Company has given a detailed explanation of related party transaction. In essence, it says that property with warehousing is being purchased, which was earlier already substantially leased by the company (~80%). The Company now requires the entire space The annual cost of lease was 1.6 crore and for full property, would have been 1.8 crore. In view of this, they are purchasing the property for no more than 16 crore.
The property is situated close to the factories and thus provides good synergies and integration. Purchase of any other property for warehousing would have been far away and would have added to logistical issues and cost of transport. Increased warehousing is required, by the way, due to expanded product line up and e-retailing requirements.
Subscribe To Our Free Newsletter |