Mumbai: Luxury residential developer Kanakia group is close to buying a seven-acre plot in Mumbai's Vikhroli suburb from India Tube Mills and Metal (ITM) Industries Ltd for Rs363 crore, two people aware of the matter said.
The Mumbai-based builder has entered into a memorandum of understanding (MoU) with ITM, an industrial equipment maker, to buy the plot housing the latter's office and factory, the people mentioned above said on condition of anonymity.
“Legal diligence of the deal is currently underway," said the first of the two people mentioned above, adding both are in an advanced stage of talks.
With a development potential of around 10-15 lakh sq. ft, the Kanakia group is looking to utilize the land either for mixed used development or building residential projects, the people said.
Spokespersons of Kanakia group and India Tube Mills declined to comment on the transaction.
As part of the deal, the Kanakias will buy out the special purpose vehicle (SPV), which holds the land, including the stakes of all the shareholders of the firm.
According per filings with the Registrar of Companies (RoC), as of 31 March 2017, India Tube Mills' net worth was around Rs8.69 crore, and revenue around Rs18.59 lakh. No transaction or filings have been recorded in the last one year.
“As already reported in the previous year's report, the company did not bid for any fresh orders, and has decided not to accept any further orders for the time being," the company said in its annual report 2016-17 to the RoC. Established in 1948, the company's executive directors and promoters include Darshan C. Aggarwal and Ravinder S. Aggarwal, among others.
According to real estate brokers and consultants, land transactions are reviving as prices are either stagnant or have dropped in certain markets. Big developers are also scouting for land parcels to expand their business, expecting the new real estate regulations (and development) Act (RERA) and other regulatory reforms would improve market sentiment in the near future. "Land deals are back in action. After the so-called three tsunamis—demonetisation, RERA and implementation of Goods and Services Tax (GST)—confidence is back in market from developers and funds, and that is directly visible in the number of land transactions being witnessed in the Mumbai MMR region," said Karan Sodi, managing director (Mumbai), JLL India, a real estate advisory.
Land prices are holding steady and with the clearance of the new Mumbai Development Plan, the city will see fresh housing, commercial and retail development, Sodi said.
Some of the big land transactions in NCR and Mumbai over the past year include DLF Ltd buying 11.76 acres in Gurugram for Rs1,496 crore earlier this year as well as Oberoi's acquisition of GSK Pharmaceuticals' land at Thane near Mumbai for Rs555 crore.
In July 2017, a joint venture of Tata Realty and Infrastructure Ltd and Standard Chartered Private Equity acquired a 47.5 acre plot at the Thane-Belapur industrial area close to Mumbai for Rs325 crore.
The same month, Godrej Properties Ltd bought 14.8 acres near Dwarka Expressway from real estate firm BPTP Ltd for an undisclosed sum.