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Two Tata companies raising funds

Wednesday, 26 March 2014 - 9:45am IST | Place: Mumbai | Agency: dna

While Tata Steel raises Rs 1,155 crore through land deal, Tata Motors hopes to raise Rs 300 crore. Oberoi may use Tata Steel land for residential project

Oberoi Realty, which emerged as the highest bidder for the Tata Steel land parcel in Borivali in Mumbai's suburbs in an e-auction on Monday, is most likely to use the land for developing residential and retail projects.

On Tuesday, Tata Steel announced that Oberoi Realty emerged the highest bidder of the auction on the basis of its final bid of Rs 1,155 crore, after several rounds of bidding. Several leading real estate developers such as Lodha Group, Kalpataru Properties and Tata Housing had participated in the auction that started on December 18, 2013.

By sale of this premium property, Tata Steel is trying to bring down its huge debt burden. As of December 31, 2013, Tata Steel's debt stood a whopping Rs 70,129 crore. "Shares of the steel major gained 1% on Tuesday on reports of completion of auction process. The stock may inch up by further Rs 5-6 on Wednesday following the announcement of highest bidder," Giriraj Daga, senior analyst with Nirmal Bang Securities said.

"As per the laid down process, the sale will be concluded after all requisite permissions are obtained," Tata Steel said in a statement. The site measuring roughly 25 acre is located at the junction of Western Express Highway and Dattapada road in Borivali (E) and is abutting both these roads. The neighbourhood predominantly comprises medium to high-end residential developments. The plot earlier housed Tata's steel wires manufacturing facility. The unit was shut down in 2009 after the operations were shifted to Tarapur in 2008.

"Oberoi Realty was hunting for a suitable land parcel since a long time, their main criteria being big land and clean title. I believe they will use the land mostly for residential and retail complex development," Anuj Puri, chairman & country head, Jones Lang LaSalle India, told dna.

"Tata Steel has got a very good price for the land. It's the price that they were looking for," said Puri.

Oberoi Realty did not immediately reply to dna queries. Knight Frank India, arm of the global real estate consultancy firm, executed the bid-cum-auction process for the sale of Tata Steel land, said executive director Zia Gulam, but declined to share more details on the auction process due to non-disclosure agreement with the steelmaker.

In the e-auction, the bids had started at Rs 750 crore for the prime land parcel. The transaction is touted to be one of the largest in recent years in value terms. In 2012, realty major Lodha Group had acquired a 17.5-acre land parcel at Lower Parel from DLF for Rs 2,725 crore.

The buyer is estimated to get a total development potential of 2.5 million sq ft out of this prime land parcel and 4 million sq ft after obtaining permission for public car parking. Current residential property rates in Borivali are around Rs 12,000 per sq ft.

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