Reuters

Mumbai: Nagarjuna Construction Co Ltd has clamped down on future real estate projects due to current slowdown in the sector and has tempered its capital expenditure plan for 2008-09, a top official said.

The company is also planning to spin off its real estate operations by March 2009 to its subsidiary NCC Urban Infrastructure Ltd, Subba Raju, vice president-finance, told analysts after the company’s results late on Monday.

“We are not planning any investment in real estate projects. All our real estate projects are fully capitalized,” Raju said. “We have put all other projects on hold. We are not launching them because of adverse market conditions.”

NCC Urban, which builds residential and commercial projects, special economic zones and integrated townships, is working on a national games housing project in Jharkhand, one project in Hyderabad and 3-4 small projects in Bangalore, he said.

“After 6-9 months we may look at dilution of equity in some of our real estate projects,” he added.

Indian real estate firms have put projects on hold as decade-high interest rates and the global financial crisis led to a liquidity crunch and the central bank tightened rules on lending to the sector, deterring financial institutions.

Earlier this month, rivals Hindustan Construction Co and IRB Infrastructure also said they slow down their real estate forays, given the weak market situation.

Nagarjuna posted a 26% rise in net profit to Rs42.3 crore as revenue rose 57% to Rs10.46 billion rupees for the September-quarter as several projects came on stream and it secured some major building projects, Raju said.