Jet defaults on payment for Mumbai Authority plot

Mumbai: Jet Airways, India’s largest private airline, which had won a huge plot at auction held by the Mumbai Metropolitan Region Development Authority (MMRDA), has defaulted on the payment that was to be made before March 13 deadline.
The company had put in the highest rate on 24,000 sq m for Rs 826 crore, which drove up the valuation to Rs 344,000 per sq m, in the MMRDA auction. MMRDA had set mid-September as the first deadline to pay up the amount to buy the plot on a long lease.
“Due to global turmoil and liquidity crunch, and its subsequent impact on Indian markets, Jet Airways could not pay up the amount. Instead, it requested MMRDA to extend the deadline up to March 13, 2009, and MMRDA obliged as they saw no demand for their plots as well,” said a Mumbai-based investment banker specialising in land transactions.
Confirming this, a senior MMRDA official who did not wish to be identified, said, “A Jet Airways representative was in our office today (Wednesday) to make verbal request to extend the deadline by another six months. They have not given us anything in writing. The deadline extension or deal cancellation can be done only after we propose to the MMRDA board, which will now meet only after elections in May. Both Jet Airways and Starlite Industries had made earnest money deposit (EMD) of Rs 10 crore for their respective plots.” When contacted by Financial Chronicle, a Jet spokesperson said, "We are talking to MMRDA to extend the deadline."
Starlite that had won the bid for the plot in Bandra Kurla Complex has not taken possession so far.
Both companies stand to lose the money paid as EMD, if they do not pay up the remaining amount and take over the plot.
18/03/09 Shilpa Shree/mydigitalfc.com

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Categories: Jet Airways Mar 2009