See traction in real estate biz in next 2 yrs: Arvind Mills

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See traction in real estate biz in next 2 yrs: Arvind Mills

In an interview with CNBC-TV18, Chairman and Managing Director of Arvind, Sanjay Lalbhai said they were expecting a larger profit in real estate for financial year 2011 which would override the debt incurred.

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In an interview with CNBC-TV18, Chairman and Managing Director of Arvind Mills , Sanjay Lalbhai said the company is expecting a larger profit coming in from real estate business for financial year 2011, which would override the debt incurred. "We would be gaining traction in the real estate sector in FY11 and FY12," he added.

The company is expected to monetise Rs 100 crore from the real estate development in FY11. "Next year we are planning Rs 250 crore. A year after that we are planning around Rs 500 crore. This is our ramp up in our real estate numbers for the next three years," Lalbhai said.

Below is a verbatim transcript. Also watch the accompanying video.

Q: In your first quarter numbers, the sales were flat and yet the expectation was that for the full year you will be able to produce a 25% growth in sales to about Rs 4,000 crore. From where does this confidence stem?

A: Textiles, garments and apparels are seasonal businesses. You will see dramatic changes quarter in quarter out on our sales numbers. Just now the demand is pretty strong for fabrics and even brands. Retail in India is doing extremely well. We are clear that we will have this kind of growth coming in this year.

Q: With respect to your export business, would you be able to share with us some kind of visibility in terms of the orders you have for FY11 as well as what kind of realisations you might be able to command?

A: The export business in America is pretty strong, Europe is flat and we should be having around 15% growth on our overall export numbers.

Q: You mean in volume would realisations be better considering that the Chinese competition is perhaps blunted by the Yuan's appreciation?

A: The prices are higher because raw material prices have gone up. We are pushing up our prices to take care of the increased input cost. In any case, the prices have gone up. The margins would stay stable because the margins are going to be taken care off by increasing the prices. There would be a price and volume growth and both would be going up.

Q: We would like to talk about your real estate plans and your plans to monetise it. You hold a considerable amount of land bank in Ahmedabad and already in May you have signed a joint venture with Safal Group. Could you give us any update and have you been able to significantly ramp it up? In your consolidated revenues how much is going to be the contribution of real estate going forward?

A: This year we are planning that we will be able to monetise something like Rs 100 crore. Next year we are planning Rs 250 crore. A year after that we are planning around Rs 500 crore. This is our ramp up in our real estate numbers for the next three years.

Q: When we had spoken to you last regarding this joint venture (JV), you had indicated that you would get an upfront payment of about Rs 70 crore in terms of cash which you would be using to reduce your debt. Could you tell us currently what the debt situation stands at for the company?

A: The debt situation has remained stable for the company because we are also expanding our textile, garment and brand business very aggressively. The debt is at the same level. We are planning a reduction of around Rs 50-100 crore this year but after investing around Rs 250 crore in newer plants, brands and retail expansion.