Ceramic tile maker Nitco’s share price continued to reel under pressure from the sluggish trend in the user segment – the real-estate sector.
Its financial performance reflects weak underlying fundamentals.
During the fiscal second quarter to September 30, the company reported a consolidated net loss of Rs 27.75 crore on sales of Rs 128.48 crore.
In order to overcome weak financial Nitco has decided to monetize some of its assets.
Recently, Nitco signed a deal with the globally renowned real estate player to develop its 4-acre plot at Kanjurmarg,
This land situated next to Lodha Aurum Grande and bang on the Eastern Express Highway offers development potential that will rival Lodha’s property.
In a statement to exchanges, Nitco mentioned of having entered into a non-binding term sheet to appoint Hines India Real Estate Pvt Ltd as a development manager for providing end-to-end services for office/mixed-use development on the 4-acre plot with a development potential of approx 1.3 million sq. ft. of leasable/saleable area.
The development manager would have to carry the responsibilities of pre-development services (preparation of a business plan, assisting in the design process, helping in arranging financial closure, etc), construction services, leasing, and marketing of the project and asset management post-construction phase.
This marks the entry of Hines into Mumbai – until now Hines has been operating in India only in Gurugram in association with DLF.
This association with Hines will help Nitco monetize its real estate assets.
Hines India Real Estate is part of the global firm, Hines, which headquartered in Houston, Texas, USA.
It is a privately owned global real estate investment, development, and management firm, founded in 1957, with a presence in 219 cities in 23 countries and US$124.3 billion of assets under management.
Hines has 148 developments currently underway around the world, and historically, has developed, redeveloped, or acquired 1,362 properties, totaling over 449 million square feet.
Nitco has also received shareholders’ nod for material related party deal with New Vardhaman Vitrified.
What does this mean for shareholders?
Nitco has significantly underperformed and been a big wealth destructor for its stakeholders despite having a good product brand in the ceramic tiles segment
While the real estate opportunity is a big upside for the company it remains to be seen how the company improved its operating profitability ahead.
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