Puravankara Projects, the publicly held realtor player with a sizeable presence in South India, expects to witness its next phase of growth from the company's affordable housing arm Provident Housing. With annual revenue of Rs 550 crore, it plans to create value in its infra subsidiary, Starworth Infrastructure, to bid for rural infrastructure projects. Ravi Puravankara, founder chairman spoke to Debasis Mohapatra about the growth plans. Edited excerpts:
You have steered the company for the last 30 years. How do you see Puravankara Projects’ growth panning out, given the kind of macro-economic scenario — rising interest rate regime and rise in commodity prices?
You never realise your dream fully because it is always a journey. I draw a lot of satisfaction from the fact that the company is executing around 20 million sq ft of projects as of now, compared to a few buildings when we started off in 1975. From Bangalore, our presence has increased to cities such as Chennai, Mumbai, Hyderabad, Coimbatore, Kochi and Dubai. I want to see Puravankara as a pan-India player in the next 10 years. Presently, we are spreading our presence in other cities in South and Western India and will like to expand further in the North.
We do have ambitious plans in affordable housing and infrastructure development. Of course, there are some weak spots in terms of a rising interest rate regime along with increase in commodity prices for the industry, but these things are cyclical and will subside with time.
Puravankara is one of those few developers in the country with presence in affordable housing. How do you see this arm ramping up?
Provident Housing has large plans in providing homes at cheaper rates. Presently, of the total 20 million sq ft area we are developing, six million falls under Provident Housing. This number will see a significant rise to 12 million sq ft in the next financial year. Similarly, the present revenue contribution from Provident to the overall company should rise from around 30 per cent to higher numbers in the next two-three years. Also, Provident's entry to Tier-II and Tier-III cities will definitely give us dividends in the future.
Will the Budget announcement of interest subvention for affordable housing boost this segment ?
Not really. The government has to do more. Such token announcements will not help in giving the required thrust. Affordable housing should get similar treatment as infrastructure as there is huge need of housing in this segment. Unless the government gives interest rate concessions along with other subsidies, developers will not be interested to enter the segment and property rates will not fall to suit buyers in this category.
What is your future plan for Starworth Infrastructure?
With Starworth Infrastructure we have entered into the infrastructure space in a small way. However, we see a lot of value in this space in the future. Presently, our infra subsidiary helps us to manage a lot of backend work. Slowly, we are also building capacity to bid for bigger infra projects. Rural infrastructure like roads and other projects are pretty much on our agenda for which Starworth will bid in the future.
Promoters’ holding in Puravankara is 89.9 per cent, which makes the stock mostly illiquid. Are you planning to dilute your stake in the near future?
We are aware that lesser traded volume in the counter due to smaller percentage of public float is an issue. Also, we have to eventually offload some of the promoters' holding if the proposed 25 per cent public float comes into force. However, there is no such plans in the near future, as the share price of the company is not rightly valued in the exchanges. We are of the opinion that as cash flow from Provident Housing flows into the company in the next two-three years, the share value will get corrected, which will make us more comfortable to dilute promoters' holding.