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Saturday, June 29, 2013

Unlisted Tata infra firms aim for 4x orders

This story first appeared in DNA Money edition on Thursday, June 27, 2013.

Tata Housing, Tata Projects and Tata Realty & Infrastructure, the Tata Group’s unlisted infrastructure entities, are on course for a four-fold increase in order book over the next five years.

The current order book (fiscal 2014) stands at Rs 15,000-20,000 crore and the goal is to ratchet this beyond Rs 70,000 crore in the next five years.

The Tata Group, operating in the Indian infrastructure space since 1910, has eight companies across sectors like energy, telecom, realty, transportation, infrastructure, project execution, project consultancy.

They contributed $12.5 billion, or 12.4%, to the group’s overall revenues in 2011-12.

Siddhartha Roy, economic advisor to the group, said the ratio of private and public sector in the country’s infrastructure spend used to be 25:75 in the 10th Five Year Plan, which increased to 36:64 in the 11th and is almost 50:50 in the 12th.

“What this basically means is that a very large part of the investment or the funding for this investment has to come from the private sector. The group has already made significant investments in the area of power, telecom, housing, infrastructure (roads, airports, urban transportation) etc and will be aggressively building the pipeline across infrastructure projects in the coming years,” said Roy.

Of the envisaged Rs 70,000 crore orderbook, the share of Tata Projects Ltd will be about Rs 25,000 crore, while it will be Rs 24,000 crore and Rs 22,700 crore from Tata Housing Development Company and Tata Realty & Infrastructure, respectively.

Sanjay G Ubale, managing director and CEO, Tata Realty, said investments will be in areas like road projects (Rs 7,500 crore), airport (Rs 5,000 crore), urban transportation (Rs 3,000 crore), industrial park (Rs 3,000 crore), real estate (Rs 4,000 crore) and hospitality (Rs 200 crore).

“We are looking at three airport projects of which work on the Jamshedpur site has already started. We will also bid for the Goa and Navi Mumbai airport projects as and when they are invited. On the roads front, there are 10 projects for which bidding is likely to happen and we should get at least two projects if not more,” Ubale said.

The commercial real estate space currently offers huge potential for inorganic growth and the company should be concluding a few deals in the coming few quarters in addition to taking the organic approach to building up portfolio, he said.

As for Tata Housing, the company has been growing at almost 100% compounded annual growth rate (CAGR) over the last 4-5 years and currently has 26 signed projects at various stages of planning and execution.

With approximately 704 acres of landbank, the company currently has 55 million sq ft under development across 10 states across including eight major cities and 11 locations.

Brotin Banerjee, managing director and CEO, Tata Housing, said growth this year might be relatively slow mainly because of delayed approvals and general slowdown in the market.

“Having said that we have over 90 million sq ft in the pipeline under various stages of approvals. We are hoping to sign a very big private-public partnership project in Sri Lanka which should happen in the next couple of months.”

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