An ambitious realty development plan in Kharghar, which included construction of a Bollywood theme park, may be shelved due to inability of the developers to raise funds, said two individuals in the know-how of the deal.
Future City Properties, a special purpose vehicle (SPV) formed by Bhushan Steel and Essel, had bought a 250-acre plot in Kharghar from CIDCO in 2010 to develop a residential and commercial complex along with a Bollywood theme park. But problems have been brewing between the two companies over liquidity issues, an official with one of the companies said.
“The consortium was supposed to pay Rs1,530 crore to CIDCO in more than one tranche, but they were unable to make the payment,” said a banking source close to the deal. “The project is not happening as the consortium is also finding it difficult to raise funds.”
The 250-acre land parcel was put on the block in 2009 and Future City Properties had bagged the plot with a Rs1,530-crore bid. The payment was to be made within a month.
While CIDCO was to get a 26% stake in the project, the SPV retained the right to put up a residential or commercial complex in 100 acres of the land. The Bollywood theme park was to occupy the remaining 150 acres.
The Bollywood park was estimated to cost upwards of Rs7,000 crore, some of which could have been offset by selling residential apartments.
“Both companies had attempted to raise funds for the project, but it seems it is tough in the present situation especially for a real estate project of such magnitude,” said the banking source.
An official from Essel told HT, “We do not have anything to do with the land deal.” An email questionnaire sent to Essel Group did not elicit any response. The official indicated that all is not well between the two companies. However, this could not be independently confirmed.
Nitin Johri, CFO, Bhushan Steel, pleaded ignorance about the status of the deal. “I do not know the status of the Kharghar deal,” he said. An email query sent to Bhushan Steel on Monday remained unanswered.
Meanwhile, a senior CIDCO official confirmed the development, but refused to divulge the reason for the cancellation of the deal.