBI’s bottom-line for the third quarter as successful bidders have to make full payment by March 29 2015. As per the statement of Malhotra, there was good interest in the bank’s auction because the properties have clear title and buyers see value in them. The extent of profits would depend on the level of provisions made by the bank. If the asset has been fully written off the entire realizations would add to the banks bottom-line.