Mr. Kamal Khetan, Chairman, Sunteck Realty Ltd

“We will take maximum opportunity in this lean period and provide value to our shareholders.”

May 12, 2009 12:00 IST | India Infoline News Service

Sunteck Group entered the real estate business in FY99, with the purpose of providing world class commercial spaces. The group extended its plan to diversified real estate product lines i.e. Residential, Commercial, Retail, Hotels and Entertainment Parks. The group is well recognized for it?s Corporate Business Centres located at Bandra Kurla Complex, Mumbai. Sunteck?s developmental activities cover the major metros and mini metros of India including Mumbai (Bombay), Jaipur, Nagpur and Goa. The Group has a history of diversified business lines like Construction, Capital Market, Finance and Service Industry.

Mr. Kamal Khetan, Chairman, Sunteck Realty Ltd is a first generation entrepreneur who founded the ?Sunteck Group? in 2000. He has done his Engineering in Electronics and Communication from Mangalore University. Kamal Khetan has followed a diverse and dynamic pathway to success. He gained valuable experience working in his family businesses of construction, finance and the service industry. Keeping in mind the global markets and the interwoven dynamics of today's business world, the group has designed world class business centers in the hub of the commercial district at Bandra Kurla Complex and successfully serviced Fortune 500MNC's and Indian Blue chip companies.

Speaking with Anil Mascarenhas of India Infoline, Kamal Khetan says, ?We will take maximum opportunity in this lean period and provide value to our shareholders.?

By when do you see a revival in the real estate market? What are the opportunities you see amidst the slowdown?
I see the market reviving in 12 to 18 months. If the market doesn?t recover by then we have reasons to worry. Else we see this slowdown more as an opportunity. We will look for some distress sales. If anything comes our way we would like to grab it, of course after careful due diligence.

Brief us about your JVs.
We have been very selective about our JVs and are happy with the progress with each of them. Piramal Sunteck Realty Pvt Ltd, a joint venture with Piramal Enterprises Ltd (promoted by the Ajay Piramal Group) focuses on high-end realty projects in the most sought after locations in metros and select Tier II cities in India and strategic locations across the globe.

Piramal Sunteck Realty and Oman's WJ Towell (one of the oldest and leading diversified group in Oman) group have signed an agreement to develop high-end and mixed-use properties in and around Muscat. Piramal Sunteck Realty and W.J.Towell have joined hands with Bank Muscat to form a new company for development of various projects in Oman.

Tell us about the private equity funding.
In such a turbulent scenario, it was very encouraging to have Kotak Realty converting warrants at an agreed price of Rs. 1,167 per share. Following the conversion, Kotak Realty holds 10% in Sunteck. In October ?07, Kotak Realty had agreed to pick up 10% stake for Rs1.40bn. The investment was routed through investment fund Kotak Alternate Opportunities India Fund.

You get rental income from Corporate Business Centers. How many do you have and what is the leased area?
Keeping in mind the global markets and the interwoven dynamics of today?s business, the group has designed corporate business centers in the new international financial hub, Bandra-Kurla Complex and Andheri.

We have two corporate business centers at Bandra Kurla Complex namely Sunteck Centrako and Sunteck Certainty and one at Andheri (E). The total area of the business centers is appr. 90,000 sq.ft. We offer ready to use office facilities which are tailor made to the client?s needs and specifically service MNCs and Fortune 500 companies.

Brief us about your other properties.
Sunteck Centre (1,50,000 sq.ft.) at Vile Parle, Sunteck Grandeur (1,00,000 sq.ft.) in Andheri, a high end mixed use project of almost 5,00,000 sq.ft. at Borivali, a commercial and retail project of 1.5 mn. sq.ft. at Sion, Sunteck Kanaka (1,25,000 sq.ft.) at Panjim Goa. We also have 2 projects in Oman.
In the residential space we have the prestigious high end residential project, Signature Island (1 mn. Sq.ft.) at Bandra Kurla Complex, Mumbai and a premium residential project (1,25,000 sq.ft.) at Nagpur.

How many flats have you managed to sell at Signature Island? What are the rates?
We have already sold 21 out of the 63 apartments. Due to the ultra luxurious nature of the project amenities have been planned accordingly. The building will feature a lounge, coffee and mini consumable shop, children?s play area, modern health club, spa and health care center, temperature controlled swimming pool, digital security systems and basement parking for residents. The amenities would match those of any seven-star hotel.

The building has duplex apartments. Designed by architect Talati and Panthaki, this is probably the fastest construction happening in India at present with ~500 people working on the site 24/7. Shapoorji Pallonji is doing the construction and they will complete it within 18-months.

What is the investment done so far in Signature Island? How much do you expect to make out of this project?
The total investment so far is Rs2bn and we are investing another Rs4bn soon. The approximate revenue we expect is approximately Rs15bn in the next 24 to 30 months. We even got close to ~40,000 per sq. ft. at peak. We are in no hurry to sell the remaining apartments. If the market sentiment remains lower we may look at leasing out some apartments but we have no reason to go in for any distress sale and lower prices.

What about your project in Sion? Is it on the backburner?
We have an upcoming project in Sion, where we are evaluating various options given the depressed market condition. We will decide soon and look to create a project that will add value to our current portfolio.

What are the new areas you would look at diversifying?
We are into already into IT, commercial and high end residential. Fortunately, we are not into SEZ. Hotel and service apartments would be the new areas. We will look at a good brand to manage both Hotels and service apartments.

Would you look at merging any of your subsidiaries?
At a later date such options are open. These subsidiary companies are sitting on cash reserves. Either we could merge it or consider giving the amount as dividend to Sunteck Realty.

What is the shareholding pattern of the company?
The promoters hold ~68%, Kotak has 10% and ~22% is with the public.

What is your message to shareholders?
Most of our projects will take 18-36 months for completion. By the time the projects are ready; we expect the economy and sentiment to be on a huge upswing and will look at benefiting from the same.
In this market, we are sitting on cash. We will take maximum opportunity of this lean period and provide value to our shareholders.

Our shareholders will be happy to know that we have managed to get a loan at a very competitive rate of 12.5%. A developer getting loans at this rate in the current environment is remarkable. We have not utilized the loan.All our existing projects for the next 2-3 years are on track. We aspire to have our projects in prime locations nationally as well as internationally.

We want to create shareholder value by focusing on quality, innovation and customer satisfaction and being one of the leading players in the industry. We are grateful to our investors and customers for their continuous support they have provided all these years.

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