Century Textiles and Industries, a part of the BK Birla group of companies, will spend nearly Rs 625 crore (Rs 6.25 billion) in the first phase of Century Mill's land development in Mumbai, according to information put out by the company.
Currently, the company is in the process of demolishing the old buildings and is expected to start construction work on the mill land by the year-end, a top company official said. The company plans to build a hotel and a commercial complex for IT and ITeS (IT-enabled Services) companies on the 20-acre land.
"Right now, we are in the planning stage and putting together the designs. We have obtained permission to start the work. Hopefully, we will start the work by the year-end," RK Dalmia, senior president, Century Textiles, said.
The land will be developed in three phases and the first phase will comprise of development of a commercial complex and rehabilitation of around 850 workers according to law, Dalmia said. The company will float a tender soon to select a construction company for developing the land, he said.
The 30-acre Worli mill land was in the news earlier due to reports of contention between the BK Birla group, which owns the 20-acre free-hold land, and the Wadia group, promoters of Bombay Dyeing, who own the rest. The Birlas have lease rights for 999 years.
Some former workers, who did not accept the voluntary retirement scheme (VRS) after the mill got closed in 2006, also agitated against the company management and held protests.
"We can start the work on the free-hold land and resolve the disputes with Wadias in due course of time," Dalmia said.
According to the succession plan of BK Birla, the patriarch of BK Birla group, Century Textiles is expected to come into the fold of Kumar Mangalam Birla, who is the chairman of the Aditya Birla Group.
The plans for Century Textiles come at a time when office rentals have fallen by over 50 per cent in various places, such as Nariman Point, Bandra Kurla Complex and Lower Parel in Mumbai, which are key business hubs.
The Lower Parel-Worli area, where Grade A office rentals hover around Rs 170 a square foot, is expected to see a further fall in rentals due to an oversupply of office space. Indiabulls Real Estate is developing Indiabulls One Centre in Jupiter Mills complex and Elphinstone Mills Project in Lower Parel, while the country's largest realty company DLF and the Wadia-promoted Bombay Dyeing are developing a commercial complex in the same locality.
When asked about falling rentals, Dalmia said: "Real estate is very cyclical and now it is in a downward cycle. In due course, we expect it to improve."