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Lancor Holdings to raise $14m via QIP route

Published on Thu, Oct 22, 2009 at 11:13 | Source : CNBC-TV18

Updated at Thu, Oct 22, 2009 at 15:37

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Chennai-based real estate company, Lancor Holdings has been buzzing off late. The stock is up 46% in one month. At 10:57 am, the share was quoting Rs 125.60, up Rs 1.1, or 0.88%. It has six ongoing projects in Chennai, a small presence in Bangalore and Coimbatore, and has regular rental income of Rs 4 crore. The company's board is likely to meet on October 21 to discuss fund raising va the FCCB/ADR/QIP route.

Commenting on the same, RV Shekar, MD, Lancor Holdings , says the company is looking to raise USD 13-14 million via the qualified institutional placement (QIP) route to acquire land. "We expect the QIP money to be raised by January-February next year. The proceeds will not be used to repay debt."

He expects to invest of Rs 200 crore over the next two years.

Here is a verbatim transcript of the exclusive interview with RV Shekar on CNBC-TV18. Also see the accompanying video.

Q: Could you take us through how much money you are seeking to raise in that and through what route? Would it be a qualified institutional placement (QIP)?

A: We are seeking about USD 13-14 million to be added through the QIP route or the private equity route. We are proposing to use this money to acquire new lands for development and not to use it for repayment of any debt, so that the business is built in future to a higher level than what we have so far achieved.

Q: How soon will be you be tapping the market in order to raise that money and will it be the entire sum in one go?

A: Yes. We have just had the enabling resolution done yesterday in the board meeting and it looks like that the fund should be in the account by about January-February (next year) considering the fact that we have December when there is very little activity in the capital market.

Q: You indicated that none of this money will go towards retiring debt. Which specific project is it that the money will be pumped into?

A: We have identified four or five different parcels of land for acquisition and development. This will be taken up and brought to the market as an announced project from 2010 to the beginning of 2011. It will go on for another three years thereafter. The likely sum to be invested is about Rs 200 crore.

Q: Are these land parcels all in Chennai or are you looking outside Chennai?

A: At present, we are looking at all these parcels in Chennai. We are basically replacing the quantity of land that we have already given away through development. We have already taken up about 20 acres of land for development which will give us a turnover of over Rs 400 crore and about Rs 100 crore profit over the next three years. W now need to do this same thing all over again ‑ acquire new lands, bring them to development, announce projects, and then go on earnings profits.

Q: You have got six ongoing projects in Chennai at this point already, are your current cash flows are enough to feed those projects or would you need to raise any capital at all?

A: We are in fact raising some working capital as a bridge just in case the market should turn sour as it has happened in the last one year. About Rs 45 crore is coming from HDFC, of which Rs 25 crore is going to hit the account today, another Rs 20 crore will probably come in about a month's time from now. But that is not actually going to be used in any big way, except that we will keep this as a reserve fund. But these projects are so far done, so maybe we do not need to use even these debts to the full extent.

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