Reliance acquires Navi Mumbai SEZ stake at Rs.2,200 crore valuation, raising questions over economic potential

Maharashtra’s biggest industrial land parcel Just sold for pittance to Reliance Industries

Maharashtra’s largest industrial land parcel, spanning over 5,286 acres, has been sold to Reliance Industries Ltd. (RIL) at a valuation of Rs.2,200 crore, sparking scrutiny over the deal’s alignment with the land’s significant economic potential.

Details of the transaction

Urban Infrastructure Holdings Pvt. Ltd. (UIHPL), partially owned by Anand Jain-led Jai Corp Ltd., approved the sale of its 74% stake in Navi Mumbai IIA Pvt. Ltd. (formerly Navi Mumbai SEZ) through its subsidiary Dronagiri Infrastructure Pvt. Ltd. RIL paid Rs.1,628.03 crore for this stake, valuing the entire project at Rs.2,200 crore.

RIL disclosed to the stock exchanges that it acquired the stake after the City and Industrial Development Corporation of Maharashtra (CIDCO) waived its first right of refusal. With this acquisition, Navi Mumbai IIA Pvt. Ltd. became a 74% subsidiary of Reliance Industries.

Strategic importance of Navi Mumbai SEZ

The Navi Mumbai SEZ, incorporated in 2004 and later converted into an Integrated Industrial Area (IIA), is strategically located near key infrastructure projects like the Navi Mumbai International Airport, the Jawaharlal Nehru Port, and the Mumbai Trans Harbour Link (Atal Setu). These developments were expected to elevate the SEZ’s value to over Rs.1 lakh crore, as per previous projections.

Funding structure and capital reduction

UIHPL, which held a 99% stake in Dronagiri Infrastructure, plans to convene a shareholder meeting to approve a 99.76% capital reduction. This move will redistribute Rs.3,746.87 crore among shareholders, including payments for equity shares, preference shares, and debenture redemptions. Reliance, a key beneficiary of this structure, has already advanced substantial funds for the project.

Funds allocation

• Rs.1,492.50 crore to shareholders.
• Rs.682 crore for redeeming optionally convertible debentures.
• Total receipts for UIHPL: Rs.3,772 crore.

Economic and environmental insights

The land value within the SEZ has appreciated significantly in recent years, supported by environmental clearance and growing demand for industrial plots. However, critics have noted a mismatch between the projected economic value and the acquisition cost, which appears undervalued for the area’s potential.

Reliance’s investments in the project

RIL has provided significant funding for the SEZ through its subsidiary Reliance 4IR Realty Development Ltd., including advances of over Rs.6,162 crore. These funds have been channeled into Zero Coupon Unsecured Optionally Fully Convertible Debentures for SPVs involved in developing Dronagiri, Kalamboli, and Ulwe.

Future prospects

With no major capital expenditure left and rising demand for industrial plots, the Navi Mumbai SEZ’s economic potential remains high. However, the transaction has raised questions about whether the sale price adequately reflects the area’s value, especially given its strategic importance and proximity to key infrastructure.

The acquisition’s impact on Reliance’s broader industrial and infrastructure strategy is likely to draw further scrutiny as the project progresses.

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