Mumbai: A unit of real estate company Godrej Properties Ltd signed an agreement with Jet Airways (India) Ltd to jointly develop a plot of land in the Bandra Kurla Complex (BKC) business district in Mumbai.
Mint reported the Jet-Godrej deal on 5 July last year.
Jet Airways had bid Rs 826 crore for the right to develop the plot in an auction by the Mumbai Metropolitan Region Development Authority (MMRDA), the apex body for planning and coordination of development activities in Mumbai, in 2008. The carrier signed the deal with Godrej Buildcon Pvt. Ltd.
Godrej Properties did not divulge specific details of the project. Mint had reported on the deal in July last year.
“Jet Airways will get an upfront Rs 500 crore,” said Mahalingam Shivkumar, senior vice- president (finance), Jet Airways. This will help the company liquidate its $81 million loan from HDFC Bank.
Jet Airways has a total debt of Rs 13,786 crore as of 30 June.
“Depending upon the area available for development and market conditions, Jet Airways will be able to generate some profit also from the deal,” he said.
According to the Jet Airways statement, Godrej Properties will develop approximately 1 million sq. ft of office space in three years. Godrej Properties will take on the Rs 360 crore debt obligation Jet Airways has on the property, and will also pay the airline Rs 135 crore to compensate it for expenses that have been incurred.
Additionally, Godrej Properties has agreed to sell 161,460 sq. ft of carpet area to Jet Airways at development cost. This space will be used as airlines headquarters, currently based in a rented building in Mumbai. Godrej and Jet will share profit from the development in a 50:50 ratio, Jet Airways said in a release.
On Friday, Godrej Property dropped 4.3% to Rs 710.75 on the Bombay Stock Exchange, while Jet Airways slipped 0.68% to Rs 436.95. The benchmark Sensex fell 2.19% to 17,305.87.