JV to generate Rs 700 cr; to start ops in FY14: Brigade

Brigade Enterprises has inked a Rs 210-crore JV with the Government of Singapore Investment Corporation Pte Ltd (GIC) for a real estate project in Bangalore.

MR Jaishankar,CMD, Brigade Enterprises explains to CNBC-TV18 that the company holds a 51% stake in the JV and the rest 49% is held by the GIC. 

Jaishankar expects a revenue of over Rs 700 crore and 12-15 months for approvals. He adds that the project should bring in revenue in the next financial year of 2013-2014.

Below is an edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.

Q: Brigade Enterprises has inked a JV with the Government of Singapore Investment Corporation Pte Limited (GIC). What exactly is the Singapore fund bringing to the table?

A: It is actually a joint purchase between the Government of Singapore Investment Corporation Pte Limited (GIC) and the Brigade Enterprises through a SPV(special purpose vehicle) where Brigade holds 51% and GIC holds 49%.

The total investment from each party is in the range of about Rs 105 crore and the property has already been registered and purchased jointly. Both parties have contributed to the land in the proportion of our investment and we have brought in our funds through a combination of internal resources and a bit of debt.

Q: What is the exact amount that the foreign partner is bringing in?

A: The total investment between both parties for the project is about Rs 210 crore. Brigade will contribute 51% and the rest 49% will be made by GIC.

Q: Is it a FDI investment or does it come with a call option?

A: No, it's a clean FDI investment. It is not a structured deal. It is a pure equity transaction.

Q: How is the Bangalore property market? Has it stabilised? What are you expecting in terms of commercial leasing?

A: The commercial lease rents in Bangalore, in the last one year, have gone up by 15-20%. In our own projects, it has risen 15-20% in the last one year and as far as the residential market is concerned there is an inherent strength though the market itself is competitive. It might not be competitive, but there is a demand for the right project by the right developer at the right price level.

Q: How much revenue is expected from this joint venture project with the Singapore government and when will it start generating revenue?

A: We expect a revenue of over Rs 700 crore. Today most projects take 12-15 months for approvals in Bangalore. The project should bring in revenue in the next financial year of 2013-2014.

Q: Can you give us an idea of your total revenue run rate for FY13 and the amount of land you plan to sell?

A: We intend doing better than our performance in FY12 wherein revenues were in the range of about Rs 650 crore. We have on-hand projects of about 24 million sqft of which about 70% is residential and about 25-30% commercial. Due to the percentage completion method of accounting, a bulk of the revenue will be accounted in 2013-2014 and thereafter..

Q: Last year your PAT (profit after tax) fell. What will be your run rate be at the bottom-line and your margins?

A: It is difficult to give guidance, but we are working hard towards doing a better job than last year.