Britannia closes in on deal to sell its Bangalore head office land

Britannia Industries, the publicly-held biscuits and dairy major, may be closing in on a deal to sell its six-acre prime real estate land in Bangalore for about Rs 550 crore by the year-end. The land, which houses Britannia’s corporate head-office and residential quarters, has been on the block since December 2011, after Britannia confirmed that it is exploring options to monetise this asset.

Sources say that the asking price of this property has appreciated by a over 20 per cent to Rs 550 crore during the past year, which is why the deal could not be closed before.

According to sources, many property developers and few other corporate houses have looked at how this prime land can be leveraged.

“Piramal Group, Bharti-Walmart are among the few prominent players who have explored this land parcel,” two real estate consultants in the know told Business Standard. While Britannia maintained that they stand by their earlier statement about considering options to leverage this land asset, the company has denied any negotiations with Bharti-Walmart.

Many developers are eyeing the land, which is on the Old Airport Road connecting the central business district to the technology hub of Whitefield, for commercial and retail development. There are not many integrated retail plays in that part of the town.

Bombay Realty, the realty arm of the Wadia Group, which owns Britannia Industries, is also understood to be exploring ways on how they can work on this parcel. This is the second time that Britannia is trying to unlock this land after its attempt in 2008 fell through.

Real estate consultants indicate that about 1 million sq. ft can be developed on this property where the rental ranges between Rs 60 and 80 per sq. ft.

Over the past two years, Britannia has been battling inflation in its key ingredients and has been effectively creaming away costs. The company’s consolidated debt stands at a little over Rs 600 crore. For the first quarter of FY13, Britannia posted an 18.4 per cent increase in net profit to Rs 46.5 crore on a revenue of Rs 1,348 crore, which grew by 12 per cent.

Britannia Industries’ stock gained 1 per cent to close at Rs 477.70 per share on the National Stock Exchange on Thursday.