Poor Results Spur Selling

Bombay Dyeing's returns on real-estate development bleak

Gloomy corporate performance has sent corporates into a run trying to sell off their prime property in Mumbai. The latest casualty is Siemens India, the 51 per cent subsidiary of Siemens AG of Germany. Through real estate brokers, Colliers Jardine, the company has announced the sale of Rs six-storeyed corporate house at Mumbai's Worli. Money realised from the sale will be added straight to bottomline, a welcome relief for a company, which posted a Rs 23 crore loss in first half of 1996-97. Though the losses are expected to be wiped off after the transfer of the telecom business to a new company, profit from the sale of the property could help bring some colour back to Siemens' balance sheet. The other leading corporates in the market looking for buyers are Mafatlal Industries andDunlop, both with prime properties. While Mafatlal Industries posted a Rs 43 crore loss, Dunlop has run into trouble.

 

Investor fancy in scrips like Bombay Dyeing is likely to recede exponentially as there is very little scope for the government to lift its ban on allowing development of real estate in mill premises.The Development Control Regulations stipulation restricts companies in developing real estate in their own mill premises. Though the Nusli Wadia flagship is doing badly, a certain amount of investor interest had been retained due to its real estate potential. By developing over seven lakh square feet of property in south Mumbai, the company was supposed to rake in nearly Rs 400 crore in profits alone from 1997-98 onwards.

With changes in the Development Control Regulations unlikely, the profit projections made by the company seem a distant dream.