Old textile mills generate funds by selling land
Old textile mills are selling their land to generate huge amounts of cash, thereby, turning their worries into wealth. As rates of land increase in an optimistic economy, India's top-most textile companies are generating additional income streams, by establishing or selling their precious real estates.
In order to increase in-flow of cash and reduce their debt, textile companies such as Bombay Dyeing & Manufacturing, Alok Industries, Century Textiles & Industries and Provogue India are either, developing on their existing land or are selling it for higher price.
During the past one year, property rates in key Indian cities such as Mumbai and Delhi, has nearly increased by two-folds. There are many textile firms that possess huge land banks. But the market provides cash to these firms, only if they have come forward with development plans for these land banks. Bombay Dyeing and Century for instance, comprises of finest and huge areas of land in central Mumbai.
Recently, Bombay Dyeing, that has about 9 million square feet of real estate in Mumbai alone, sold one of its properties to Axis Bank for Rs 7.8 billion. Bombay Dyeing has shifted its mills near Pune and the free land has been allocated for setting up two real estate projects in Central Mumbai.
Meanwhile, construction of two commercial complexes will come to an end in a span of 12-15 months on the Century Textiles' land, spanning across 16 hectares (1.7 million square feet), again in Central Mumbai.
During the colonial British times, most of the old textile mills received huge areas of land for almost free of cost, as the British rule was then keen on developing Mumbai as the textile hub for cotton. Many others have also procured land from British government for a nominal lease for industrial purposes, thereby, helping turn Mumbai in to a key textile manufacturing hub. Textile mills faced closure during the early eighties owing to destructive industrial strike.
However, in the last five years, the Maharashtra government has permitted usage of more land from these closed textile mills for property development. Mill owners therefore, are finally benefiting with this policy as land rates are bouncing back.
At the same time, firms like Alok Industries are making an exit from their real estate portfolio, instead of developing it. The firm is hoping to procure around Rs 7 billion from sales of its four large blocks, including property at Lower Parel, Mumbai, which is their key portfolio.
In the meantime, garment retailer, Provogue India, is about to introduce residential projects in Tier-II cities. Three residential projects will be launched in Indore, Coimbatore and Nagpur by the end of the current year, on land owned by Prozone Enterprises, wherein Provogue is 75 percent stakeholder. The first phase of construction will be spanning across 34 acres of land across these three cities.
But around all this, experts' question that, whether these land banks, which are generating revenue for debt-ridden textile mills, will be merely one-time profit making avenues or will turn into consistent source of earnings for the company.
Fibre2Fashion News Desk - India