Prajay Engg: Have 850-acre land bank worth Rs 2500 cr

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Prajay Engineers has been buzzing lately. Over the last seven trading sessions, the stock has gained over 30%. What's the trigger?

Director of Prajay Engineers Syndicate , Ravinder Reddy has some answers.

Excerpts from CNBC-TV18's exclusive interview with Ravinder Reddy:

Q: As we understand you have 650 acres of land. Could you break it down as to how much is commercial, how much is residential and what do you plan to do with this land?

A: This 650 acre of land bank is as of March 2006, but during the current year, we have added approximately more than 200 acre of land; most of which is in Hyderabad.

We have gone to two new destinations in the current year; Vijayawada and Bhubaneswar. The size of land parcel GRR (Provincial Grazing Reserve) is not big currently, but we intend further to expand the land banks in these two cities.

Q: What is the current market value of these entire 850 acres you are talking about?

A: Its market value would be over Rs 2500 crore.

Q: How much of this is has been used for the hotels and hospitality business that you are looking to get into?

A: About 7-8%.

Q: By when will you finish the entire development of that land?

A: The entire development would be about 33 million square feet; this is the additional 15 million sq.ft, which we have added in the current year to the 18 million, which we had earlier. 

Q: Have you paid out completely for this 850-acre or do you have to raise money to pay out for the cost of acquisition?

A: We are almost done with the payments; a small tranch of payment to be completed in the month of April and May. We are already funded for that.

Q: Do you have any joint venture talks going on with international hotel chains at this point in time for hotel projects?

A: We are in talks with three hotel chains; one is from Europe and the other one is from Far East and another hotel chain from US with whom we are in talks and are in quite an advanced stage of negotiation. We should be coming out with at least a couple of names for four star and five star hotel management tie-ups by mid-May.

Q: What will be the nature of these ventures?

A: Most of these would be management contracts, but for one of the five star properties, we are looking at a minority equity stake from the joint venture part.

Q: How much are you looking to invest in these joint ventures if you put a ballpark figure to it?

A: The entire hotel development would cost around Rs 500 crore.