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Mr. GRK Reddy Chairman & Managing Director, MARG Group

India Infoline News Service | Mumbai |

Replying to Yash Ved of IIFL, GRK Reddy says, "MARG has a total land bank of 1,750 acres of which 750 acres has been identified for projects and around 1,000 acres available for future projects."

Mr. GRK Reddy Chairman & Managing Director, MARG Group has done post graduation degree in Commerce and an alumni of Kellogs USA. Reddy began his career in 1985, as a merchant banker and gained expertise in advising and structuring financial closures. He promoted the MARG Group in 1994 and since then has been the protagonist in the rapid growth of the company, which has a project base of more than Rs. 80bn and is evolving into becoming the lead innovator in each vertical.

MARG Ltd was incorporated in 1994 and has completed projects in Tamil Nadu, Puducherry, Andhra Pradesh, Karnataka etc. The Company and/or its subsidiaries have offices in India, China and Singapore.The Company has designing, construction, development and operational capabilities in Marine Infrastructure, Dredging, Integrated Townships, IT Parks, Commercial and Residential Spaces. The Company has been certified for ISO 9001: 2008 certification for carrying out activities in planning and development of commercial, residential and turnkey projects.The company's esteemed clientele include Scope International (Standard Chartered Bank), TATA Consultancy Services, BHEL, Enercon India, Slash Support Systems, L&T, Indian Railways and Elcot, among others.

Replying to Yash Ved of IIFL, GRK Reddy says, "MARG has a total land bank of 1,750 acres of which 750 acres has been identified for projects and around 1,000 acres available for future projects."

Brief us about your expansion plans in Infrastructure, Marine, and EPC space?
MARG revenue has grown at a CAGR of over 120% in the last 5 years. The company operates through four key verticals – Marine, Urban and Industrial, EPC and Real Estate. In each of these verticals there is a strong portfolio of projects under execution and in pipeline.

Marine Infrastructure
Karaikal Port in Puducherry is the flagship project in this domain, first phase of the project is operational, there are 2 berths and the capacity is 5.2 MTPA. Phase 2A is currently under development which will increase the capacity to 21MTPA. The port will have 5 berths including fully mechanized coal berths, liquid cargo handling capabilities and specialized warehouses for agro products. The expected COD for Phase 2A is October 2011.

Apart from Karaikal Port, the company is also developing a Minor Port cum Ship Repair Yard in Mugaiyur, TN. The project is in the planning stage currently, work on it is expected to start in FY11.

EPC
MARG has built significant capacity to execute complex and high value projects in the EPC domain. Currently, the order book is Rs 28bn (including contracts from group companies). In the next few years, our focus will be on expanding capacity and establish ourselves as preferred EPC partners in specialized projects in marine and urban development spaces.

Urban & Industrial Infrastructure
Swarnabhoomi, the flagship project in this space is under development. It is being developed as a new city which can provide new paradigms for business, living and learning. The project is spread across ~1000 acres (Phase 1), on completion it will boast of more than 22 million square feet of development. During the next few years, the focus will be on development of this project.

Apart from this, MARG will be developing the Bellary and Bijapur Airports in Karnataka and a Multi Level Car Parking in Chennai – all these projects are in the pre development stage currently.

What is the status on the Karaikal Port project?
Karaikal Port became operational in April 2009. The first phase has a capacity of 5.2 MTPA – 2 berths for coal and general cargo, warehouses, internal road network, railway sliding and other necessary infrastructure development.

The port has so far (since commissioning) has called more than 230 major vessels and handled ~4.1 MMT.

Some key highlights are:

  • Phase I development completed – Two months ahead of schedule
  • Phase II development commenced in Jan 2009 (seamless with Phase I)
  • Port has achieved financial closure for Phase II
  • Obtained Investment Grade credit rating from CARE
  • Equity tied-up for Rs.1.5bn, against minority stake, with India Infrastructure Fund (IIF) – Managed by IDFC Project Equity
  • With all clearances in place, Phase II is expected to achieve COD by Oct 2011
  • Achieved a peak discharge rate of 37,999 MT /day – One of the highest discharge rates in any non-mechanized port.
  • Significant operational efficiency achieved by multi-purpose cargo handling equipment.
  • Operational Bagging machines / Conveyor

Tell us about your current and upcoming residential and commercial projects? In which of the cities are you targeting?
MARG’s real estate division comprises MARG ProperTies, the residential arm andMARG Junction, the umbrella brand for development of Retail, Commercial and Leisure space.

MARG ProperTies provides value-enriched homes from functional budget apartments to super luxury villas.

MARG ProperTies - Current Portfolio

MARG Properties - Projects in Pipeline

Most of the current and upcoming real estate projects are located in and around Chennai.

MARG Junction is the umbrella brand for the development of retail, commercial and leisure spaces. It identifies opportunities in Chennai’s retail, hospitality and office space market segments. It is currently engaged in developing a large, 1.8 million square feet ‘mixed use’ development on a 7.3 acre property in Karapakkam on the Old Mahabalipuram Road in proximity to large IT development centers.

Junction Mall comprises a 1,044,000-square mall, twin office towers offering 270,000 square of office space and a 257-room 4-star business class hotel & 57 service apartments over 517,000 square feet. The mall, which is slated to be operational in 2012, will be a one-stop ‘destination’ for shopping, dining, leisure and entertainment for the fast growing, prime catchment areas of OMR and South Chennai.

The company has already signed MoU’s with leading players like PVR, Shoppers Stop, HyperCity and Shangri-la Hotels.

Give us details about your land bank?
Currently, MARG has a total land bank of 1,750 Acres of which 750 acres has been identified for projects and around 1,000 acres available for future projects. This is spread across Chennai, Karaikal, Swarnabhoomi region and some parts of Andhra Pradesh.

What is your capex plan?
A large portion of the company’s portfolio includes asset based projects. Of these Karaikal Port Phase 1 (Rs4bn) is operational. Phase 2A of Karaikal Port (~INR 1500 crores), MARG Swarnabhoomi (Rs7bn) are currently under development, financial closure for these has been achieved and capex investment is being incurred as per schedules. Apart from this, MARG Junction, a ~700 crores mall development project is also under development.

The company has a robust pipeline of asset based projects including Phase 3 of Karaikal Port, Mugaiyur minor port cum ship repair yard, Bellary and Bijapur airports – total expected capex to be incurred on these is Rs27bn. Capital planning for these will be done at appropriate stages.

MARG has completed a QIP process in April 2010; it raised 1.06bn from the market.

What is the progress on restructuring?
Restructuring to unlock value and promote clarity in the business structure is in the planning stage.

Brief us about your financials?
For the first quarter ended June 2010, the company registered a 42.5% increase in operational income which stood at Rs1.74bn as compared to Rs. 1.22bn in Q1 2009 - 2010. The net profit for the quarter ended June 30, 2010 stood at Rs. 114mn, a 2.7% increase from Rs. 111mn for the quarter ended June 30, 2009.

What is your current debt-equity ratio?
The consolidated debt- equity ratio is 1.2

NSE 14.00 [0.15] ([1.06]%)

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