GTL puts Mumbai plant on sale for Rs 1,200 crore

Cigarette maker Golden Tobacco Ltd (GTL) is putting its Vile Parle, Mumbai, factory on sale.

The property is being put on the block for a reserve price of Rs 1,000-1,200 crore. The company hasn’t yet decided whether it will rope in a consultant for the sale.

Earlier this year, GTL had engaged CBRE, a commercial real estate services company to secure a buyer for this eight-acre plot.

But a source told DNA Money that the tie up with CBRE too isn’t inching ahead, and CBRE has disassociated itself to be a liaison to find a prospective buyer.

CBRE declined to comment.

In 2009, GTL had entered into an agreement  with Sheth Developers and Surakasha Realty to jointly develop the factory plot at Vile Parle’s SV Road, but the deal landed into legal battle and fell through.

Under the deal, the developers were to pay Rs 542.70 crore. Sheth Developers did not respond to a query by DNA Money on the deal with GTL. A part of the sale proceeds will go to income-tax department, which has dues pending towards GTL.

In an order last year, while hearing the petition between GTL and income-tax department, the Supreme Court observed, “The income-tax department shall be entitled to take steps for attachment of the properties of the company, including Vile Parle land as per the provisions of the Income Tax Act and shall be entitled to sell the same. If there are any secured creditors in respect of these properties, such attachment and sale shall be subject to the rights of those creditors. Out of the proceeds, the principal amount of tax due to the income-tax department and even the admitted excise dues shall be paid to the revenue...”

As of January 2010, the outstanding dues and income tax summed to Rs 761.35 crore.

The payment to the I-T Department dates back to 1997, when GTL had become a sick company and its net worth had eroded. In 2000, a draft rehabilitation scheme was circulated wherein it was proposed to allow the company to carry forward unabsorbed losses and allowances beyond eight years, apart from lifting attachment order on its properties.

In 2001, the dues raised by the I-T department were Rs 366 crore.  But as on March 31, 2007, the net worth of the company became positive.