Plan a four-star hotel in Sahibabad NCR: Magnum Ventures

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Praveen Jain , CMD, Magnum Ventures Ltd , says major chunk of the money to be raised through this second IPO, will be deployed in hotel projects.

He adds the company has 62,000 metres land till date, of which 10,000 metres has been earmarked for hotel projects. The company owns land since prices were almost negligible.

The company is planning to set up one four-star hotel in Sahibabad NCR at a cost of Rs 150 crore. He expects that half of the company's total profit will be from hotel business, once the Sahibabad four-star hotel becomes ready.

Excerpts from CNBC-TV18's exclusive interview with Praveen Jain:

Q: You are looking to raise about Rs 48 crore. Take us through where are you going to deploy this money?

A: Basically, 20% goes to the paper and 80% goes to the hotel. I am in process of setting up a four-star hotel in NCR at Sahibabad in Ghaziabad area.

Q: Have you acquired the land?

A: It is already with the company since long time back. The company owns the land since the prices were almost negligible. We are putting the land at zero cost which constitutes 60-70% of the total cost of a hotel project. It is an expansion of Rs 150 crore as a whole.

Q: What would be the market value of the land right now and how much land are you sitting on?

A: As on this date the company owns 62,000 metresland wherein 10,000 metres has been earmarked for hotel project.

Q: What will the revenue mix for the paper and hotel be once your four star hotel comes up?

A: At the topline, 70% goes to the paper and 30% goes to the hotel, but at the bottomline it should be 50% each.

Q: When will this hotel come up and when will you be able to derive revenues from them?

A: We are very confident that we will have a soft launching in January 2009 and it should be in full operation by April 2009. The fiscal year of 2010 should be the full year operational for this hotel. Simultaneously, we can ripe up some of the fruits of 2010 Commonwealth Games which is scheduled already for this area.