Carnival Group buys L&T’s commercial real estate project in Chandigarh3 min read . Updated: 30 Sep 2015, 11:20 PM IST
The Rs1,785 crore deal includes the purchase of Elante Mall, Hyatt hotel and office premises with a central courtyard
Mumbai: Carnival Group, promoted by Shrikant Bhasi, is on a buying spree.
The Mumbai-based firm on Wednesday agreed to buy the commercial real estate projects of Larsen and Toubro Ltd (L&T) in Chandigarh for ₹ 1,785 crore.
These commercial real estate projects of India’s largest engineering and construction firm include the Elante Mall, Hyatt Hotel and office premises with a central courtyard.
“This acquisition is a part of asset creation for the group as an investment portfolio. This acquisition will help us to further expand our capabilities and allow us to make inroads into newer markets. This project will be operated as a separate unit and will be led by its current India-based management team," said Bhasi, chairman of Carnival Group.
Last month, Carnival Group had acquired Leela Infopark at Technopark in Thiruvananthapuram for ₹ 142 crore. It was the second such acquisition by the Carnival Group, which took over the IT infrastructure of Leela Group in Kochi in July 2014 for ₹ 280 crore.
In the same month, Carnival Cinemas Ltd announced the acquisition of multiplexes from Reliance MediaWorks, part of the Anil Ambani group, for ₹ 700 crore.
Earlier this year, Carnival Group acquired Glitz Cinemas, which is a part of Capital 18, a subsidiary of Mukesh Ambani’s Network 18 Media and Investments Ltd.
In July 2014, Carnival Group acquired HDIL’s Broadway for ₹ 110 crore.
“This project has got a good rental yield." A.C. Dinesh, director of finance, Carnival Group said, referring to the Chandigarh deal.
This property has Elante Mall with its retail space of over 1.5 million sq. ft., the largest in Chandigarh. Elante has an entertainment zone with multiplex and food court that caters to its customers spread across 20 acres.
L&T’s sale of its non-core assets comes at a time when Indian companies, especially infrastructure developers, are selling off assets.
In 2014-15, the total consolidated debt of L&T stood at ₹ 90,698.61 crore.
Indian companies will continue with such sales to deleverage their balance sheets as cash flows are not happening at this point of time, said Ajay Garg, managing director at domestic investment bank Equirus Capital Pvt. Ltd. “The asset sales are expected to continue. And it is a buyer’s market," Garg said.
A slump in economic growth, declining consumer demand, delays in securing statutory approvals and non-completion of land acquisition have stalled dozens of infrastructure projects, including highways and power plants, in recent years.
That has squeezed corporate cash flows, making it difficult for developers to repay debt, and led to a pile-up of bad loans in the banking system.
Early this month, Gammon Infrastructure Projects Ltd sold nine projects—six roads and three power plants—to BIF India Holdings Pte Ltd, an entity controlled by Canada-based Brookfield Asset Management Inc. and Core Infrastructure India Fund Pte Ltd, an India-focused infrastructure fund managed by the Singapore branch of Kotak Mahindra (UK) Ltd.
On 8 September, Jaiprakash Power Ventures Ltd said it had concluded the sale of two hydropower projects to JSW Energy Ltd in a deal valued at ₹ 9,275 crore, less than the originally agreed ₹ 9,700 crore. The company said it has also signed an in-principle agreement with JSW Energy for the sale of a thermal power plant.
These transactions could mark an acceleration of deal-making in the Indian infrastructure sector, including power plants and roads.
Sellers are on a weak wicket in negotiating deals as a number of them have high debt and limited options for further fund-raising. Banks, which have so far kept these companies afloat, are also getting tough as they try and clean up their own books, leaving some companies with no choice but to sell assets.
Bhasi said the deal would be funded through internal accruals, promoter’s contributions and deposits of the tenants of the realty complex.