Mahindra Holidays has revived efforts for its IPO. It had re-filed its draft offer documents with the Securities and Exchange Board of India, or Sebi, in September. At that time, the company did not go ahead with its offer due to unfavourable market conditions.

It plans to sell 92.65 lakh shares, which is nearly 11% of the post-issue paid-up capital. The leader in timeshare holiday packages plans to raise nearly Rs 450 crore. It plans to use the IPO proceeds for 

Arun Nanda, Chairman, Mahindra Holidays & Resorts India, said the IPO proceeds will be used for expansion of current properties and to double our capacity to 1,500 rooms

Here is a verbatim transcript of the exclusive interview with Arun Nanda on CNBC-TV18. Also watch the accompanying video.

Q: What makes you confident of tapping the market at this juncture when risk aversion appears to be ruling the psyche?

A: I am of old school which believes that you should look at what the business needs. The business is doing well and in the last four years we had a topline growth of 52% annually. Also, bottomline growth has doubled. The first six months numbers are very encouraging and we have got expansion plans. The other thing which is of advantage for us is that the product by concept is inflation proof and that is why in the first six months we have seen the same growth trend continue. Also, we didn't allow the IPO to lapse. We have been talking about certain approvals, regulatory issues, and were caught between whether we should or should not and that is why we lost out on the time. Otherwise, we should have done the issue then only.

Q: You are looking to raising about Rs 450 crore, where exactly would the money be placed, and is that all you need right now?

A: The issue is 11% out of which 4% comes from Mahindra, which is a secondary sale. So, that money will go into M&M accounts. I can’t tell you what the pricing will be at this stage but the 7% will be used for expansions. We have got some plans to spend money on. We plan to double our capacity to 1,500 rooms.

Q: How much of that money does it take care off would you also have to tap debt market or internal accrual?

A: No, in our company primarily we don't have that much of debt. It’s virtually a debt free company. The expansion plan will be about Rs 400 crore, out of which nearly half will come from the issue and half will come from internal accruals.

Q: When will the additional capacities come on stream and when will you be able to complete that?

A: In fact, the process is on. I think out of the 750 rooms that we are adding, 500 rooms will be added by March 2009 and the rest of the rooms will come up during March 2010.

Q: Outline for us how are you looking at the real estate space itself. Are you seeing price cuts in several pockets in the country? What are the major price trends that you are looking at?

A: The developers have not yet dropped prices but secondary sale prices have dropped. However, what is really hitting the industry is liquidity on the developer’s side. Fortunately, we were debt free when most people were highly leveraged. So, people are going to find it difficult to complete the projects and buyers are finding it difficult to raise money as lot of banks have tightened their lending norms and interest rates have gone up.

I feel the pain will continue for sometime. We will have to move to affordable housing if we want to see growth in numbers because that is the segment which actually saw the real spurt in real estate when interest rates were down and they were pricing the flats at Rs 30-35 lakh, so lot of young people found it was better to buy a flat than to rent it. But now that interest rates have gone up to 13-13.5% and prices have also gone up, people will have to look for affordable housing. In fact that is what Mahindra Lifespace is doing, soon we will be announcing lot of satellite townships to take care of that.

Q: How much correction in prices do you see over the next six months?