This story first appeared in DNA Money edition on Saturday May 14, 2011.
Tata Housing and Arvind Ltd have entered into a strategic partnership to develop an integrated township project spread over 134 acres near Ahmedabad. The two have floated an equal (50:50) joint venture for this project which will have a built up area of more than 9 million square feet (msf), located on the western outskirts of Ahmedabad. The township will include residential, commercial and retail spaces apart from a hospital, a school and other civic amenities.
Brotin Banerjee, MD & CEO of Tata Housing Development Co Ltd, said, this JV is part of our long-term strategy of establishing presence in the emergent tier I and tier II cities. “This partnership will help us tap onto a very important Gujarat market,” he said without divulging information on the JV company and related financial details.
Elucidating the arrangement with Tata Housing, senior officials from Arvind Ltd said that the land valued at Rs 250 crore has been being transfered to the joint venture company and that the company will receive immediate payments Rs 125 crore being 50% partner in the project. The project, due for completion in 2012, is expected to generate revenue of Rs 2,000 crore.
Jayesh Shah, chief financial officer, Arvind Ltd, said, “We would get around Rs 125 crore from the land sale in the next six to eight months time, within which the land would be transferred. We plan to start construction in three to four months time. The joint venture company is looking at a couple of thousand crore worth of revenues, out of which around Rs 500 crore to Rs 700 crore could come to us."
While media reports stated the township was valued at Rs 1,250 crore, Tata Housing officials said that a market study is still under way hence exact value of the project cannot be arrived at at this stage. On the payments to be made to Arvind, THDC officials said it will be made in various stages after making some adjustments because the JV partner will also be sharing some proportion of the development / construction cost.
According to a Reuters report Arvind Ltd is looking to liquidate Rs 800 to Rs 900 crore worth of land over the next 3 years, including the Rs 250 crore it expects from the JV. “Currently we are focussing on the land bank that can be converted into an earning asset,” Shah said.
In another development, Tata Housing has launched a new residential project in Gurgaon called Primanti. With this premium luxury housing complex the realtor will further expand its presence in Delhi NCR region. Spread across 36 acres, the development will offer 102 villas, 75 executive floors, 89 executive apartments and 828 tower residences.
(Amritha Pillay contributed to this story in DNA Money)
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