INDIA: Arvind may get 200 crores from real estate venture

Arvind has announced its plans to form a 50:50 joint venture (JV) with B. Safal group. The JV will develop about 1 million sq feet of residential complex in 1/3rd of the area of Ashoka Cotsyn, a division of Arvind situated at Khokhra, Ahmedabad. When fully developed, the project will be worth Rs. 225 crore.

In addition, B Safal group will also buy 1/3rd of the land area. B. Safal will pay Rs 70 crore consideration for buying this land and for 50 per cent stake in the joint venture.

The company’s 100 per cent subsidiary, Arvind Infrastructure Limited is engaged in the real estate development and will look after company’s projects in real estate sector.

Talking about the joint venture, Jayesh Shah, director and CFO of Arvind said, "This is a good proposal for Arvind as it is not only realising cash up-front but is also keeping the upside of appreciation open as Arvind is retaining about one third of land with it for future development. We expect to realise about Rs 200 crore from sale and development of said land at Ashoka Cotsyn over next two years."

The joint venture is expected to result in development of anywhere between 1,200 and 1,500 2BHK and 3BHK residential units.

"There is a very large unfulfilled demand of quality housing in East Ahmedabad. We will aim to fulfill this demand by providing superior quality facilities and we are very excited about this venture," said Rajesh Brahmbhatt, chairman of B Safal Group.

Arvind said the project is a part of its earlier announced plan to unlock value of its large land bank. Arvind holds about 600 acres of land in and around the city and has applied for two townships as per the new township policy of the Gujarat government.

Arvind had a debt to equity ratio of 1.4 times in FY09. In case the company uses the cash realized from this project and sale of land for the repayment of its debt, it would be a big positive for the company.

Company stocks spurted 6.58% to Rs.35.65 in the morning trades after the company made the announcement on the Bombay Stock Exchange (BSE). The stock hit a high of Rs 36.50 and a low of Rs 33.85 so far during the day.

Arvind reported a net profit of Rs.15.39 crore in Q4 March 2010 compared with a net loss of Rs 20.43 crore in Q4 March 2009.

About Arvind Mills
Arvind Mills, the flagship company of the Lalbhai Group, is one of India's leading composite manufacturer of textiles. Its headquarters is in Ahmedabad, Gujarat, India. It manufactures a range of cotton shirting, denim, knits and bottomweights (Khakis) fabrics.

Arvind is a vertically integrated textile operator with interests ranging right across from cotton farming to clothing retail and has a turnover of Rs 25 billion.


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Added: June 28, 2010 Source: Agencies
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