On 23 November 2023, the mumbai-based Bharat agri Fert & realty (BaFrL) announced that it expects its residential project ‘Wembley’, ground plus 59 floors at Shiv Sai Paradise, Majiwada, Thane, on the outskirts of mumbai, to be a game changer for the company. The soft launch of the project received buyer enquiries for 152 units out of a total of 452 units. Further, the company has undertaken strategic expansion plans for its ‘anchaviyo resort’ in Palghar district, Maharashtra, along with other real estate projects and the modernisation of the single superphosphate (SSP) fertiliser unit.
“We expect revenues of about R800 crore in the next three-four years from these projects,” elaborates Yogendra Patel, CMD, BafrL. “The company is expanding ‘anchaviyo resort’s capac-ity from 46 to 125 rooms. BafrL holds freehold surplus land of 4 million sq ft area (92 acres), where the company plans to establish weekend homes. also, we have entered into a joint ven-ture project to develop 35,000 sq ft area in Vile Parle East, in suburban mumbai, to develop 3/4 BhK residential luxurious flats”.
BAFRL was founded by the Late Dahy-Abhai Patel, who came to Mumbai in 1954-55 from a small village in the Khaira district in Gujarat. While working with a clearing agent firm handling the import of fertilisers, he observed a lot of demand for the product in the country and planned to set up a plant. after raising funds from friends and relatives, Patel floated Bharat Fertil-iser Industries, which was eventually listed in 1962 on the Bombay Stock Exchange, fulfilling his dream at the age of 35. The company then set up the first NPK (nitrogen, phosphorus and potassium) mixture plant at Maji-wada in Thane, near Mumbai, on free-hold land purchased. Later, in 1972, he started making and distributing urea and DaP to ensure that the company had a multiple fertiliser product range.
Foray into fertiliser In 1982-83, following the Union car-bide gas leakages, the government decided to close down all fertiliser plants in city municipal limits, which forced the promoters to offer empty go-downs on a rental basis. also, in 1983, the second generation of promoters, led by Yogendra Patel, a chemical engineer, oined the company. Yogendra set up brand new sulphuric acid, SSP (single super phosphate), GSSP (granular sin-gle superphosphate) and alum plants to make up for the bad times.
He also set up an integrated he also set up an integrated plant at an estimated project cost of R7.60 crore in a 20-acre freehold private land. Dahyabhai then purchased 120 acres of land in the name of Vaitarna Farm at Wada Taluka in Thane district, while also setting up an ownership office in 1972 at Fort, mumbai, named Bharat house. Dahyabhai offered the farm-land to BafrL after obtaining permission from the land reve-nue department, to set up more business opportunities in Wada Taluka.
From 1997 onwards, BafrL had to contend with a steep increase in imported crude oil prices, as also defective government policies on pricing and subsidy, coupled with delay in payment of subsidy and rise in prices of raw materials. Fertiliser production dwindled and, instead of making profit and paying dividend, the company started making losses, leading to the entire net worth getting wiped out and the manufacture of SSP fertiliser becoming problematic. In 2004, the company made a reference to BIFr reporting a loss of net worth, to find out ways and means to revive and revamp the company.
“We did not lose courage,” explains Yogendra. “With our innovative plan-ning, we started developing the compa-ny’s surplus land at majiwada, Thane, measuring 625,000 sq ft.” as the com-pany’s fortune revived, it secured a prestigious contract for the conver-sion of SSP/GSSP fertilisers from various other companies. This gave the com-pany an opportunity to re-enter its long-standing traditional business, for seven years to start with. The company had already revamped its production units to cater to this order.
“The fertiliser facility operated at less than 10 per cent capacity utilisation for 2022-23, due to supply and availability constraints of raw material for the production of SSP,” says Kantilal N. Jethwa, CFO, BafrL. “The company has now announced that it is in discussion with chambal Fertilizers and Indian Potash for a suitable lessee, who will operate the plant efficiently, benefitting both BFIL as well as the lessee’s company with a lease
Real estate pays off
In the real estate development business, Bafrl has started the construction of a residential tower in Majiwada, Thane. Upon completion, it will be the tallest building in Thane at 59 floors, with 400,000 sq ft carpet area, for 457 units of 2-3 BHK apartment flats. The company has also constructed a residential complex in Thane, with six towers of 11-12 floors each, built between 2007-08 and 2015-16. all units in these six towers have been sold out. The company has also got approval for the Wembley Tower, originally for 19 floors only, which, after the covid pandemic, was extended to 59 floors.
The Wembley Tower will house 457 units of 2/3 BHK apartment flats. “The company aims to complete the project over the next four years and we expect the project to generate revenues up to R800 crore, yielding a profit of Rs.400- 500 crore,” states a recent research note by arihant capital.
Bafrl is also looking to redevelop its office and residential space. It wants to redevelop its ‘Bharat Fertiliser house’ at 12 Nanabhai Lane, South Mumbai. It is exploring options, including joint ventures with companies like Shapoorji Pallonji. The rEra saleable area is 35,000 sq ft, with a potential revenue of about Rs.200 crore. Besides this, the company is entering the redevelopment of promoter’s residential building in Ville Parle, a suburb in Mumbai. It plans to redevelop this to make 3-4 BhK luxurious residential flats on the G+13 floors, with a revenue potential of Rs,175-200 crore.
The company has already started availing of the required project finance, appointed a civil contractor and complied with all other required sanctions and permissions to start the construction work on receipt of an amendment in MOEF (ministry of environment & forests) permission, which is at an advanced stage. The company plans to fully utilise the potential FSI available at majiwada, Thane Phase II. The residential tower will have 2/3 BHK luxurious flats, with all modern amenities. To cater to the local residential market, 400 flats will be offered at affordable rates.
The company also operates a luxury resort branded ‘anchaviyo resort’, which has 45-50 rooms, all exclusively designed with different themes. The current occupancy levels of the resort are 65-70, with an average rent of Rs.20,000 per room, generating an annual turnover of Rs.20-21 crore (occupancy levels vary with seasons). The company intends to increase the number of rooms to 125-130 in the next two years and become a preferred wedding destination, while also inviting corporate bookings. This will generate up to Rs.40-50 crore.
Based on current market conditions, the company anticipates revenues of about R700-800 crore from this real estate project in majiwada, Thane, over the next five years. It will comply with or amend rEra as and when necessary. Upon completion of this project, the company expects to be debt-free.
Meanwhile, for the quarter ended December 2023, the company reported improvement in operational performances. Net sales, at R5.67 crore in December 2023, were up 2.18 per cent over the Rs.5.55 crore level of December 2022. The quarterly net loss stood at Rs,4.25 crore as on December 2023. The EBIDTa stands negative at Rs. 0.51 crore in December 2023 – up 65.31 per cent from Rs.1.47 crore in December 2022. It further announced that it had received commencement certificates for up to 35 G-Wembley Tower floors, anticipating revenue of R500 crore within three years.
“BaFrL is utilising the land bank of 120 acres that the company has, and another 30 acres of land in the name of the promoter, which could also be transferred in the company’s books at an appropriate time in the future,” says arihant capital’s sales note in February 2024. “Going ahead, we believe the company will also utilise the opportunity to redevelop the commercial building, Bharat house, in Fort area for a joint-venture with Shapoorji Pallonji group, which could generate a cash flow of R200 crore. hence, we believe the developments as highlighted by the management in the earnings con-call will be generating a minimum cash flow of R2,000-2,500 crore over the next four-five years.
“Hence, based on the incoming free cash flow from different projects, we value the stock at R353 per share on P/V of FcF (free cash flow) over the next four to five years,” the note further adds. “On the BSE, the stock trades at R92.45112.95, With a 52-week high of R139.90 and a 52-week low of Rs. 79.25.
Lancelot Joseph