 "Unitech's non-core businesses grow")
According to analysts, Unitech's stable financial position does not require it to exit non-core business.
On the other hand, realty major DLF is on a divestment spree to exit its non-core business and cut down its mounting debt. Besides, being a big player in the sector, DLF needs to focus on its realty business, which is impacted by slowdown more than others.
DLF has been selling its land parcels and wind power energy business with a target to reduce debt to about Rs 17,000 crore by the end of the current financial year. It has sold non-core assets for about Rs 6,500 crore in the past two years and plans to reduce debt by half in the next three years.
“Unitech will develop its non-core businesses fully and earn profits before offloading a stake or selling it completely to investors,” said a Mumbai-based analyst.
Except for its telecom foray a few years ago, which saw the company’s managing director Sanjay Chandra undergo trial in the 2G spectrum case, Unitech’s non-real estate businesses such as property management, hospitality, and transmission towers have registered good growth numbers in 20012-13.
During this financial year, it settled all disputes with its telecom partner Telenor and completely exited the telecom business, which enabled it to give a greater focus on core business of real estate.
Unitech Power Transmission Ltd (UPTL), which is engaged in transmission towers, has a state-of-the-art manufacturing facility at Nagpur and offers various services including site survey, soil investigation, access roads, foundations, tower design, tower testing, mobilisation of manpower and equipment, testing and commissioning.
“With greater clarity and focused business development, UPTL continued to grow. The segment revenues grew by 33.3 per cent from Rs 200.84 crore in FY2012 to Rs 267.9 crore in FY2013,” the company said in its annual report.
In the hospitality space, it opened a hotel - Country Inn - in Gurgaon in 2011-12. Another hotel, Courtyard, in Noida is under construction. Revenues from operations of Country Inn have increased the income from the hospitality business by 65 per cent from Rs 24.77 crore in FY2012 to Rs 40.78 crore in F2013.
“The strategy for the hospitality segment is to develop hotels to be managed by global operators for eventual monetisation through sale to investors,” the annual report noted.
In FY2013, Unitech also started operations of food courts through Unitech Hospitality Ltd (UHL) in the office complexes developed by it in Gurgaon, Noida and Kolkata.
Currently, it is operating four food courts – one in Gurgaon, two in Noida and one in Kolkata. These food courts are part of the amenity areas in the IT parks being developed by Unitech and the objective is to provide value-added services to the tenants of these office complexes to increase their attractiveness, the annual report noted.
The food courts have been named ‘Klub Ibiza’ and catered to more than 10,000 people and clocked revenues of Rs 7.35 crore in the first year.
The property management business has continued to register a steady growth of 8.7 per cent with a turnover of Rs 127.84 crore in FY13 from Rs 117.61 crore, the report said. The focus of this business is to primarily grow with the Unitech portfolio.
“We have gone through some of the most turbulent times in our history in the last few years. As we emerge out of it as a more focused organisation with a clear strategic path, I urge you to continue to repose faith in the organisation. You are our strength,” Unitech’s chairman Ramesh Chandra said in his message in the annual report.
Unitech has recalibrated its strategy to meet the different challenges and is focusing more on delivery capability now.
The procedural delays and inertia in decision-making have affected progress of projects in the infrastructure and real estate sectors. The government and stakeholders of this sector need to address issues related to the sector such as land, finance, skilled manpower and urban infrastructure to evolve a comprehensive growth path for the sector at large.