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Ambuja Realty Group Plans to Hive off Subsidiaries into separate Companies
The Ambuja Realty Group, with interests in real estate, healthcare, hospitality and education, is weighing the option of spinning off its subsidiaries into separate companies. The group is also open to acquisitions in the real estate space and is aiming at a more aggressive national presence in three years from now. Where separating the subsidiaries into independent companies is concerned, Ambuja Realty Group chairman Harsh Neotia told DNA Money, “We have an idea on this but nothing has been firmed up yet because last year’s slowdown made us more focused on finishing the projects at hand.”
There are several entities within the Ambuja Realty fold. Ambuja Realty Development (ARDL) and GGL Hotel & Resort Company are two subsidiaries of the holding company, Ambuja Housing & Urban Infrastructure Company, while Bengal Ambuja Housing Development is a joint sector company with the West Bengal Housing Board. The group is also open to the idea of acquisitions in the real estate space. However, in real estate, Neotia said it is not easy to acquire a company because of the latter’s obligations and promises.
“It is not easy to acquire a half built business and fulfill on its brand promise, which may not tally with ours. In terms of acquisitions, no opportunity has yet come our way, but if it does, we will be open minded about it,” Neotia said, declining to put a figure on the size of acquisition that could interested the group. The group has so far been busy mainly in West Bengal, having branched out to Chhattisgarh and Punjab. However, Neotia said, “We will look nationally, too, in all our lines of businesses, may be in three years from now.”
The current ongoing ventures include a 122-acre township in Amritsar, where the group is in talks with several partners for executing the project. In Chhattisgarh, a City Centre mall is coming up on five lakh square feet, which will be ready by 2011. In West Bengal, residential projects like Upohaar and Ujaas are underway.
The group had plans to invest about Rs 5,000 crore over five years in its various business. But because of the meltdown, Neotia said the group will have to revisit plans and revise targets, though he feels there won’t be much of a difference in the numbers. In terms of price realisation, the group seems to have taken a 10% hit and there has been 30-35% impact on its bottomline as well.
Debt and internal accruals in the ratio of 1:1, plus sale proceeds from its various realty projects are expected to take care of the funding. Neotia does not have any next big retail development project in mind though the group has acquired land in Kolkata. He feels this is not the time to start any big-ticket project. “The acquired land can later be put to any use – retail, real estate, healthcare etc,” he said.
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