Valecha to form SPV to enter real estate

The Mumbai-based infrastructure development company Valecha Engineering (VEL) is all set to foray into the now-burgeoning real estate market. The company will float a special purpose vehicle (SPV) for the same this year.

J K Valecha, managing director, Valecha Engineering said, "We are planning on venturing into the real estate sector in the current year for which we are eyeing all the possible options available with us. We are a financially stable company and can foray (into the realty sector) with or without a joint venture partner".

The company, until now was mainly into building highways, flyovers, dams, bridges, water supply, tunnels and airport infrastructure. Now it is looking at providing real estate solutions which will cater to the country's commercial markets which in turn are riding on high retail activity.

The company is looking at building malls and other commercial properties including residential ones.

The company will start its real estate activity from Maharashtra and plans to gradually shift to other parts of the country.

While highlighting the details of the plans, Valecha added that the company might let the owner of the land, where the proposed venture takes shape, become a partner in the project or even go for direct land acquisition.

The company is looking to earmark an investment to the tune of Rs 100 crore for the venture which would be highlighted in the company's balance sheet in the FY'08.

Apart from this, the company is hoping to bag contracts for the Bangalore Metro Rail project, for which the second phase of bidding is due to happen in the coming weeks. The second unit bid will be a part of the total of five units bid of the project.

Valecha Engineering has entered into a 50:50 joint venture (JV) with Malaysia-based infrastructure company Persys for the said project.

According to the joint venture contact, VEL will lay down sub-structures and the Malaysian company will construct superstructures.

In Phase-I, the metro will cover 33 kms in two corridors i.e. East-West corridor of 18.1 kms from Byappanahalli to Mysore Road and North-South corridors of 14.9 kms from Yeshwantpur to RV Road. The entire project is proposed to be completed by 2011.

Besides, the company also today successfully bid for the tunnel project of the state of Rajasthan worth Rs 150 crore. The construction will form a part of the Dewas-II project of the state, with the construction of the tunnel being from Akorda Dam to Bujara village.

The project is expected to be completed in a period of 24 months.