Puravankara Projects, the Bangalore-based publicly-eld realtor, is looking to roll out 17 million square feet of residential projects in the near future. The company which focuses as much as 95 per cent on residential projects said that approvals for these projects are in the pipeline and they hope to have them in place in 12-18 months time.
The company which posted a net profit growth of 14 per cent to Rs 32 crore for the third quarter of FY12 as compared to the corresponding previous quarter said that though the macro-situation is tough, the demand for housing has been good in Bangalore and other South Indian states, a market on which Puravankara focuses on.
“The profitability has come down. The rate at which the cost of input materials is going up, the profitability is not matching up. However, there is no shortage of demand. The recent move by RBI to relax rates will certainly boost the sentiment,” Ravi Puravankara, Chairman and Managing Director, Puravankara Projects told Business Standard. The company, last year sold 3.1 million square feet of projects as compared to 2.4 million square feet in the earlier year. “While the volume in terms in number of units is going up, we are not able to pass on the price hike. As a result of this, the net margins which was earlier in the range of 30 per cent, has come down now,” he added.
The company which has land assets of little over 143 million square feet is developing 27 million square feet including the ones in its premium affordable housing arm — Provident Housing, on which Puravankara is betting big. “The three projects in Provident which we have launched has met with a od response and we are set to launch three more projects. While we have two projects in Bangalore and one in Chennai. We are looking to add more projects in Bangalore, Coimbatore and Cochin,” Puravankara detailed.
According to him, the roadmap for Provident is to eventually list it after delivering substantial area of developed projects. “This arm is not about low-cost houses. It is about bringing down the price relative to the cost of average price, thus offering units of affordable ticket sizes. All these projects have the same amenities as a regular residential complex, but how we bring down the price is that we cut down on non-functional areas,” he explained.
Puravankara further noted that they are examining various offers from private equity funds to work on residential projects in the flagship arm through joint development at the special purpose vehicle level but are not rushing to dilute their close to 90 per cent holding in the company. “We have to bring our holding down to 75 per cent by end of 2013 and we will start the process by next year. There are various options such as QIP and IIP besides offering stake to a private equity player,” he added.
However, he was non-committal on the aspect of whether they are looking at taking the company private. “Few bankers have suggested that idea to us. They are of the view that market is yet to give a proper value to a pure play residential player. Whatever the steps we want to take, it will be during 2013,” he said.
