Real Estate Arm of Sahara Group Slated to Hit the Capital Market

October 13, 2009	(Be the first to rate this story!)  Loading ...
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Sahara Prime City — the real estate arm of the Sahara Group, which is slated to hit the capital markets with a Rs 3,450-crore public issue — has said in its draft red herring prospectus (DRHP) that over half its land bank is accounted for agricultural land. In all, the company owns 8,585 acres across the country, of which 51.8% is agricultural land, 32.7% is non-agricultural in nature and the balance 15.5% is for residential and commercial purposes, the company said in its draft prospect to Sebi.

Sahara Prime City will have to change the status of agricultural land to non-agricultural before it can execute its real estate plans. In comparison, other real estate companies like DB Realty, Lodha Developers, Emaar MGF and Ambience, which also have plans of going public, only have around 10% to 15% of their land holdings in the agriculture category, according to DRHPs filed with Sebi. In the Sahara DRHP, the company said that the expenditure for converting agricultural land to non-agricultural land varies across states. An e-mail query sent to Sahara Prime City last Thursday on agricultural land accounting for a high proportion of their land holdings, in addition to the expenditure that is likely to be incurred for converting that to non-agricultural remained unanswered. In a phone conversation, an external spokesperson for Sahara Prime said they would not be able to comment because the company was in a silent period.

Sebi rules prevent a company from making public announcements during a silent period. Of the total land bank, around 280 acres is under litigation. The proposed Rs 3,450-crore public issue includes a 15% green shoe option, which means that the company may sell 15% more than the target number of shares if there is demand. Sahara Prime City has also signed a memorandum of understanding (MoU) with Sahara India Commercial Corporation, a group company that is in the business of developing residential apartments. Under this agreement, Sahara India Commercial Corporation will pay Sahara Prime around Rs 1,400 crore, of which close to Rs 400 crore has been already paid. According to the DRHP, the balance amount would be paid when Sahara Prime City transfers them to Sahara India Commercial Corporation.

News Published Under:   Real Estate Developers |

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