With funds increasingly hard to find, real estate developers are exploring every possible option to keep their projects going, including sale of surplus land.
Rejection of FDI proposal means it must look for alternative sources of funding
MUMBAI: Difficult times call for desperate measures.
With funds increasingly hard to find, real estate developers are exploring every possible option to keep their projects going, including sale of surplus land.
Take Bangalore-based Keppel Puravankara Development Pvt Ltd (KDPL), a joint venture of Puravankara Projects Ltd with Keppel Investment Mauritius Pvt Ltd, subsidiary of Singapore-based Keppel Land Ltd, which in turn is a subsidiary of Keppel Corporation Ltd, majority owned by Temasek Holdings.
Keppel Puravankara’s bid to sell a part of the unused land it had earlier acquired to undertake a construction or housing project was thwarted last week. Its foreign direct investment (FDI) proposal was among the four rejected by the finance ministry even as 40 others, for a total of Rs 1,498.51 crore, were cleared.
An email sent to the company seeking details went unanswered.
Ravi Ramu, director, Puravankara Projects, refused to comment beyond saying: “This is not our company. Keppel Puravankara Development Pvt Ltd is a different company. We have not applied for any foreign direct investment or any proposal to the government,” Ramu told DNA Money.
But the draft red herring prospectus filed by Puravankara last year reads: “The company (Puravankara) owns 49% of the shares of Keppel Puravankara Development Pvt Ltd.”
The residential projects developed by the joint venture are in the premium segment, with the last project launched in Bangalore this September. However, it has not met with much success yet, say analysts.
“The premium segment is not selling where the joint venture has targeted itself and this quarter the company’s profit after tax have dipped to 17%. So it is an obvious choice to sell land and gain cash flow in their books. The company is also hunting for private equity investments,” said an analyst.
Another analyst had this to say on the larger trend: “They are selling land because banks have refused to lend them due to their stretched balance sheets and also from next year most of the players’ revenues will be equal to the profits they made this year.”
pooja_s@dnaindia.net
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