New Delhi: India’s largest listed developer DLF Ltd has formed a joint venture with Hyderabad-based infrastructure company Gayatri Projects Ltd to build roads and highways even as the government prepares to spend more on the infrastructure sector, and returns in the real estate business start to plateau.
The two companies said they plan to develop projects worth at least Rs1,000 crore every year, without saying how much they will jointly invest in the business.
“Infrastructure is an attractive sector given the rising demand and focus of the government in promoting public private partnership projects,” Rajeev Talwar, group executive director of DLF, said. “We see this venture as a catalyst in expanding DLF’s presence beyond the verticals of residential, commercial and retail projects.”
Gayatri has projects worth more than Rs3,450 crore under construction in states such as Andhra Pradesh, Assam and Uttar Pradesh to build national and state highways, dams, reservoirs and canals.
DLF joins other real estate developers that are entering the infrastructure space to take advantage of the government’s increased focus on the sector. India has tripled its investment target for infrastructure to $500 billion (Rs19.65 trillion).
Real estate developers Unitech Ltd and Omaxe Ltd have also diversified into the infrastructure space. Omaxe— which has formed a consortium with Hyderbad-based GVK Construction and Nagarjuna Construction Co. Ltd—recently bid for the 1,000km-long Ganga Expressway project of the Uttar Pradesh government. The project will link Ballia in a remote part of the state to Delhi’s suburb of Noida. DLF had also put in a request for qualification for the project but did not make it to the shortlist.
The joint venture has already identified the national highway authority’s six-laning and four-laning projects in Maharashtra, Orissa and Andhra Pradesh, T.V. Sandeep Reddy, managing director, Gayatri Projects said.
“We have called for pre-qualification for these projects,” he said, without giving names of these projects.
The JV company will form special purpose vehicles for the development of highways. This means that it could choose to create a separate company to handle each project. The company will also look at developing bridges and rail networks. “We plan to develop projects valued at Rs5,000-10,000 crore over the next few years,” Talwar said.
DLF-Laing O’Rourke, the JV venture between DLF and the UK-based construction company Laing O’Rourke Plc., will be the contractor for the projects. DLF-Laing O’Rourke is constructing 25 of DLF’s projects across India. The total built-up area of these projects is 65 million sq. ft.
“The first joint venture with Laing O’Rourke was for their construction capacity,” Talwar said. “The JV has now progressed beyond construction,” he added.