The repeal of the Urban Land (Ceiling & Regulation) Act (Ulcra) by both houses of the Maharashtra legislature on Thursday is set to unlock huge fortunes over the next few years.
MUMBAI: The repeal of the Urban Land (Ceiling & Regulation) Act (Ulcra) by both houses of the Maharashtra legislature on Thursday is set to unlock huge fortunes over the next few years. While nine urban agglomerations will see a total of around 100,000 acres of land being freed, the big money will be made in Mumbai, where 30,000 acres will be freed.
The Godrej and Bombay Dyeing groups are seen as the biggest beneficiaries. Precise estimates are unavailable, but the Rs7,500 crore Godrej group is sitting on around 3,500 acres of land in the central suburbs of the city.
This figure is derived from what Jamshyd Godrej, chairman, Godrej & Boyce, the group’s holding company, told a business magazine some time ago when he was asked whether 7,000 acres was a fair figure. “It will be around half that figure,” was Godrej’s reply.
The current market value of 3,500 acres in Vikhroli, where the Godrej land is located, would be a stupendous Rs53,000 crore. However, it’s pertinent to mention here that most of this land — around 3,000 acres of it — is disputed and is being claimed by the government.
But the markets have begun celebrations. On Thursday, Godrej Industries, a Godrej & Boyce subsidiary, saw its shares hitting the upper circuit, closing at Rs268.50 on the Bombay Stock Exchange. But insiders say that Godrej Industries is not a direct beneficiary from the land value unlocking. Rather, Godrej & Boyce Manufacturing Company, an unlisted company which owns around 64% in Godrej Industries, is.
In a recent interview to DNA Money, Adi Godrej, chairman of the Godrej group, had also said that the value of the land, whenever the dispute gets sorted out, would flow to Godrej Properties and not Godrej Industries.
Godrej Industries owns 83% of Godrej Properties and the Godrej family the remainder. Godrej Properties is planning an initial public offering shortly.
Another group that will benefit from the repeal of Ulcra will be Nusli Wadia’s Bombay Dyeing, which is sitting on approximately 150 acres — around 50 acres at Prabhadevi and another 100 acres at Thane. At the current property rates of 15,000 per sq ft at Prabhadevi and Rs 1,500 per sq ft at Thane, it would translate to a total of Rs 3,900 crore worth of property.
Shares of Bombay Dyeing gained 3% on Thursday, closing at Rs 688.15. Other real estate stocks were also up on sentiment.
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