Will the Finlay Mills prove to be a costly buy for the Lodha Group?The repeated attempts to auction the 10.4-acre Finlay Mills in central Mumbai by the National Textile Corporation (NTC) in many ways mirror the roller-coaster ride the property market has seen in recent times.
The first round of bidding held in December last year was cancelled as there were no bids to match the reserve price of Rs 1,065 crore. The only bidder, DB Realty, offered just Rs 405 crore. The second round held in March 2009 was also a washout even after NTC reduced the reserve price to Rs 710 crore. In its third attempt in mid-July, NTC got some serious bidders. However, in this round too the highest bidders, the Lodha Group, bid below the reserve price at Rs 657 crore.
After negotiations with NTC, the Lodhas have agreed to up their offer to Rs 710 crore to meet the reserve price, and the sale is now set to go through. While this price is 20-30 per cent lower than the peak prices Mumbai mills have seen in the boom, the Finlay Mill sale still reflects a high price — nearly Rs 16,000 per sq. ft. It shows the builder is confident of the future. However, the risk is obvious. There is a huge glut in commercial property in central Mumbai. It can, of course, wait till demand picks up.
Gurbir SinghJapan seems to be manufacturing its way out of recession. Factory output rose for the fourth straight month in June. Production soared 8.3 per cent in April-June from the previous quarter, surpassing the 1953 record of 7.9 per cent. Japanese firms will keep raising production to meet the demand spurred by the trillion-dollar stimulus packages.
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