Nerolac sells its 15.86-acre Chennai plot for Rs550 cr

Paint maker Kansai Nerolac has agreed to sell its 15.86-acre land parcel in Perungudi, Chennai for Rs550 crore to Brigade Enterprises, making it perhaps the biggest land deal in Chennai.

The board of directors of Kansai Nerolac, at its meeting on Monday, approved the sale of the land to Brigade Group, subject to due diligence and other statutory procedures.

"The company has entered into a term sheet with Brigade Properties relating to the same," Kansai Nerolac said in a statement.

The land will be sold to Bangalore-based Brigade Group or a special purpose vehicle backed by the government of Singapore Investment Corporation (GIC of Singapore). This values the land at Rs7,959 per square foot. 

Nerolac said it would use proceeds from the sale to invest in a plant it is setting up in Gujarat.

The transaction has raised a few eye brows as at the agreed price of the land, the developer will not be able to sell property at Rs11,000 per square foot for residential purposes or rent out commercial space at Rs80 to Rs90 a square foot.

Rival bidders for the land parcel included Ascendas, Prestige, RMZ, Standard Chartered and Khivraj.

International property consultants Jones Lang LaSalle and CBRE managed the transaction.

Reports cited the reason for the sale as the closure of Nerolac's factory in Chenni, which was within the city, which was a very old factory and polluting.

The company decided to sell it off to monetise it and use the proceeds elsewhere for business. It has recently announced a Rs350-crore expansion for putting up a factory in Gujarat. Part of the money would be used there.

If the shareholders decide part of the money will go to them while a part of it will go to the government as well.