HC order grounds mill redevelopment

A Bombay High Court judgement has opened a Pandora's Box of development-related issues in the city by setting aside the sale of NTC's mill lands and negating the Development Control Rule (DCR) 58.

The judgement, which has shaken the city's powerful millowners' lobby, puts at stake the development of 600 acre of prime land in central Mumbai, valued conservatively at Rs 5,000 crore.

Properties of 10 mills are already in various stages of development with malls, commercial office space, hotels and luxury apartments coming up. NTC-owned Jupiter Mills was sold in March 2005, and it has been completely demolished, while the other mills are yet to be handed over.

Today's HC judgement, however, has put paid to all developments in the central Mumbai area, as it has also set aside the 2001 amendment to DCR 58, under which the private mill lands were being developed.

Under the DCR, where the original mill structures were not being pulled down, could be redeveloped in entirety without setting aside any land for open spaces or low-cost housing.

Some of the real estate industry watchers in the metro went on to say that the judgement may also discourage foreign investors, although it may not affect foreign direct investment (FDI) inflows in the long term.

IndiaBulls bought the 11.11-acre Jupiter Mills for Rs 276 crore in a joint venture with the US-based Farallon Investments.

Arun Goel of DHFL Realty Venture Fund said, "I don't think it will affect FDI inflows. Investors who are looking at India are looking at the country as a whole."

However, Anuj Puri of Trammel Trow Meghraj differs, "Foreign investors are considering India as it is not a transparent market, consequently the returns on risk are higher. This judgement will send a wrong signal to all those investors."

Both Puri and Goel agree that land prices as a consequence of the judgement will come down in central Mumbai. "It will push down the price of land while pushing up the price of the final product as the demand supply gap will widen," said Puri.

Goel added, "It will cool down the over-heated prices in the city and make investments in the city more attractive for long-term players."

The judgement has also put paid to NTC's plans for revamping its mills in the state, including four slated revamp by the end of the fiscal. So far, of the Rs 2,020.75, which was raised in the Mumbai sales, NTC has received Rs 1,600 crore.

All sales have been realised except the last one, Kohinoor Mill No 3 at Dadar, which was picked up for Rs 421 crore jointly by Matoshree Realties, floated by Shiv Sena chief Bal Thackeray's nephew Raj Thackeray, Kohinoor Realties, owned by former Lok Sabha speaker Manohar Joshi's son, Unmesh Joshi and IL&FS.

Based on the mill land sale, NTC had drawn up ambitious plans for revamping 20 of its mills in the state, at a cost of Rs 284 crore. Of these, 17 are in Mumbai and four - Finlay, Poddar, Tata and India United No 5 "� are slotted for revival in the first phase.

The other mills - Goldmohur, India United No 4, Savatram, RBBA, New City, Auranagabad, Dhule and Chaalisgaon Mills "� were to come up for revival in the second phase. Barshi Mills at Barshi in Solapur district was also to be modernised in the first phase.

The NTC chairman R K Pillai described the judgement as a temporary setback to the company's broader roadmap for restructuring.