KSL looking at realty business demerger

Source: DNA
Analysts say the move makes sense as it is already fairly diversified
Mithun Roy. Mumbai
Textile major KSL and Industries Ltd (KSL), promoted by Saurabh Kumar Tay-al, is betting big on its realty business.
A banker close to the development said the Rs 800 crore company plans to demerge its realty business into a separate company and list it on the bourses.
The rising rupee, which has hit exporters hard, seems to have taken a toll on its core business - textiles. Hence the focus on realty play in the next few years, said the banker.
Analysts say the demerger makes sense considering the company has diversified into the realty business in a big way
Tayal told DNA Money, "We are analysing all possible growth areas including hiving off and thereafter listing on bourses, but not immediately A separate team is looking into it and once the internal report comes, we will take the final call and subsequently inform the exchanges."
Going by industry sources, KSL has started buying land at prime locations in Mumbai. It acquired 1,25,000 sq ft land in and plans to build either a hotel or IT park there.
Tayal conceded that the company had indeed acquired land, but didn't disclose the valuation. The going rate in Andheri is Rs4,000-6,000 per sq ft was all he would say
KSL had earlier bought two patches of 50,000 sq ft and 1,50,000 sq ft, respectively at Mahape in Navi Mumbai for development of an IT Park. Apart from these, it has land in Dombivali where it will build a shopping mall in the next two years.
The company has built up a large land bank over the last few years. It is currently undertaking developments at 15 locations across the country, with a total developable area of 18 million sq ft. Among these are two integrated township projects at Nagpur and Kolhapur � Empress City and Deccan City, respectively - besides properties at Ludhiana and Amritsar.
In fact, the company has already rented out a good part of those properties and will start getting rental income on the same from the current fiscal.
Analyst Naveen Jain of Emkay Research said in a research report recently that the company has a unique strategy for acquisition of property wherein it buys sick textile units and other distressed assets and utilises the excess and unutilised land bank within the ac-.development.
According to the India Real Estate sector report by Global Research, the Indian real estate market is expected to grow at a CAGR of 20%, driven by an 18-19% growth in residential real estate, 55-60% in retail real estate, and 20-22% in commercial real estate over the next five years.
The size in terms of total economic value of real estate development activity of the Indian real estate market is currently $40-45 billion (5-6% of GDP), of which residential developments form the major chunk at 90-95%, followed by the commercial segment at 4-5% and organised retail 1%.