Reliance Industries Limited, the country's largest private sector company, is close to selling a 2.5-acre commercial plot at Bandra-Kurla Complex to closely-held property developer Wadhwa Group.
The deal is expected to be around Rs 1,000 crore (Rs 10 billion) in size and will take a month to conclude, a person involved with the talks between the two groups said.
The plot is a part of the 18.5-acre land RIL had bought in 2006 from Mumbai Metropolitan Region Development Authority for Rs 1,104 crore (Rs 11.04 billion) in an auction.
Considering that the floor space index in BKC is allowed to go up to 9 (from 2 when RIL bought the land), the buyer can make profits from the project, a consultant said. But developers cannot have such high FSI because of the restriction on height.
(FSI means the permissible construction on a given plot of land. If a developer has 1,000 sq ft of plot, FSI of two means 2,000 sq ft of development.) Even if the buyer goes for FSI of 6 on the RIL plot, it can develop 653,400 sq ft.
RIL was earlier talking to at least four developers to sell the land, the source said.
"Considering that the deal involves two big groups and RIL has also requested MMRDA to refund the Rs 696 crore (Rs 6.96 billion) it has paid for the additional space, it will take some time to conclude,'' said the person.
When contacted, the RIL spokesperson as well as Sanjay Chhabria, managing director of Wadhwa Group, declined to comment on the deal.
Vijay Wadhwa, the promoter of Wadhwa Group, could not be contacted as he was travelling abroad.
RIL is going slow on its plans to develop a convention centre and leisure and entertainment complex on the plot, said a property consultant who did not want to be quoted.
According to sources in RIL, since telecommunications and power have become the immediate priority for the Mukesh Ambani-led company after his patch-up with brother Anil Ambani, real estate projects have taken a back seat.
According to reports, RIL had roped in the Maker group to develop the entire project.
MGM Mirage, the US-based hospitality giant, was in talks with RIL to set up the marquee Bellagio hotel on the plot. The project was also set to see a premium mall on the lines of DLF Emporio in New Delhi.
RIL is the second corporation which has chosen to sell its land parcel in the area. Jet Airways, the country's largest airline, is in the final stages of joint development of its BKC plot with Godrej Properties, which it acquired from MMRDA in March 2008 for Rs 826 crore (Rs 8.26 billion) for building its global headquarters.
Wadhwa Group plans to build commercial buildings on the plot, the person added.
It is one of the biggest developers in BKC with at least four developments in the area.
In November 2007, the group created a national record when it bought less than two acres at BKC for Rs 831 crore (Rs 8.31 billion).
When the property market went down, MMRDA increased the FSI norm. The group got FSI of 9.34 for that land.
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