Reliance Industries Acquires Maharashtra’s Largest Industrial Land Parcel in Navi Mumbai at a Bargain Price

Mumbai, Jan 2 (NationPress) Maharashtra's largest industrial land parcel, covering over 5,286 acres and situated in a prime location near Navi Mumbai Airport, JNPT, and the Mumbai Trans Harbour Link, has been acquired by Reliance Industries Ltd for a valuation of just Rs 2,200 crore.

Anand Jain's Jai Corp Ltd announced via the stock exchange that Urban Infrastructure Holdings Pvt. Ltd., where his company holds a 32 percent stake, will hold an extraordinary general meeting (EGM) to approve the proposed capital reduction.

The announcement detailed that Urban Infrastructure Holdings' subsidiary, Dronagiri Infrastructure Pvt. Ltd. (DIPL), sold its 74 percent stake in Navi Mumbai IIA Pvt. Ltd. for Rs 1,628.03 crore, thereby valuing the company at Rs 2,200 crore for Reliance Industries Ltd.

On December 13, 2024, Mukesh Ambani-led RIL disclosed to the exchanges that following the waiver of the first right of refusal by the City and Industrial Development Corporation of Maharashtra Ltd. (CIDCO), it has purchased 57.12 crore equity shares representing 74 percent of Navi Mumbai IIA Private Limited (formerly Navi Mumbai SEZ) at a rate of Rs 28.50 per share, totaling Rs 1,628.03 crore and valuing the 5,286-acre project at Rs 2,200 crore.

Following this acquisition, NMIIA has now become a 74 percent subsidiary of Reliance, as stated in a disclosure to the stock exchange.

Established on June 15, 2004, NMIIA is focused on developing the Integrated Industrial Area (IIA) in Maharashtra. The Navi Mumbai IIA Pvt. Ltd. was granted permission by the Maharashtra government in the financial year ending March 2018 to transition from an SEZ to an Integrated Industrial Area (IIA), and NMIIA has been designated as the Special Planning Authority for the Dronagiri and Kalamboli areas.

The Navi Mumbai SEZ was projected to possess an economic potential exceeding Rs 1 lakh crore once the Mumbai Trans Harbour Link (Atal Setu) and Navi Mumbai Airport become operational. NMIIA's location is strategically advantageous due to its proximity to the upcoming Navi Mumbai International Airport, Jawaharlal Nehru Port, Mumbai Trans Harbour Link, and the Mumbai-Pune Highway.

RIL clarified in its statement that this investment does not constitute a related party transaction, and that none of the company's promoters, the promoter group, or associated companies have any interests in this transaction.

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

UIHPL held a 99 percent stake in Dronagiri Infrastructure, which owns 74 percent in Navi Mumbai IIA Pvt. Ltd. The remaining stake is held by the government agency CIDCO.

As stated on the SKIL Infrastructure website, Navi Mumbai IIA has achieved financial closure for approximately 2,140 hectares (about 5,286 acres) and is currently developing the site. The company acts as the lead consortium member for Navi Mumbai IIA Ltd., with the remaining equity held by Reliance Group Investment and Holding Private Ltd., part of the Mukesh Dhirubhai Ambani Group.

Dronagiri Infrastructure was set to convene a shareholder meeting on January 2 to seek approval for share capital reduction.

The Board of Urban Infrastructure, the owner of Dronagiri, has proposed to reduce 99.76 percent of its share capital (which includes equity shares and fully compulsorily convertible preference shares, or CCPS) on a proportionate basis and disburse an aggregate consideration of Rs 3,746.87 crore to its shareholders for this capital reduction.

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

Consequently, UIHPL is expected to receive a minimum of Rs 3,772 crore. UIHPL, which possessed a 99 percent stake in DIPL, has also issued Compulsorily Convertible Debentures to the Reliance Group. Upon conversion of these debentures, Reliance, along with the Jai Corp Group, will hold a significant equity stake in UIHPL, as noted by the rating agency. This scenario would lead to both the Reliance Group and Jai Corp Group indirectly acquiring a controlling interest in NMIIA.

Moreover, the funding requirements for NMIIA have been sourced from equity and share application money (through UIHPL) as well as deposits from RIL's wholly owned subsidiary.

By December 31, 2022, NMSEZ had received equity capital and share application money totaling approximately Rs 3,100 crore and deposits amounting to Rs 6,038 crore, according to Care Ratings. The current status of these deposits remains unclear.

According to the 2023-24 balance sheet, Reliance has provided nearly Rs 6,162 crore to its subsidiary Reliance 4IR Realty Development Ltd., which has utilized part of these loans to significantly invest in Zero Coupon Unsecured Optionally Fully Convertible Debentures across multiple SPVs involved in the development of Dronagiri, Kalamboli, and Ulwe.

The rating agency has indicated that since the project has received clearance from the Environment Ministry, the demand for plots in the area is anticipated to rise. Furthermore, as there are no substantial capital expenditures remaining for the project, land value has notably appreciated over recent years.

However, the high economic value is not evidently reflected in the acquisition cost of the project by Reliance Industries.