In one of the biggest land deals in the financial capital, Wadias-run Bombay Dyeing on Wednesday announced the sale of a 22-acre land parcel to Japan’s Sumitomo for Rs 5,200 crore.
IMAGE: The Mumbai skyline. Photograph: Hemanshi Kamani/Reuters
The plot in central Mumbai’s Worli houses the Wadia International Centre, the nearly three-centuries old group’s headquarters and other establishments.
“It’s a large deal and will help solve a lot of our issues,” Rahul Anand, the chief executive of Bombay Realty, an arm of the listed Bombay Dyeing, told PTI.
He said the genesis of the transactions is in a March 2022 decision by the Bombay Dyeing board to make the company leaner from a debt perspective, turn it into black and put it on the path to sustained profits by strengthening balance sheets.
The company, which reported a widening of losses to Rs 517 crore in FY23, will get the money in two phases, with the first payment of Rs 4,675 crore expected by October, while the remaining Rs 525 crore will come by March 2024 after the completion of certain milestones, Anand said.
Goisu Realty, a subsidiary of Sumitomo Realty & Development Company, will be purchasing the freehold land parcel, which allows it to use the entire 22 acre for residential or commercial use.
Group chairman Nusli Wadia said he is happy that Bombay Dyeing is entering into agreements with Sumitomo Group for the sale.
The transaction will help Bombay Dyeing record a pre-tax profit of Rs 4,300 crore, take its networth into the positive territory, and also pay dividends in the future, as per an official statement.
This is the second major land deal struck by Sumitomo in the financial capital, after signing an agreement with the state-owned MMRDA for a long-term lease of two plots at the Bandra Kurla business district for Rs 2,067 crore in October 2022.
Worli is in the heart of what was called the Mill Land at a time when the city had a reputation for being a hub of textiles.
With the shutdown of mills, large parcels of land by Mumbai standards are getting released for commercial development and this locality already commands land rates, which are among the highest in the city.
Anand said the sale will help Bombay Dyeing retire its existing debt of Rs 3,900 crore, and the debt-free balance sheet will help it take on further business activities.
The company has many land parcels across, which have a development potential of 3.5 million square feet that can deliver revenues of Rs 15,000 crore, Anand said.
Prime among the land parcels is an over 15 acre “unencumbered” plot in nearby Dadar while the rest are smaller parcels, he said, adding that the Rs 15,000 revenue potential can be realised in the next two years.
It will launch a project on the Dadar land parcel by September next year, he added.
Anand said it has booked revenues of over Rs 900 crore by selling inventory at another ready project in Dadar, which helped reduce debt from the March 2022 peak of Rs 4,600 crore.
Apart from the WIC, the Worli land parcel, which is now being sold to Sumitomo, also used to house actor Shilpa Shetty-owned Bastian Restaurant.
A few years ago, it also hosted the Hard Rock Cafe.
Interestingly, over the last few days, Bastian has shuttered while the Wadia group headquarters have been shifted to another group-held property in Dadar.
As per reports, Bombay Dyeing had toyed with a scheme to develop the 22-acre plot by itself in the past and announced a mixed-use development on it.
The Wadia Group started way back in 1736, and has its roots in shipbuilding, and also runs a slew of other ventures, including biscuit brand Britannia, tea company Bombay Burmah, the grounded carrier Go First and Bombay Dyeing, which has its roots in the textile business.
The company’s scrip closed 6.93 per cent up at Rs 140.45 apiece on the BSE on Wednesday, against gains of 0.37 per cent on the benchmark.
