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Due to delay in approvals we lost three years, we are now making for it. In just another three years we will be there on the doorsteps of the stock markets. So, everything is back on the table including the Lavasa IPO, Ajit Gulabchand, HCC said.
Lavasa, Hindustan Construction Company's (HCC) hill city on the outskirts of Pune will be developed across 18,000 acres. Its size is about one-fifth of Mumbai. Construction at Lavasa had been banned by the environment ministry resulting in a loss of almost Rs 730 crore for HCC.
After a year long protracted battle with the then Environment Minister Jairam Ramesh, HCC got the green signal in November 2011. In an interview to CNBC-TV18, Ajit Gulabchand of HCC spoke about the latest happnening in the company and the road ahead.
Below is the edited transcript of Ajit Gulabchand's interview with CNBC-TV18.
Q: It has been a year and a half since you got all the approvals from the environment ministry. Has that helped in sales? Have you seen an uptick?
A: The issue is that the state government whose responsibility was to give the clearance had given it. The central government, ministry of environment and forests (MoEF) felt that they need to be the people giving clearance. Now, based on that we have got clearances from two places, we are twice cleared as a project. To move on from there we have started the process again.
In the last few months, we have sold more than 300 homes there both apartments and villas. There are about 5,000 construction workers on the ground there. It is coming back to its full construction, which you will see as soon as the monsoon is over.
Q: But has that uptick in sales also being complimented by a price appreciation?
A: We began sales and sold three, four years ago at a price of about Rs 2500 a square feet. Today, these same places are going at about Rs 4000 a square feet. There were villas that were priced at Rs 1.5 crore, the same ones are now some sales are happening at about Rs 3.5 crore. So, the property valuation there because of what is being built there is going up every year. Therefore it shows that there is a growing demand for this.
Q: What all can we expect at Lavasa in 2013? Do you have a strong launch pipeline?
A: There are three aspects to Lavasa’s economy. First aspect is there will be homes for people to live. So, there would be rental homes for those who will come to work there and will not be able to afford to buy initially ranging from Rs 500 a month to Rs 3000 a month. Then there will be villas as well going up to Rs 2 crore as well as apartments starting at Rs 10 lakh and that is underway.
The next is it has to build a healthy place for tourism, hospitality and leisure. So, hotel which were stalled are now being renegotiated and restarted so that it has a continuous tourism economy in that place. Third is soft businesses, research centres, etc which have been already included in the plan and have been approved by the Maharashtra government.
Q: Can you tell me what the profile is of the people that are buying into Lavasa? Are they those who want a holiday home? It is also a hill city so are we seeing senior citizens and retired folks looking to settle down here perhaps NRIs looking to make an investment?
A: It is across this whole section you spoke about. When you begin a Greenfield project in a brand new place it would be second homes to begin with. There is a company called Ashiana which builds retirement homes. They have taken a large area there and are building a full retirement home. They are now negotiating one more plot to expand that activity in other towns of Lavasa as well. So, you will have older people who will settle down there, you will have a large youthful population.
Afterall it is being deviced substantially for young India. Today average age of India is 26 years 7 months, so this aspirational population that would like to stay there. Most of the apartment homes, etc are going to younger people between the age groups of 30-45. As far as the rentals are concerned, it would be for those who come and work there. So, there is a whole segment of apartments that cost Rs 10 lakh to Rs 20-25 lakh and to even Rs 35 lakh. It goes all the way to Rs 2 crore plus. So, it is across socio-economic cross section.
Hind Constr stock price
On April 17, 2014, Hindustan Construction Company closed at Rs 18.50, up Rs 0.45, or 2.49 percent. The 52-week high of the share was Rs 19.80 and the 52-week low was Rs 7.75.
The company's trailing 12-month (TTM) EPS was at Rs 0.10 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 185. The latest book value of the company is Rs 19.17 per share. At current value, the price-to-book value of the company is 0.97.
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