The Bombay Dyeing and Manufacturing Company, the Nusli Wadia-led textiles firm, is selling a land parcel of 22 acres in Worli, Mumbai, to Goisu Realty, a subsidiary of Sumitomo Realty and Development Company, for a total consideration of Rs 5,200 crore.

The transaction is one of the biggest land sale deal in the country’s financial capital. It will be spread across two phases.

Upon shareholder approval, Bombay Dyeing will receive about Rs 4,675 crore from Goisu for Phase-I.

The balance amount of about Rs 525 crore will be received upon the completion of certain conditions by BDMC and execution and consummation of the definitive agreements for the phase.

Bombay Dyeing said in a regulatory filing after market hours that the agreement for Phase I is likely to be signed by September 30, while the agreement for Phase II will be done by the fourth quarter of the next financial year.

The sale for Phase I is expected to be completed in October and for Phase II in the fourth quarter of 2023-24.

Commenting on the proposed transaction, Nusli Wadia, chairman, said while Bombay Dyeing has entered into agreements with the Sumitomo group for the sale of about 22 acres of land along with the associated FSI (floor space index), on completion of the deal the company will be able to record a pre-tax profit in excess of Rs 4,300 crore.

He added that Bombay Dyeing will also report a strong positive net worth, extinguish all its borrowings, thereby saving interest costs and releasing the charge on encumbered assets.

Moreover, it will also be in a position to pay dividend in the future and have a strong treasury balance to fund the future realty projects.

Bombay Dyeing said its board had drafted a strategy in March 2022 to change the company’s trajectory, which envisaged focusing on realty business for future growth and profitability, accelerating sale of flats in Island City Center (ICC), at Dadar in Mumbai, monetising its land bank, deleveraging by retiring its borrowings and improving credit rating.

It includes developing the unutilised land parcels of the company and exploring joint development opportunities.

Bombay Dyeing said it was able to generate a net revenue of about Rs 1,050 crore between April 2022 and June 2023, through the sale of the flats in ICC, which led to the company’s borrowings reducing about Rs 900 crore in the same period.

The company added that the decision to monetise the land parcel at Worli was taken with a view to deleverage and strengthen its balance sheet to fund future real estate projects.