Zandu Realty has struck a deal with Sheth Developers to rebuild erstwhile herbal healthcare firm Zandu Pharmaceutical Works’ headquarters in Mumbai’s Dadar neighbourhood into a 2.7-acre commercial complex.
On entering the development agreement, Zandu Realty, an Emami group firm, received Rs.70 crore in cash from Sheth Developers. It will also receive half the developed area on completion of the project, according to R.S. Agarwal, Joint Chairman of the Emami group.
Zandu Realty recently assessed the value of its Dadar property at Rs.250 crore. Going by Zandu Realty’s stock price of Rs.1,482.70 on BSE on Monday, the market values the property at Rs.119 crore.
After acquiring the company from its founders for around Rs.730 crore, Emami carved out and merged with itself Zandu Pharmaceutical Works’ herbal healthcare business. Emami is now cashing out of the fixed assets of the erstwhile herbal healthcare company.
“From our studies, we concluded that we should build warehouses at our Dadar property,” Agarwal said. “It will create for us a long-term revenue stream.” Emami had earlier considered building a high-end condominium at the site.
Ashwin N. Sheth, Chairman and Managing director of Sheth Developers, however, refused to give more details. “The details of what we will build are expected to emerge in a month or so,” he said.
“The cash flow from the Dadar property will benefit shareholders of Emami, permeating through the holding companies, besides those of Zandu Realty,” said Naresh Bhansali, Emami’s Chief Financial Officer.
The Emami group is currently restructuring its real estate projects, consolidating them into two listed firms—Zandu Realty and Emami Infrastructure Ltd—to focus on different segments of the business.
The company had said in September that three firms, Emami Realty Ltd, Emami Homes Pvt. Ltd and Emami Estates Pvt. Ltd, were to be merged with Zandu Realty.
