In what may put a spanner in the modernisation plans of sick public sector enterprise National Textile Corporation, the government has expressed its disapproval in the PSU's bid to sell 10.4 acres of Finlays Mill in Mumbai citing low realty rates.
"I dont think this is the right time to sell land as the prices are really low," said Dayanidhi Maran, minister of textiles. "We should wait for the market situation to improve before going in for a sale. NTC does need Rs. 300-500 crore in the short term but we will have to find other means to raise the capital."
"There will not be any help from the government." he added.
NTC has already made two unsuccessful attempts to sell the 10.4 acre property in Parel in the last six months but it finally managed to get a suitable bid from Lodha Developers in its third attempt last month. Lodhas who had earlier bought Apollo Mills in July 2005, recently increased their bid from Rs. 657 crore to match the PSU's reserve price of Rs. 710 crore.
The next highest bid was Indiabulls' Rs. 520 crore while real estate consultants Jones Lang LaSalle Meghraj had set a price of only Rs. 400-410 crore for the property. The bid however has not been approved by government's asset sale committee yet.
"We are looking into the details of the bid and no final decision has been taken yet," said a member of the committee on conditions of anonymity. "This is an improvement over the bids on two previous instances but the market situation is improving as well and we have to make sure that we are getting the best possible price."
The company had earlier set a reserve price of Rs. 1066 crore in November 2008 which was later revised by over 30 per cent to Rs. 710 crore given the fall in prices in the real estate sector. However, on both these occasions all major real estate companies including Lodhas and DLF did not participate in the bid.