Mumbai: Construction firm Gammon India Ltd, which ventured into infrastructure through its subsidiary Gammon Infrastructure Projects Ltd, or GIPL, has decided to consolidate all its real estate projects under Gammon Realty, which it plans to list on the bourses.
Though Gammon Realty was floated two years ago, it has announced only one venture in Bhopal, Madhya Pradesh—a Rs800 crore mixed-use project that would host a five-star hotel, and residential and office space.
“There are a few real estate projects which were being executed under different group companies of Gammon India such as GIPL that would now be brought under Gammon Realty,” said a senior Gammon India executive who declined being named as he is not authorized to speak with the media.
Towering ambitions: An aerial view of Nariman Point and Cuffe Parade in Mumbai. Gammon has planned an IT park in Dombivli, a Mumbai suburb, and a mixed-use project near Andheri in Mumbai. Photograph: Madhu Kapparath / Mint
“Once the consoldiation of the real estate arm is complete, Gammon Realty, like GIPL, would opt for listing.” Gammon India and GIPL are independently listed companies.
Gammon Realty plans to develop a range of properties across India—both high-end residential and commercial space—in Mumbai, Bangalore, Mysore and Bhopal, and has already acquired sizeable land.
“Though real estate is still at a nascent stage in the company, we have formed our own land bank, invested about Rs160 crore in buying new land parcels and will launch projects in phases when the market looks up,” said Parvez Umrigar, managing director of GIPL, adding that the company is looking for opportuniies to add to its land bank.
It is planning an IT park on 10 acres in Dombivli, a Mumbai suburb. It also plans to develop another high-end residential and commercial complex spread over seven acres, near the Andheri Sports Complex in Mumbai.
The company has also acquired some 200 acres in Mysore and another 200 acres near the new Devanahalli airport in Bangalore.
All these projects will now be brought together under Gammon Realty. The realty arm has a workforce of 60 people and the various projects are in different stages of planning and designing, and will be launched “based on market conditions”, Umrigar said.
Gammon India has tied up with Sri City Pvt. Ltd for a 5,000-acre multi-product special economic zone, or SEZ, near Chennai. This project may eventually be brought under Gammon Realty, said Umrigar. GIPL is also co-developing with the Tata Group another SEZ near Jamshedpur, Jharkhand.
“Real estate initiatives for Gammon would mean moving up the value chain. Real estate as a new business would also mean higher margins compared to its construction ventures.” said Shailesh Kanani, research analyst tracking infrastructure and real estate at domestic brokerage Angel Broking Ltd. On the flipside, Kanani added, Gammon has to develop or borrow expertise to select right locations and appropriate projects.
Following a global trend, India’s construction firms are venturing into real estate development. For instance, Mumbai-based Larsen and Toubro Ltd last year announced an investment of Rs8,000 crore in real estate and urban infrastructure over the next three-five years to be executed by it subsidiary L&T Infrastructure Development Project Ltd.
Hindustan Construction Co. Ltd, or HCC, has begun developing properties in Mumbai and is even building a Rs10,000 crore Lavasa project near Pune through HCC Real Estate Ltd. “It is not the first time...(and it is natural) that construction companies get into real estate,” said HCC’s chairman and managing director Ajit Gulabchand.