Entertainment World to focus on development in Tier II cities

Entertainment World Developers Pvt Ltd (EWDPL), with expertise in developing shopping centres in Tier II cities, is now developing township projects as well. Manish Kalani, managing director, EWDPL, discusses the new projects of the company with Pallabika Ganguly

Pallabika Ganguly (ML): How many township projects are you developing or planning to develop?
Manish Kalani (MK):
Currently, we are developing 11 township projects in Tier II cities. The first four townships that we launched are in Indore, Raipur and Udaipur. The total built-up area of all our township projects is about 50 million sq ft. We are working with two concept projects, Treasure Town and Treasure Vihar. Treasure Town is a project with a fully-equipped club house, spa, schools, and shopping centres while Treasure Vihar is a project of affordable houses.

ML: How many Treasure Towns and Treasure Vihars are you developing?
MK:
We are coming up with two Treasure Towns in Indore, two in Udaipur and one in Raipur. Each Treasure Town has an approximate built-up area of 4.5 million sq ft. It comprises two and three bedroom, hall and kitchen (BHK) apartments, starting from 1,500 sq ft to 2,000 sq ft. The apartments are priced between Rs50 lakh to Rs60 lakh.

In our Treasure Vihar project, we have a built-up area of 4.5 million sq ft. We are coming up with three such projects in Indore, one in Udaipur and one in Raipur. We are looking at creating some of the greenest townships in terms of open space.

ML: Don’t you feel that the prices you quoted for these projects are high for a Tier II city?
MK:
We have recently launched Treasure Town in Indore and have already received booking for 300 apartments, priced from Rs25 lakh to Rs50 lakh. In Udaipur, we received about 150 bookings. For our Treasure Vihar projects, we received bookings for 300 apartments in Indore and 100 bookings in Udaipur. So I don’t think the prices are high when you look at the services and facilities that we are offering.

We are launching the fourth township, the second Treasure Vihar in Indore, in January 2010. It comprises one BHK (500 sq ft), two BHK (700 sq ft) and three BHK (1,200 sq ft) and the price range would be between Rs7 lakh to Rs20 lakh.

ML: What is the time frame for development of these township projects?
MK:
We plan to hand over our four Indore and Udaipur-based townships from December 2010 till 2015.

ML: Who are the stakeholders in your township projects?
MK:
We have K2C, an AIM-listed company which has invested $10 million in the Indore township project, Landmark Group has invested $5 million in the Udaipur township and the rest is owned by EWDPL.

ML: The industry is sceptical about Tier II cities. Why are you launching townships and shopping centres in these cities?
MK:
Our unique selling proposition has always been carrying out developments in emerging, fast-growing cities. Before entering a city, we measure it on different parameters—the city must have potential and we must be the first mover to exploit the potential. In most of the locations, we developed the first shopping centres.

ML: How many shopping centres have you planned in 2010?
MK:
All together, we are developing 13 shopping centres, out of which two are operational in Indore and the third will open at Nanded in Maharashtra in January 2010. Moving forward, we will be launching our next shopping centre at Ujjain between March and April. Then there is one shopping centre coming up at Raipur in September, one at Bhilai in October, and another at Jabalpur in December followed by a third shopping mall at Indore in December. The remaining four shopping centres at Mohali, Udaipur, Vadodara, Thiruvananthapuram and Amravati will be operational between 2010-2011. All our projects are in advanced stages of construction. The total construction of these shopping centres is close to 10 million sq ft. Out of 10 million sq ft, 6 million sq ft is already being constructed. Most of the malls are at the fit-out stage. From December 2010, nine malls will be operational and the rest will be operational by 2011.

ML: You are coming up with an initial public offering (IPO) next year. Can you elaborate on your plans for the same?
MK:
We are planning to raise about Rs500 crore–Rs600 crore through an IPO for future expansion and a small portion will be utilised for the repayment of debt.

ML: How do you see the retail segment growing in the next two years?
MK:
We were the first one to propagate the revenue-share model in India even before retailers started talking about it. We are at the tip of the iceberg. The organised consumption in India is still around 5%-7% while in other countries like China it is 25% plus, in the US it is 85% and in Europe it is 65%. So we are at the bottom and we have a long way to go. There are not enough retailers in India.

Out of 200-odd operational shopping centres, 80% of malls are filled with the same 400 brands. There is no new experience.

ML: How do you think more number of players can come into the retail segment?
MK:
We have more than 5,000 successful brands in the country which individually do an annual turnover of more than Rs5 crore, which some of the organised retail players do not even earn. Many of them are manufacturers, while some are exporters. 

These are brands that do not have expertise to come to the mall. First, they claim that they are manufacturers and they do not understand the business of retail. Second, they do not understand the concept of rent and revenue-sharing. Third, those who do have an appetite to take risk do not approach any mall because they are afraid that mall operators will deny entry to them. They are happy running a successful business. We need to assist these brands with our expertise so that they can easily step into retail. That is what we do by offering our expertise; I offer a revenue-share model to the retailers.
 

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RBI can increase interest rates to tame price rise: Rangarajan

Making a case for reduction in money supply, C Rangarajan, also a former governor of the RBI, said that the apex bank could raise the cash reserve ratio (CRR)

The Prime Minister's Economic Advisory Council chairman, C Rangarajan, on Monday suggested that the Reserve Bank of India (RBI) could reduce money supply and raise interest rates to tame the rising prices of food articles, reports PTI.

"If price decline does not happen in December, then early steps could be taken. The RBI could increase interest rates. (It) preferably could reduce liquidity by acting on CRR,” he said.

Mr Rangarajan was responding to a question on what measures the RBI should take to moderate food inflation, that has climbed to a 10-year high of 20% during the first week of December, driven mainly by higher prices of potato, other vegetables and pulses.

Making a case for reduction in money supply, Mr Rangarajan, also a former governor of the RBI, said that the apex bank could raise the cash reserve ratio (CRR), the portion of amount that banks are required to keep with the central bank.

Through a slew of measures, the RBI has injected liquidity into the system to help the cash-starved industry to combat the adverse impact of the global financial meltdown since September last year.

The RBI governor, D Subbarao, had met finance minister Pranab Mukherjee on 18th December, fuelling speculation that monetary policy would be tightened.
The RBI in October had raised the statutory liquidity ratio (SLR), the portion of funds that banks are required to park in government securities, to 25%, though it retained the CRR at 5%.

The central bank will come out with its next monetary policy statement on 29 January 2010.
 

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Capital crunch? India Inc raises over Rs1,50,000 crore in 2009

The biggest irony is that nearly two-thirds of these funds were estimated to have come from investors in overseas markets. However, these global markets themselves were in shambles and companies were in dire need of capital, forcing them to beg their respective governments for money

Companies knocking on government doors for bailout funds may have been the norm in the West, but India Inc begged to differ from this rule by raising over Rs1,50,000 crore of capital for expansion from investors across the world in 2009, reports PTI.

The biggest irony is that nearly two-thirds of these funds are estimated to have come from investors in overseas markets, which themselves were in shambles and where companies were in dire need of capital, forcing them to beg their respective governments for money.

Also, Indian companies took the quick-fire qualified institutional placement (QIP) route to meet their immediate capital needs, instead of the time-consuming initial public offering route. As a result, the funds raised by Indian companies during 2009 were more or less equal to the levels seen in 2008, when the economic downturn was not a reality for most part of the year.

Besides, the response was more than required as demonstrated by the books being highly over-subscribed for most QIPs and even some IPOs.

A total of about 50 companies raised a record-breaking cumulative figure of about Rs55,000 crore through sale of shares to qualified institutional investors, mostly overseas private equity firms and also local and foreign financial services firms like banks, insurers and fund houses.

According to global consultancy firm Grant Thornton, the private PE and QIP space saw 221 deals till 13th December totalling $11.20 billion (about Rs52,000 crore).

"The worst seems to be over for PE investing and clearly there is renewed PE interest in investing in the country, specifically in sectors supporting India's domestic consumption like education, healthcare and real estate. As a result, PE activity in 2010 is expected to rise significantly," said S Krishnan, executive director, PricewaterhouseCoopers.

Ernst & Young's partner and national director Pankaj Dhandharia said, "PE investment activity is on the rise again as is evident from the deal activity, which has picked up in the past couple of months." He added that India, which is on a growth trajectory and with its ability to generate relatively superior returns, would attract even higher degrees of capital (including private equity) in the years to come.

It was realty major Unitech which kicked off the QIP bandwagon earlier in the year and raised a total of close to Rs4,500 crore in two separate deals. Other major QIP deals of the year included a consortium of foreign players putting in close to Rs3,000 crore in Indiabulls Real Estate.

Similar amounts were raised by Axis Bank and Hindalco, while a number of smaller fund-raising deals were also inked successfully.

The QIP performance of 2009 was even better than the total of a little over Rs20,000 crore—a record at that time—raised through this route during 2007, when the markets and economy, both in India and abroad, were flying high. The QIP funds raised by India Inc were not even Rs2,000 crore in 2008.

It was the QIP push that took India Inc's fund-raising spree in 2009 to the overall levels seen in the previous year, as capital-raising activities turned tepid in 2009 on fronts like IPOs and overseas instruments like American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and Foreign Currency Convertible Bonds (FCCBs).

The overseas fund-raising through depository receipts or external commercial borrowings fell down to nearly Rs75,000 crore from close to Rs1,00,000 crore in the previous year.

Still, India Inc had its hands full in 2009 with funds exceeding Rs1,50,000 crore—almost equal to the levels in 2008, although short by close to Rs1,00,000 crore from about Rs2,50,000 crore it got in 2007.

"2009 was a year of recovery in terms of fund-raising by India Inc, but the hyper-enthusiasm of 2007 is yet to return to the market. During the year, promoters have gone ahead with the compulsory expansion plans, while they postponed discretionary projects," brokerage firm SMC Capitals' equity head Jagannadham Thunuguntla said.

As the Indian economy started showing signs of revival and the stock market recovered from the lows it touched in March on increased buying support by institutional investors, fund-raising activity also increased.

The IPO market was also not that bad, if seen in terms of average fund-mopping activity. While a total of 20 companies raised close to Rs20,000 crore in 2009, a total of Rs32,000 crore came from 37 IPOs in 2008. However, a worrying factor was low participation of retail investors in the IPOs.
 

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