Adani Enterprises Ltd (AEL),the flagship company of the Adani group,on Thursday announced to divest its holding in the real estate business,which is largely spread in the property markets of Ahmedabad and Mumbai.
The company felt that the exit from the real-estate business will help it focus its time and energies on its core business of coal mining,ports and power generation.
Adani is already in the process of developing a Rs 5,000-crore integrated township located on the corridor between Ahmedabad and Gandhinagar.
It has properties in prime locations in Mumbai including the one at the International Finance & Business Centre (IFBC) in Bandra-Kurla Complex (BKC) that is close vicinity to some of the prime commercial developments in BKC.
It mostly runs real-estate business through its subsidiary Adani Infrastructure and Developers Private Ltd is estimated to have an asset base of over Rs 2,000 crore.
A decision in this regard was taken at the meeting of board of directors of the company held on Thursday.
Real-estate is not our core business and so we have decided to make a complete exit. Secondly,it is not in sync with our other business where we see a lot of potential for growth. Be it energy or logistics,we have a lot of potential to be number one and we want to concentrate our energies and time on these businesses, Devang Desai,chief financial officer of AEL,told The Indian Express.
The company official said in the coming days the intricacies of this divestment will be worked out. In the past we have similarly exited from our retail and trading businesses, Mr Desai said. The flagship company of the group will focus on group’s primary target of 200 million tonnes of mining capacity,200 MT of cargo-handling capacity and 20,000 megawatts of power generation capacity by the year 2020,he said.
AEL also declared its third quarter results on Thursday. The net profit of the company for the three months ending December 31,2011 stood at Rs 407.28 crore,down from the Rs 474.41 crore it clocked during the same period last year. The AEL stock opened at 410.20,plummeted to a low of 379.60,before closing at Rs 392.55 on the Bombay Stock Exchange.
Experts in the real-estate sector felt that the company could easily raise over Rs 2,000 crore by selling its holdings in the real-estate business and deploying the funds in its core activities.
Talking about the company’s decision to exit the real-estate business,the regional director of global real-estate consultant,Jones Lang LaSalle,Nirav Kothary said,The decision is an internal business call and in no way connected to the present scenario (read stagnation) in the real-estate market. Adani do not have a large a real-estate business. However,they have a huge ongoing township project,which is being constructed in association with city-based Saumya Constructions Pvt Ltd,in Ahmedabad and has picked up prime property in BKC in 2008.
Mr Kothary felt that both properties in Ahmedabad and Mumbai,put together,could easily have a worth of over Rs 2000 crore.
Adani’s joint-venture partner in the realty business in Gujarat,Saumya Constructions,refused to comment on the issue. You should be talking to some one in Adani, said Saurabh Shah,president of the realty firm when asked if Adani’s decision to exit from the real-estate business would have an immediate impact on the on-going township project in Ahmedabad. The township spread over 600 acres,also houses the under construction Adani Group Corporate Office designed by Mumbai-based architect,Hafeez Contractor.
Adani group also holds 60 per cent stake in Swayam Realtors and Traders Ltd which had acquired properties belonging to Khatau Makanji Spinning & Weaving Mills Ltd in Byculla and Borivali areas of Mumbai.
The real-estate arm of Adani had also started acquiring land in Surat and Kochi to develop high-end residential and commercial projects. It had also planned to set up an integrated township at Mundra (Gujarat) in a phased manner.