Mumbai-based budget carrier GoAir could venture into the real estate business much like other Wadia Group companies. GoAir’s land bank could not be ascertained immediately and the company declined to comment on the report. However, the decision to commence business in the real estate sector was taken by the airline’s board of directors at an extraordinary general meeting or EGM held on December 4, according to filings with the Registrar of Companies.
GoAir is headed by Jeh Wadia, who is also the managing director of Bombay Dyeing.
?The consent of the company is hereby accorded to carry on the business activities as stated in the Clause 166 to 171 under Other Objects (Part C) of the Memorandum of Association,? a copy of the resolutions passed at the GoAir EGM held on Dec 4 stated.
The said clauses, which allow Go Airlines to enter the real estate business, were inserted into the company’s Memorandum of Association on May 3, 2012.
The biscuit to aviation Wadia Group, headed by chairman Nusli Wadia, ventured into real estate in 2011 with the formation of Bombay Realty, a 100% owned subsidiary of Bombay Dyeing and a company that has a land bank of 70 acres in Mumbai. The group’s companies and trusts combined have a land bank of 10,000 acres across India, of which 700 acres is in Mumbai. The group now plans to monetise these land assets.
?Markets rarely value land banks and instead tend to focus on near-term earnings, cash flow metrics,? said JP Morgan analysts Saurabh Kumar and Gunjan Prithyani in a research note released in June 2012. ?We think over time as Bombay Dyeing develops joint ventures and joint development agreements with group companies, the market may take notice of these land parcels.?
?According to the management , Bombay Realty over time will explore co-development options for the group’s real estate holdings,? the note added.
The land bank is one of the largest in the country, according to JP Morgan analysts and has been acquired by group companies during the group’s 200-year history in textile and other businesses. The group has previously announced plans to monetise these land assets in 6-7 years.
Bombay Realty is also tying up with group company Britannia to develop a 7-acre land parcel in Bangalore.
GoAir’s board on the Dec 4 EGM also passed a resolution to enable the airline to lend upto R200 crore to group companies.
?The consent of the company is hereby accorded to the board to provide loans, give securities and guarantees to any bodies corporate as they may deem beneficial subject to a maximum of R200 crore,? GoAir stated in the copy of the resolutions passed.
As per the latest available data, GoAir made a profit of R60.04 crore in the fiscal 2010-11 while it had an operating income of R1,260 crore. GoAir, a low cost carrier, had a market share of 7.4% in November 2012.
