Mills Await Freedom To Develop Real Estate

Plans and bottomlines of leading Mumbai-based textile companies have been affected following the state governments ban on developing real estate within their mill premises.

The Sena-BJP government, on February 29, 1996, put a total freeze on any sort of development of mill lands.

The main idea was to prepare an integrated development plan of mill land to stop haphazard development plans of several companies which had gone ahead on their own.

The move also put paid to plans of several textile companies, which, under the Development Control Regulations, were permitted to develop, for commercial purposes, up to 15 per cent of their total built-up area.

 

However, money realised from such activities was to be invested back in modernisation.

The state governments ostensible aim was to stop real estate speculation.

It wanted to prevent textile companies from turning into real estate companies by selling off a chunk of their land at high prices.

After realising that the profits are large from dealing in real estate, textile mills were showing keen interest in it, says a government official.

All the land development activities started by the mills had to be stopped following the action of the government. In one case, construction of a building to be stopped half-way following the governments sudden order, a mill owner said.

Moreover, under certain provisions of the Development Control Rules, mills are called upon to make available 60 to 70 per cent of land for public purposes, he added.

According to sources in real estate business, if the government had permitted sale of excess land, it would have certainly brought the market prices down.

The fact is that there is no clear-cut policy by the government as to what is to be done. It is not really possible to assess the reaction in the market since it is not clear whether the government will allow the sale of excess land. Even if the government grants permission, it will take another two years before any construction activity is completed, the source said.

A government official said that the decision was not taken to please anyone.

After the Sena-BJP government took over, a cabinet sub-committee was appointed to review all the modernisation, rehabilitation and Board of Industrial and Financial reconstruction decisions cleared by the Congress government, he said.

The committee also requested the government to do a study on the surplus land by appointing experts. Following this recommendation, an expert committee was appointed under the charimanship of Charles Correa.

Mill workers contend that in the name of modernisation, the management will bring in new technology resulting in job losses. The interest will soon shift to real estate, a union member said.

Some of the textile mill owners agree that it is likely that the focus will shift to real estate once the government gives a free hand in developing or selling land.

At times, it is better going in for a golden shake instead of incurring losses. If we can generate some money from developing our property, it can be utilised to the advantage of the employees, a mill owner pointed out.

The governments delay in coming out with a clear policy has upset most of the textile mills. A senior official from the Piramal Enterprises, which runs the Morarjee Goculdass Spinning & Weaving Mills, said that the mill ran into losses after making profits for many years. Had the government cleared the proposal, we could have generated additional income to pump into the industry We were expecting to create additional cash flow through our project. The money was to be pumped in to the industry itself, he said.

Bombay Dyeing and the state government were to sign an agreement last year under which the former would get back 2,70,00 square feet of the companys land for development in South Mumbai that is currently under government occupation.

The textile ministry is understood to have raised no objections but the deal is yet to be finalised following the governments ban.

The companys plans for developing additional real estate at its Spring Mills in Wadala in central Mumbai has also not borne fruit.

The industry is looking forward to the cabinet meeting on Wednesday where, according to sources in the textile department, a decision is likely to be taken to lift the ban .

MILLS AWAITING NOD FOR REAL ESTATE DEVELOPMENT

Bombay Dyeing Hindoostan Spinning Mafatlal Industries Victoria Mills Simplex Mills Morarjee Goculdas

MILLS WHERE BIFR PACKAGES ARE YET TO TAKE OFF lNTC Maharashtra (South and North)

New Great Eastern Modern Mills Mathulya Kamla Raghuvansi Mills New Vinod Silk Mills