Hindustan Unilever is selling a number of its properties to free up idle capital. It has advertised the sale of about 30 flats (over 30,000 square feet) and land across prime locations in Mumbai and Kolkata, besides, a 25-acre parcel near Hyderabad.
About 27 flats in Mumbai are in locations such as Bandra, Mahim, Parel, Colaba, Cuffe Parade, Altamount Road, CBD Belapur and Santacruz, where realty prices range between Rs 50,000 to Rs 1 lakh per sq ft.
To an email query on the rationale behind disposing of prime pieces of property, an HUL spokesperson said: “As part of the normal business process, we continuously review our assets including real estate to unlock business value from idle assets.”
Analyst Nitin Mathur of Espirito Santo Securities thinks companies such as HUL should focus on their core business and not diverge into buying and selling real estate.
Total realisation
Other analysts added that companies often sell or lease real estate assets to raise quick money rather than divest their non-core business in a bad economic environment.
According to the company’s balance-sheet from March 2012 to the latest quarter ended December 2012, HUL has raised a total of Rs 672.42 crore from the sale of its various assets.
Of this, the major chunk of Rs 607.24 crore was in the quarter ended June 2012, when the company sold its Worli property, ‘Gulita’, for Rs 452 crore.
According to real estate and property consultant Sushil Dungarwal, “As most of the properties are in upscale areas, the company is likely to gain around Rs 300 crore from the sales.”
Right timing
According to Amit Bhagat, CEO and Managing Director ASK Property Investment Advisors: “MNCs realise that providing flats for their top executives is not that relevant today as a retention tool. So companies are increasingly opting to free up the capital locked as fixed assets on their balance sheets.”
“The standard of living of their present top executives has also moved up several notches from the time the flats were first bought. They also know it is a good time to exit, given that residential prices are not going to go up in a hurry,” he added.
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