Rajesh Exports to raise Rs 100 crore debt for realty foray

Rajesh Exports, the Rs 7,000 crore Bangalore-based gold exporter and retailer, is looking to raise a debt of Rs 100 crore for its recently formed arm which will focus on real estate development.

The company is looking to form a joint venture for development of five properties from its available land bank of 32. The five properties which have been selected for development is spread over close to 20 acres and is expected to have a developed value of around Rs 450 crore.

Rajesh Mehta, executive chairman, Rajesh Exports confirmed the move to raise debt for this development and ruled out equity dilution for this expansion. According to information available, Rajesh Exports has thirty two properties in and around Bangalore city which the company has built up over the past couple of decades and is looking at unlocking the value by setting up residential and commercial properties. Mehta detailed that 15 acres will be developed as residential while the rest will be commercial.

"We had made strategic investment in real estates at low prices from the year 1990 onwards. We feel that this is the right time to explore opportunities to unlock the true value of our investments. We have almost all our properties in Bangalore and at a few cities in Kerala. We feel that even though the development may require time, it would be worth as it would fetch better valuations compared to selling of the land bank," Mehta added. Rajesh Exports currently has cash reserves of Rs 1,000 crore.

This diversification plan by this company which has been historically focusing on jewellery exports comes at a time as it faces some intense competition from the likes of Gitanjali Jewellers and Titan Industries.

Noted an industry analyst: "Both Gitanjali and Titan are gearing up for a splash in the US market during this year and are parallelly expanding at a fast clip in the Indian market. Rajesh Exports has started to step on the retail pedal only in the recent past and it would require some immense cash power to roll out the retail game plan nationally to sustain margins. Rajesh Exports' decision to unlock its land bank is aimed to generate a war-chest for local and global acquisitions."

According to industry information, Rajesh Exports is working on forming a joint venture for a focused diamond retailing game-plan which is expected to roll out during the second quarter. The company recently raised $150 million for jewellery operations.