Mumbai, Jan 2: Maharashtra’s biggest industrial land parcel measuring over 5,286 acres — at a strategic location close to the Navi Mumbai Airport, JNPT and the Mumbai Trans Harbour Link project — has been sold to Reliance Industries Ltd at a valuation of mere Rs 2,200 crore.

Anand Jain-promoted Jai Corp Ltd. informed the stock exchange that Urban Infrastructure Holdings Pvt. Ltd., a firm in which his company holds 32 per cent, is convening an extraordinary general meeting (EGM) of shareholders to approve capital reduction proposed by the company.

The company informed the stock exchange that the subsidiary of Urban Infrastructure Holdings Pvt. Ltd., i.e., Dronagiri Infrastructure Pvt. Ltd. (DIPL), sold its 74 per cent stake in Navi Mumbai IIA Pvt. Ltd. for Rs 1,628.03 crore, valuing the company at Rs 2,200 crore to Reliance Industries Ltd.

Mukesh Ambani-led RIL informed the exchanges on December 13, 2024, that pursuant to the waiver of the first right of refusal by the City and Industrial Development Corporation of Maharashtra Ltd. (CIDCO), it has bought 57.12 crore equity shares representing 74 per cent of Navi Mumbai IIA Private Limited (NMIIA), formerly called Navi Mumbai SEZ, at a price of Rs 28.50 per equity share, aggregating Rs 1,628.03 crore, valuing the 5,286-acre project at an equity value of Rs 2,200 crore.

After the acquisition, NMIIA became a 74 per cent subsidiary of the company, it said in a disclosure to the stock exchange.

NMIIA was incorporated on June 15, 2004, and is engaged in developing the Integrated Industrial Area (IIA) in Maharashtra. Navi Mumbai IIA Pvt. Ltd. in the financial year ending March 2018 was allowed by the Maharashtra government to be converted from an SEZ into an Integrated Industrial Area (IIA). NMIIA has been appointed as the Special Planning Authority for the notified areas of Dronagiri, Kalambol.

The Navi Mumbai SEZ was once said to be estimated as having an economic potential of over Rs 1 lakh crore after the Mumbai Trans Harbour Link (Atal Setu) and Navi Mumbai Airport get operational. NMIIA is a strategically located industrial zone as it is in close proximity to the upcoming Navi Mumbai International Airport, the Jawaharlal Nehru Port, the Mumbai Trans Harbour Link and the Mumbai-Pune Highway.

RIL, in its statement, said that the investment is not a related party transaction and none of the company’s promoters, the promoter group, or group companies have any interest in the above transaction.

But Urban Infrastructure Holdings Private Ltd. (UIHPL) is owned 33 per cent by Mukesh Ambani-led Reliance group companies, 32 per cent by Jai Corp Group led by Anand Jain and SKIL Infrastructure, which is currently under NCLT proceedings, held 35 per cent as per its annual report for the financial year ending March 2023, according to credit rating agency Care Ratings, which had rated Navi Mumbai SEZ instruments in March 2021.

Urban Infrastructure Holdings Private Ltd. held a 99 per cent stake in Dronagiri Infrastructure, which owns 74 per cent in Navi Mumbai IIA Pvt Ltd. The remaining stake is held by the government agency CIDCO.

According to the SKIL Infrastructure website, Navi Mumbai IIA achieved financial closure for 2,140 hectare (approx 5286 acre) and is currently developing the site. It said the company is the lead consortium member for Navi Mumbai IIA Ltd., with the balance of equity held by Reliance Group Investment and Holding Private Ltd., a Mukesh Dhirubhai Ambani Group company.

Dronagiri Infrastructure was scheduled to convene a shareholder meeting on January 2, seeking approval for reduction of share capital.

The Board of Urban Infrastructure, i.e., the owner of Dronagiri, has proposed to reduce 99.76 per cent of its share capital (i.e., equity shares and fully compulsorily convertible preference shares, or CCPS) on a proportionate basis and pay an aggregate consideration of Rs 3,746.87 crore to its shareholders towards such capital reduction on a proportionate basis and considering CCPS on an as is converted basis.

Out of this, owners of Urban Infrastructure have already received the promoter’s contribution towards equity of Rs 1,597 crore. Dronagiri will distribute Rs 1,492.50 crore along with any interest that has accrued and redeem Optionally Fully Convertible Debentures for Rs 682 crore held by its subsidiary Vinamra Universal Traders Private Limited.

Thus, the total funds that UIHPL will receive will be a minimum of Rs 3,772 crore. UIHPL, which held a 99 per cent stake in DIPL, had also issued Compulsorily Convertible Debentures to Reliance (Mukesh Ambani) Group. On the conversion of CCDs, Reliance, along with Jai Corp Group, will hold a substantial equity stake in UIHPL, the rating agency had said. This would have resulted in Reliance Group and Jai Corp Group indirectly having a controlling stake in NMIIA.

In addition, the funding requirement of NMIIA is met out of equity and share application money (through UIHPL) as well as deposits from the wholly owned subsidiary of RIL.

Till December 31, 2022, NMSEZ received equity capital and share application money of approximately Rs 3,100 crore and deposits to the extent of Rs 6,038, according to Care Ratings. It is not clear what the status of these deposits is since then.

As per the 2023-24 balance sheet, Reliance has advanced close to Rs 6,162 crore to its subsidiary Reliance 4IR Realty Development Ltd., which in turn used a portion of the provided loans and invested substantially in the Zero Coupon Unsecured Optionally Fully Convertible Debentures of several SPVs involved in development in the Dronagiri, Kalamboli, and Ulwe areas.

The rating agency, though, wrote that since the project has been cleared by the Environment Ministry, the demand for the plots within the area is expected to increase. Furthermore, there is no major capital expenditure left to be incurred in the project, and there has been a significant appreciation in the value of land in the last couple of years.

However, this high economic value does not seem to reflect in the cost of acquisition of the project by Reliance Industries.