Real estate developer, Vipul Ltd, the eighth largest real estate company in India by market capitalization, plans to invest Rs2,000 crore over the next two years in expanding its operations to smaller cities in the country.
The company is expanding into Nagpur, Bhubaneswar, Chandigarh, Ludhiana, Mohali and Dharuhera (in Haryana). Currently, the company has residential and commercial projects only in Gurgaon, to the south of Delhi.
Around 70% of the company’s revenue comes from residential projects.
Vipul is expanding into the smaller, or tier-II, real estate market as the cost of acquiring land is very high in the metros, according to Punit Beriwala, managing director, Vipul.
“Also, with lots of corporates moving to tier-II cities such as Nagpur, the demand for residential and commercial property in these cities exceeds the supply,” Beriwala added. “We think these cities offer more opportunities for growth,” he said.
The money for the expansion will be raised through a mix of debt and equity. The company also plans to form partnerships with private equity firms to raise money.
“Going forward, we are looking at offering equity to private equity players in special purpose vehicles which will be set up for specific projects,” Beriwala said, adding that the company would retain a majority stake in these units.
The company is also exploring buying out projects of smaller developers.
“We would not mind expanding in the inorganic way. There are a lot of small developers who have approached us with their projects. If they have a good project in a good location, we will look at acquiring it,” Beriwala said.
Vipul is also in the fray for the development of the proposed Nano city project, which will also house a information-technology park in Haryana.
The Haryana government plans to set up a Rs5,000 crore city in a phased manner as a joint venture between the Haryana State Industrial and Infrastructure Development Corp. and Nano Works Developers Pvt. Ltd, a company promoted by Sabeer Bhatia, the founder of Hotmail.
For the fiscal ended March, Vipul posted a net revenue of Rs1,99.9 crore and a net profit of Rs41.460 crore.