Mumbai-based real estate developer Runwal Group has bought one of the two plants of Neosym Industries Ltd from the CK Birla Group for Rs 300 crore ($55 million) in a deal that brings the steel & copper rolling company’s Mumbai suburb property up for redevelopment. The deal, which was in the works, has been closed a few weeks ago, sources told VCCircle.
Neosym (formerly Indian Smelting & Refining Co. Ltd) owns a property spread across 14 acres in LBS Marg in Bhandup West besides a separate unit at Thane. The Bhandup property has been acquired by privately held Runwal Group.
Wheelabrator Alloy Castings, a Runwal Group firm, completed the business transfer agreement with CK Birla Group, according to an investment banker. Global property consultant Jones Lang LaSalle was the advisor for the transaction. After the sale, the administrative office of Neosym shifted to its casting factory in Thane, said one of the sources.
E-mail queries sent to both Runwal Group and Neosym did not elicit any response till the time of posting this article. When contacted by VCCircle over the phone, CK Birla declined to comment on the transaction.
The CK Birla Group has interests in various industries such as cement, consumer electricals, precision bearings, heavy engineering products, paper, building products, automobiles, auto components, healthcare, education and ITES.
For the Runwal Group, this acquisition fits in with its focus on property development in Mumbai suburbs. It has developed more than 40 projects and housing solutions in suburbs like Chembur, Ghatkopar, Mulund and Thane.
According to an investment banker, there were around 500 labourers working at Neosym, who would be compensated by the new management. “The deal has come at an attractive price because of the labour issues. Under normal circumstances, the per acre cost should have been at least Rs 40 crore as against Rs 20 crore at which it was closed,” the banker said.
It is not unusual for property developers to buy manufacturing companies only to shut down the factories located in the city and monetise the land with lucrative residential or commercial property projects. Given the lack of open space within the city, Mumbai has seen a string of such deals over the past few years, starting with the redevelopment of closed textile mills which were located in the heart of the city.
In some cases, old industrial groups have shifted out their plants to other locations and set their own property development units to monetise the land assets.
(Edited by Sanghamitra Mandal)
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