Britannia likely to close sale of its corporate office land by end of December

Asking price shoots up 22% in a year

Britannia Industries, the publicly held biscuits and dairy major, is understood to be closing in on a deal to sell its 6-acre prime real estate land for close to Rs 550 crore by end of December 2012. The land, which houses Britannia’s corporate head-office and residential quarters in Bangalore, has been in the market since December last year after Britannia confirmed that it is exploring various options to monetise this asset.

It is understood that the asking price of this property has appreciated by a little over 20 per cent to Rs 550 crore during the past year and is one of the major hurdles for the deal not to have closed in the recent past. It is understood that many property developers and few other corporate houses have looked at how this prime land can be leveraged. “Piramal Group, Bharti Wal-Mart are among the few prominent players who have explored this land parcel,” two real estate consultants in know told Business Standard. While Britannia maintained that they stand by their earlier statement about considering options to leverage this land asset, the company denied any negotiations with Bharti Wal-Mart.

The land, which is on the Old Airport Road connecting the central business district to the technology hub of Whitefield, is being eyed by many developers for a commercial and retail development as 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 exploring unlocking this land after an earlier attempt during 2008 fell through.

Real estate consultants indicate that close to 10-12 lakh square feet can be developed on this property where the rental ranges between Rs 60-80 per square feet.

Britannia has been over the past two years battling inflation in its key ingredients  and has been effectively creaming away costs, but still its consolidated debt is at a little over Rs 600 crore comes under a gearing of 1.48 times for the last fiscal. The company for the first quarter of Fy13 posted a 18.4 per cent increase in net profit to Rs 46.5 crore on a revenue of Rs 1348 crore, which grew by 12 per cent.

Britannia Industries stock gained one per cent to close at Rs 477.70 per share on NSE on Thursday.