Part of Kurla project sold to the latter for Rs 649 crore
Real estate developer HDIL has sold 850,000 square feet of development rights in Kurla in Mumbai to a company belonging to the Mumbai-based Wadhawan Group for Rs 649 crore (Rs 6.49 billion), according to people familiar with the developments.
HDIL and the Wadhawan Group are headed by cousins Sarang Wadhawan and Kapil Wadhawan, respectively, who divided their business in 2009.
The two sides signed the deal almost six years after a business restructuring announced by them.
The transaction was registered in the second week of December and Wadhawan Group paid around Rs 35 crore (Rs 350 million) of stamp duty for buying the rights, the source said.
The development rights sold to Wadhawan are for a part of the 53-acre plot of land HDIL bought from Premier Automobiles for Rs 1,900 crore (Rs 19 billion).
Of this, 38 acres were meant for rehabilitating families dwelling on airport land as part of the Mumbai International Airport Limited project and the rest was for free sale.
According to the sources, the Wadhawan Group’s real estate arm Dheeraj Realty has already launched the project Liv Smart in Kurla West.
In a statement to exchanges, HDIL said it has registered a Development Agreement with DK Realty to sell the development rights, in respect of the piece and parcel of land situated at Kurla, Mumbai, for a consideration of Rs 649.51 crore (Rs 6.49 billion).
According to analysts, the deal augurs well for HDIL given that it has Rs 3,200-crore (Rs 32-billion) debt on its books and the money will go towards debt repayment and working capital.
“Given that the Mumbai market is slow, HDIL can use the money for debt repayment and working capital,” said a real estate analyst, who did not wish to be named.
The company plans to reduce its debt by 15 per cent to below Rs 2,500 crore (Rs 25 billion) in the current financial year.
According to reports, HDIL plans to sell 200 acres in Baroda and Hyderabad.
Last year, it sold its multiplex business for Rs 105 crore (Rs 1.05 billion) to the Carnival Group as part of its debt reduction plans.
In the 2009 restructuring, Sarang Wadhawan and his father Rakesh Kumar Wadhawan took complete charge of HDIL, while Kapil and Dheeraj Wadhawan took over the management of Dewan Housing Finance, Wadhawan Retail, Wadhawan Global Resorts and Wadhawan Lifestyle Retail.
HDIL’s stock ended at Rs 70.35, about 6.19 per cent higher than Friday’s close.
The image is used for representational purpose only. Photograph: Reuters