HCC wants to spin off Lavasa and other 3 businesses

HCC plans to spin off four businesses -- construction, infrastructure development, real estate and the Lavasa project, the beautiful township on Mumbai Pune Highway (Read more) -- and list them separately as a part of its restructuring plan.

Ajit Gulabchand, chairman and managing director said that LAVASA would be the first on the block. HCC will restructure Lavasa as a holding company and expects to generate Rs 2,000 crore revenues from it in the next three years by selling and managing properties at the planned commune 64 km from Pune. HCC expects to make positive cash flows from Lavasa from 2010 onwards.

HCC will manage the property by levying municipal charges on residents and charging for security through a public private partnership deal.This would be a first of its kind in the country that the residents would be paying the municipal charges to the holding company than the government directly.

Lavasa has so far earned Rs 550 crore through sales of 160 apartments and villas clubbed together from June 27, 2008. A second round of property sales will be conducted in August. ITC will open its property in Lavasa by October 2008. HCC is also buying stake in most of the developments that are coming up around Lavasa. Most of the stakes range from 26%-76% in most of the projects. For example, it holds a 49% stake in an Apollo unit that is being developed.

In all, the company plans to invest Rs 5,000 crore into construction projects in Lavasa in the next 12 years. Axis Bank has taken a 2.5% stake in the project by investing Rs 250 crore worth debentures which will be converted at the Lavasa IPO price or by the end of the fifth year.

That values the project at Rs 10,000 crore. HCC is also in talks with Deutsche Bank and other banks for raising private equity funding. HCC will issue secured redeemable non-convertible debentures worth Rs 100 crore to the Life Insurance Corporation on a preferential basis.

The company's net sales grew by 22.5% to Rs 895 crore for the quarter ended June 2008 as against last year's Rs 731 crore. However, the company's net profit slipped to Rs 31 crore vis-a-vee Rs 34 crore.

Read more on Lavasa - http://re-it.blogspot.com/2008/06/lavasa-township-gets-fresh-funding.html

Lavasa township gets fresh funding valuing it at Rs 10,000 crore

Axis Bank has picked up a 2.5% stake in Lavasa corporation, a subsidiary of Hindustan Construction Company (HCC), engaged in the development of a township in Lavasa near Pune, for Rs250 crore valuing the project at Rs10,000 crore. The township is spread over 100 square kilometers and being developed in four phases. The first phase is expected to be completed in 2009-10. The entire project is expected to be completed by 2020. HCC is already positioning Lavasa as an educational centre for hospitality, higher education and management.

Lavasa has issued convertible preference shares and convertible debentures to Axis Bank.After the conversion of the debentures at the end of 5 years, the equity shares of current promoters will go down. At present, HCC holds 29 per cent stake in the project, while 16 per cent stake is held by Avantha Group (LM Thapar Group) and Venkateshwara Hatcheries holds 13 per cent. HCC is expecting a total revenue of Rs 1,470 billion (US$37.4 billion) over the next 10-15 years from the Lavasa hill station

Amby Valley, which is a competitor town hill city, created real estate first and then focused on infrastructure later. Correcting that, Lavasa is doing just the opposite, creating footfalls first by getting the roads, hotels, education centres and then setting up the real estate. Moreover, the Lavasa homes will be more affordable, entry level condominiums will begin at Rs 27 lakh that will dot the lake. Damanhole, on the other hand, as yet some years away, will boast the more exclusive residences, all bordering the golf course, with vantage views of the lake.

The star attraction at Lavasa is the waterfront; all development springs around it. To prevent the lake from drying up prior to the monsoons, HCC has built a mini dam that has created a reservoir holding of 1.8 million cubic metres of water.

Lavasa houses an Oxford University India Business Centre that will conduct business research and impart training to new generation corporate leaders.

Earlier, Lavasa had announced the setting up of a Hospitality Learning Centre by the Ecole Hteli de Lausanne (EHL) of Switzerland. The first batch for this centre will also begin in 2009.

Promoting the health platform, Lavasa has signed Apollo Hospitals to set up an integrated healthcare and wellness destination and a 50 bed multi-speciality hospital. The healthcare and wellness centre will be spread over 200 acres with the hospital slated to be ready by 2009.

Lavasa is 200 kms from Mumbai and 75 kms from Pune. The town hill will house 3 hotels managed by Novotel, Starwood and Fortune chains. Lavasa is soliciting interest from key non-industrial businesses, like convention centres, educational institutions, spas and medical centres. An 18-hole golf course is being laid out, a club house planned and, eventually, shopping centres.

Three revenue streams for Lavasa - lease rentals, the sale of apartments and single family homes and fee.

Have attached some pictures of Lavasa. Enjoy the luxury on the hills :)