Sharpening focus on realty, Jaiprakash may hive off division

Sharpening focus on realty, Jaiprakash may hive off division

New Delhi: Diversified industrial house Jaypee Group’s flagship firm, Jaiprakash Associates Ltd, says it could consider spinning off its real estate division, Jaypee Greens, into a separate company that could eventually raise money through an initial public offering of shares.

“We have identified real estate as an important business area for the group," said Rita V. Dixit, executive president of Jaiprakash Associates. “So, as this division grows, we could spin it off into a separate company." Earlier, Jaypee Greens was operating as a separate company but was merged with Jaiprakash Associates in 2006. “That was an internal business decision," Dixit said.

“But, as the real estate business grows, the rules governing the industry and operational economics could be reasons to spin off the division."

The company is developing Jaypee Greens, an integrated residential township in Greater Noida, near Delhi. The 450-acre township, which has a golf course designed by legendary golf player Greg Norman, has already seen an investment of Rs700 crore. The project, which was launched in 2000, is expected to be completed by 2010.

“It was a conscious decision to take time to complete the project, because we wanted this to be our flagship project for our entire real estate business," Dixit said.

The company plans to target the premium real estate market segment. Jaypee Greens plans to develop residential townships and commercial property in Delhi’s suburbs of Noida and Greater Noida. “We would prefer to develop properties in Noida and Greater Noida as Uttar Pradesh has large tracts of land," Dixit said.

The expansion will be financed through internal accruals and equity funding. While the company did not put a figure to its overall land bank, Dixit said the company owns 550 acres in Noida.

Jaypee Group is already present in the hospitality business through Jaypee Hotels Ltd, which is a listed company. Jaypee Hotels has four five-star hotels in north India. “As of now, we are not going that big in hotels. More than hotels, we want to focus on our real estate business," Dixit said.

Jaypee Group is in the business of construction of river valley projects, development of hydro-power projects and cement manufacturing.

Jaiprakash Associates is the fourth largest cement producer in the country with a capacity of 7 million tonnes per annum and revenues of about Rs4,000 crore in 2006-07.