Will the Wadia land deal be able to help revive Bombay Dyeing?

[CAPTION]Bombay Dyeing Mill at Pandurang Bhudkar Marg, Worli, Mumbai. Image: Vijayananda Gupta/Hindustan Times via Getty Images [/CAPTION]

Once spoken about in the same breath as the Tatas and Birlas, the Wadias have a firm place in Mumbai’s history and were once considered part of the city’s business elite. But a series of poor business decisions and failure to get into high growth sectors (with the exception of now shuttered GoAir) has meant that the family relies on just one company, Bengaluru-based Britannia, for almost all their wealth.  
 
Now, in a bid to revive the fortunes of Bombay Dyeing, which lost out to faster more nimble players (Indo Count, Welspun, Trident) in the home textile space, the company has sold its land parcel in Worli for Rs 5,200 crore. This would make Bombay Dyeing primarily a real estate company and a statement issued by the company says that it expects to sell Rs 15,000 crore of real estate in the next few years.  
 
The Group’s aviation plans—GoAir was founded by son Ness Wadia—also seem to have gone awry. The airline has been grounded since May 2023 and its listing plans out on hold. Ness is no longer in charge of the company and has shifted base to London.  

Forbes India takes a look at where the Wadias stand and whether this deal can revive Bombay Dyeing.   

Major companies controlled by the Wadias  

 
Most of their wealth comes from Britannia
Company/Stake/Market Cap

1. Britannia — 50.5 percent stake – Rs 1,10,000 crore
2. Bombay Burmah - 66 percent – Rs 8,900 crore
3. Bombay Dyeing - 53.6 percent – Rs 3,100 crore  
4. National Peroxide - 70.7 percent – Rs 1,151 crore  
5. GoAir - Flights suspended - Unlisted  
   
   

[CAPTION]Nusli Wadia of Bombay Dyeing. Image: Umesh Goswami/The The India Today Group via Getty Images[/CAPTION]

Contours of the land deal  

Twenty-two acres in Bombay Dyeing Mill at Worli sold to Goose Realty Pvt Ltd for Rs 5,200 crore. Out of this amount, Rs 4,675 crore will come about immediately while Rs 525 crore will come after certain milestones are met. 

Also read: One of the big moats of our business has been our ability to drive cost efficiencies: Varun Berry

What will the deal allow Bombay Dyeing to do?  

• Record a one-time pre-tax profit of Rs 4,300 crore  
• Pay off its debt and report positive net worth  
• Have a strong balance sheet for future projects  
  
  

Will the deal be enough to revive Bombay Dyeing?  

• Bombay Dyeing has consistently reported losses for the last three years of Rs 469, Rs 460 and Rs 517 crore.  
• As a result, it has negative net worth of Rs 1,274 crore.  
• Debt on its books is Rs 3,642 crore.
• Rs 5,200 crore will allow the company to pay off its debt and record Rs 274 crore of net worth.  
• However, in the last three financial years the company’s sales have been more or less the same as its expenses.  
• Assuming the company had to pay no interest in FY21, FY22 and FY23 it would still have recorded a loss of Rs 8 crore, profit of Rs 118 crore and loss of Rs 67 crore respectively.  
  
  

Path ahead  

Bombay Dyeing plans to sell 2.5 million square feet of real estate through its land parcels in the city to generate Rs 15,000 crore in revenue in the next few years, according to a company statement. The company said that between April 2022 and June 2023 it had sold flats worth Rs 1,050 crore resulting in its debt coming down by Rs 900 crore.