Bombay Dyeing shares rise 20% on land deal; debt reduction plans

Bombay Dyeing shares rise 20% on land deal; debt reduction plans

Shares of Wadia- owned textile to real estate company Bombay Dyeing & Manufacturing Company (BDMC) shot up 20 % and hit 52 week high on Thursday after the company on Wednesday said that it would be selling its 22-acre land parcel in Worli area if Mumbai for 5200 crore to Japan’s Sumitomo group.

The stock opened at Rs 164.80 and touched an intra- day high of Rs 168.50 and closed the day at Rs 153.45, about 9.26% higher than Wednesday’s close.

He said the deal is crucial for the company as it has debt service obligation of Rs 1000 crore in FY24 and its planned rights issue to reduce debt has been delayed.

Bombay Dyeing had a networth of -Rs 1274 crore and debt of Rs 3642 crore as of March 31, 2023. It made a loss of Rs 517 crore on revenues of Rs 2674 crore in FY23.

The company would record a pre-tax profit of over Rs 4,300 crore on account of this transaction, its chairman Nusli Wadia said in a release on Wednesday. The company will be able to report a strong positive net worth, extinguish all its borrowings thereby saving interest costs and releasing the charge on encumbered assets and pay dividend in future, Wadia said, adding: “It will be able to have a strong treasury balance to fund the future realty projects” he said.

He said with a view to deleverage and strengthen the balance sheet of the company for funding future real estate projects, the board decided to monetize the company’s land parcel at Worli, Mumbai, after evaluating various other options. The Board has also approved the development of land parcels which have a potential to create about 3.5 million square feet of residential / commercial property and generate a revenue of about Rs. 15,000 crore over the next few years, he added.

. “The development will be planned judiciously in phases to manage company’s cashflows efficiently. The Company will also evaluate other joint development and partnership opportunities to create a steady pipeline of future revenue and profits,” he said.

Wadia said the company had charted out a strategy in March 2022 to change its trajectory which envisaged: focusing on realty business for future growth and profitability, accelerating sale of flats in Island City Center, Dadar; monetizing its land bank; deleveraging the company by retiring it’s borrowings and improving credit rating; developing the unutlized land parcels of the company. and exploring joint development opportunities.

Wadia said Bombay Dyeing to was able to generate a net revenue of about Rs. 1,050 crore between April 2022 and June 2023 through sale of the flats in its project International City Center, Dadar by focused execution, leading to a reduction in the company’s debt by about Rs 900 crore in the same period.

Bombay Dyeing, set up in 1879, forayed into real estate in recent years and developed its luxury mixed use project The Island City Centre in Dadar and Wadia International Centre in Worli. In 2010, it sold four lakh sq ft office building to Axis Bank in the same area for Rs 782 crore.