Banks settle Rs 7.37 bn loan on South Mumbai mall with BMMCL promoters
ECONOMY & POLICY

Banks settle Rs 7.37 bn loan on South Mumbai mall with BMMCL promoters

Canara Bank-led lenders have given their approval to the one-time settlement offer proposed by Kishore Biyani for the debt owed by the holding company of SOBO Central Mall (formerly known as Crossroads) at Haji Ali in south Mumbai.

Bansi Mall Management Company (BMMCL), which is promoted by Biyani, had a debt of Rs 7.37 billion with lenders. The promoters offered Rs 4.40 billion to settle the debt.

The settlement represents a 40% reduction for the lenders. The offer was approved at a joint lender meeting last month, as there were no bids for the mall during an auction in January 2024, where the reserve price was set at Rs 4.75 billion. Initially, lenders valued the mall at Rs 6 billion when sanctioning the loans. However, due to the property's disuse, the internal valuation was marked down to Rs 4 billion. Although the company's contractual liability is Rs 7.37 billion, the book liability of the banks holding the first charge (Canara Bank and Punjab National Bank) is Rs 2.2 billion. The additional liability of Rs 5.75 billion arises from a second charge held by United Bank of India and PNB against which the property was offered as security.

Canara Bank and Biyani did not respond to queries for comment. The proposal was tentatively accepted by the banks at the joint lenders' meeting. The completion of some formalities by the borrower, including paying 10% upfront and the remaining amount before the third week of March, is required for the deal to be finalised.

BMMCL was incorporated in 2005 by the promoters of the Future group to develop and manage the mall. SOBO Central Mall, with a total leasable area of 148,198 sq ft, was rented out to Biyani's group companies, including Future Consumer Enterprises, Future Retail, and Future Lifestyle. Future Consumer Enterprises occupied only 1% of the leasable area.

BMMCL defaulted on its obligations after the cessation of rental income during the Covid lockdown. Rent recoveries were weak due to the distressed state of Future companies renting the premises. The lack of cash flows severely impacted the company's financials, leading to continuous defaults. This situation prompted lenders to initiate proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act.

Crossroads, the first mall in the country set up by the Ashok Piramal group, faced challenges in managing customer traffic when it was launched in 1999. In response, the management briefly restricted free entry to those with a credit card or a mobile phone ? both rare items in those days. Others without these items had to pay a Rs 60 entry fee. However, a downturn in retail resulted in the promoters exiting the mall management business.

Canara Bank-led lenders have given their approval to the one-time settlement offer proposed by Kishore Biyani for the debt owed by the holding company of SOBO Central Mall (formerly known as Crossroads) at Haji Ali in south Mumbai. Bansi Mall Management Company (BMMCL), which is promoted by Biyani, had a debt of Rs 7.37 billion with lenders. The promoters offered Rs 4.40 billion to settle the debt. The settlement represents a 40% reduction for the lenders. The offer was approved at a joint lender meeting last month, as there were no bids for the mall during an auction in January 2024, where the reserve price was set at Rs 4.75 billion. Initially, lenders valued the mall at Rs 6 billion when sanctioning the loans. However, due to the property's disuse, the internal valuation was marked down to Rs 4 billion. Although the company's contractual liability is Rs 7.37 billion, the book liability of the banks holding the first charge (Canara Bank and Punjab National Bank) is Rs 2.2 billion. The additional liability of Rs 5.75 billion arises from a second charge held by United Bank of India and PNB against which the property was offered as security. Canara Bank and Biyani did not respond to queries for comment. The proposal was tentatively accepted by the banks at the joint lenders' meeting. The completion of some formalities by the borrower, including paying 10% upfront and the remaining amount before the third week of March, is required for the deal to be finalised. BMMCL was incorporated in 2005 by the promoters of the Future group to develop and manage the mall. SOBO Central Mall, with a total leasable area of 148,198 sq ft, was rented out to Biyani's group companies, including Future Consumer Enterprises, Future Retail, and Future Lifestyle. Future Consumer Enterprises occupied only 1% of the leasable area. BMMCL defaulted on its obligations after the cessation of rental income during the Covid lockdown. Rent recoveries were weak due to the distressed state of Future companies renting the premises. The lack of cash flows severely impacted the company's financials, leading to continuous defaults. This situation prompted lenders to initiate proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. Crossroads, the first mall in the country set up by the Ashok Piramal group, faced challenges in managing customer traffic when it was launched in 1999. In response, the management briefly restricted free entry to those with a credit card or a mobile phone ? both rare items in those days. Others without these items had to pay a Rs 60 entry fee. However, a downturn in retail resulted in the promoters exiting the mall management business.

Next Story
Infrastructure Transport

Titagarh Rail Systems Launches Third Diving Support Craft for Indian Navy

Titagarh Rail Systems (TRSL) marked another milestone in its shipbuilding journey with the launch of the third indigenously built Diving Support Craft (DSC) for the Indian Navy. The vessel is part of a series of five DSCs being constructed by TRSL under the Ministry of Defence’s Make in India initiative.The launch ceremony was graced by Kangana Berry, wife of Vice Admiral Suraj Berry, AVSM, NM, VSM, Commander-in-Chief, who performed the traditional naming and launch. The vessel was side-launched into the Hooghly River at 16:10 hrs.Diving Support Crafts are catamaran-type vessels designed wit..

Next Story
Infrastructure Transport

Concord Control Systems Secures First Kavach 4.0 Order via Progota India

Concord Control Systems (CNCRD), a leading manufacturer of embedded electronic systems and critical electronic solutions, has secured its first order for Kavach 4.0 through associate company Progota India. Valued at Rs 190.45 million, the order represents the start of large-scale implementation opportunities for advanced railway safety systems in India.With this milestone, Concord will become one of the few railway companies to have a fully developed Kavach system approved for supply to Indian Railways. The next-generation Kavach has successfully advanced through the stringent approval journey..

Next Story
Infrastructure Urban

Awfis Delivers 67,000 sq ft Innovation Hub for eBay in Bengaluru

Awfis Space Solutions, India’s largest flexible workspace provider and the country’s first publicly listed workspace solutions platform, has added eBay to its growing list of prestigious global capability centre (GCC) clients. Awfis has designed, built, and will manage a ~67,000 sq ft innovation hub for eBay at Embassy Tech Village, Bengaluru, supporting the e-commerce leader’s AI-first commerce strategy.The new centre will function as a strategic hub, advancing artificial intelligence, engineering, product development, and applied research, while further strengthening eBay’s growth in..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?