To up promoters’ holding to 49%, from the present 26%.
Prajay Engineers Syndicate Limited (PESL), a city-based construction and hospitality company, will be investing Rs 500-600 crore in various hospitality ventures in and around Hyderabad.
Currently operating a 30-room Celebrity Boutique Hotel in Begumpet and 70 rooms at the company’s Celebrity Club near Shamirpet on the city outskirts, PESL is planning to build a 260-room business hotel at LB Nagar.
The company has signed up Best Western International – an Arizona-based hotel brand with more than 4,000 hotels in 80 countries – for this project christened Pristine Towers, which will be ready by December 2010. Besides, a 130-room three-star hotel with an investment of Rs 55-60 crore is currently under way.
“We have already received funding to the tune of Rs 150 crore for the Rs 200-crore Pristine Towers from a consortium led by the State Bank of India, while the rest is the equity from the company,” PESL chief financial and operating officer, N Ravinder Reddy, told Business Standard, adding that the company aims to create a 1,000-room capacity in the five-star, four-star, three-star business class categories by 2011.
“Since the current market is not greatly conducive for debt raising, we have decided to infuse fresh capital through promoters’ resources and had already received approvals from the regulators for the same. Currently, the promoters’ holding is 26 per cent (10 million shares of the total equity of 3.96 million), which will be increased to 49 per cent post the infusion. It will take 14 months from now for the entire process to be completed,” Reddy said.
PESL’s current consumed debt, Reddy said, was Rs 130 crore, while the total sanctioned debt is Rs 270 crore. Last year was a watershed year for PESL, when the real estate market was in a stalemate condition. The company reported revenues of Rs 80 crore in FY09, as against Rs 340 crore during the previous year, he said.
“We expect to see a 50 per cent growth in revenues this financial year, with our net margins being in the range of 10 to 12 per cent, as against a net loss of Rs 1 crore in FY09,” he added.
Prajay Engineers Syndicate’s stock was at Rs 30.25 at the end of the trade on the BSE on Friday, down 2.89 per cent as against the previous close of Rs 31.15.
