Bangalore: State-owned National Textile Corp. Ltd (NTC) on Tuesday failed for a second time to find buyers for its Finlay Mills in central Mumbai as developers stayed away from the auction.
Only one bidder—representing Tamil Nadu’s Christy Textile Products Pvt. Ltd—turned up at NTC’s south Mumbai office, but was disqualified as the firm failed to put up the Rs100 crore earnest money required to bid for the 10.5-acre mill, an NTC official told Mint on condition of anonymity.
NTC’s efforts to sell Finlay Mills were in stark contrast to its first set of land auctions in 2005, which had the country’s largest developers such as DLF Ltd and Indiabulls Real Estate Ltd queuing up to grab a piece of land at Mumbai’s defunct mills located in prime locations. DLF bought the 17-acre Mumbai Textile Mill for Rs702 crore. It was clearly not the same this time. “We haven’t yet decided when we will put the mill up for auction again,” said the NTC official.
Falling market: Dawn Mills in Mumbai. Government agencies such as the Mumbai Metropolitan Region Development Authority, which from time to time put up plots for sale in the city, have halted all land sales.
Finlay’s auction followed a previous attempt in December, when NTC tried to sell it for Rs1,066 crore. Mumbai-based Nine Paradise Hotels Pvt. Ltd, part of realty firm Dynamix Balwas Group (DBG), bid at Rs450 crore, which fell short of the floor price. This time, the reserve price was a little above Rs700 crore, nearly 30% less than in December.
Shahid Balwa, managing director of DBG, said his company had decided that it is not going to be part of the auction the second time.
“Most developers are facing the pressure of downward pricing for their projects and buying such expensive land would not be a feasible idea now,” said Akshaya Kumar, chief executive officer of Park Lane Property Advisors.
Another factor that perhaps worked against the Finlay Mills auction was the three heritage structures within its premises. The Indian National Trust for Art and Heritage has filed a public interest litigation in the Bombay high court to save heritage structures located inside Mumbai’s old mills.
“Why would a developer want to buy land at this time when he can’t develop it immediately?” asked a property consultant, who didn’t want to be identified.
Government agencies such as the City and Industrial Development Corp. of Maharashtra Ltd (Cidco) and the Mumbai Metropolitan Region Development Authority (MMRDA), which from time to time put up plots for sale in Mumbai, have halted all land sales. “We have substantial land bank, but don’t want to go in for any sale right now,” said G.S. Gill, managing director of Cidco.
An MMRDA spokesperson said it is not planning to go for any land auction in the Bandra-Kurla Complex (BKC). “It is a conscious decision not to do auctions now due to the downturn, after the earlier auctions were not very successful,” he added.
Last August, an auction for land at BKC fetched Rs1.55 lakh per sq. m, nearly half the price from the previous auction in March, when Jet Airways (India) Ltd bought a plot in the same area at Rs3.52 lakh per sq. m.