Sahara in Makeover Mood- Focus on Real Estate

December 11, 2009	(Be the first to rate this story!)  Loading ...
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The Sahara Group, once a high-profile finance company that diversified at break-neck speed into disparate activities, appears to have quietly undergone a makeover. After staying virtually under the radar for the past few years, it is all set to re-emerge with a new focus: real estate. In a rare interview, group chairman Subrata Roy spoke about the company’s new plans, how it has been buying land (8,500 acres) for the last 10 years in about 100 cities and towns, and how it wants to capitalise on its large bank that was acquired at a relatively low price.

“We have already completed and sold four township projects in Lucknow, Hyderabad, Bhopal and Gorakhpur and two residential projects in Gurgaon and Lucknow. We have now started the development of townships in nine cities, including Indore, Nagpur and Lucknow, which are scheduled to be completed in 2013, 2013 and 2017,” he said. For its real estate venture, the $12-billion Sahara group has spun out a subsidiary, Sahara Prime City (SPCL), which is headed by 35-year-old Sushanto Roy, the elder son of Subrata Roy. Sushanto said the total debt on the SPCL is just 0.16 times of its capital. “In the downturn, most realty companies were badly affected because of their huge loan repayment burden. Not us. And that’s our strength.”

Subrata Roy claimed the response to their real estate products was “really good”. He said 80% of SPCL’s apartments and housing plots were in the “affordable range of below Rs 30 lakh.” The plan is to focus and grow this business, and for the purpose, SPCL is planning to raise around Rs 3,500 from the market. And that presumably would lead to the next big step in the company’s makeover. The Sahara group, although regarded to be financially muscular, has also been considered to be opaque. Its finances were probably known to the Reserve Bank (to which a finance company has to make disclosures), but not to the public at large. Going public would force it to be transparent.

Asked whether Sahara was prepared for the requisite degree of transparency, Sushanto Roy said it was. “In fact, that’s one of the reasons why we are going to the market - it will change the perception. We have been a closely-held company. Through the proposed public issue, we want to make it clear that we have nothing to hide and we are a strong group with solid fundamentals,” he said. The money raised would help grow the business, he added. Subrata Roy said the perception of non-transparency was true for most first generation successful companies. “However, over a period of time, with good results the perception changes,” he said.

Sushanto Roy said the company plans to develop 88 townships and 15 residential complexes in 15 to 20 years. The group has also developed a high-end residential township Amby Valley City, close to Mumbai. As most of the land has been acquired before the boom, the average cost of land was around Rs 48 per sq ft. “This has given the group enough head room to sell the products at competitive prices and still remain profitable.”

News Published Under:   Real Estate Developers |

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