Captain Gopinath, the low-cost aviation pioneer in India who has been facing intense heat from State Bank of India (SBI) to repay loans, is in the process of forming a joint development pact with promoters of Bangalore-based RMZ Corp to unlock value at one of his up-market residential properties in Bangalore.
SBI, the country’s largest lender, had recently issued public auction notices to sell Gopinath’s pledged properties, owned by his family members as well as Deccan Cargo, to recover as much as Rs 259 crore (Rs 2.59 billion). Gopinath, however, is understood to have got a stay on the auction.
SBI officials said they could not comment on the auction process as it was sub judice. While Gopinath was not reachable for his view, the promoters of RMZ Corp said they could not comment as it was a private transaction between families. RMZ Corp, over the past years, has acquired and developed over 13 million square feet and today manages a property portfolio in excess of $3 billion (Rs 17,940 crore) in real estate value across India.
The property which is being spun off into a joint development is spread across 16,200 sq ft and is situated just off Vittal Mallya Road, one of the premium localities in Bangalore, where the prices are around Rs 21,000 per square feet. SBI had put a value of close to Rs 33 crore (Rs 330 million) for this property, which is technically owned by Gopinath’s wife Bhargavi Gopinath.
This property is in close to where UB Group chairman Vijay Mallya is building towering uber-luxurious residential apartments - Kingfisher Towers - in a joint venture with Prestige Developers, after razing down his ancestral bungalow.
Even as this development is picking up pace, realtors are indicating a price as close to Rs 30,000 per square feet when the building is completed.
The move to go in for a joint development comes after protracted attempts by Gopinath to restructure the debt failed to yield any result.
Gopinath is understood to have raised close to Rs 500 crore (Rs 5 billion) debt for his second major venture - Deccan Cargo and Logistics - after selling out Deccan Aviation to Kingfisher Airlines.
Deccan Cargo had also raised close to Rs 135 crore (Rs 1.35 billion) from Reliance Industries through the equity route. “While the concept of connecting industrial towns to cities through the air cargo route had immense potential, the execution did not fall into place, as a result of which the venture went into a tail-spin and had to be suspended,” senior industry analysts explained.