Chennai: What started as a small entry into real estate development for the city-based Shriram group, has now turned into a big business.
The group's real estate company headquartered in Bangalore Shriram Properties Limited has charted out mega plans that include development of information technology related special economic zone (SEZ) near Chennai, six township projects in Chennai, Kolkata and Bangalore apart from the usual residential property development in the southern cities.
Implementing these projects involve tying-up funds and even promoting joint venture companies. Expectedly, the thirty-eight year old managing director M Murali is busy shuttling between Chennai and Bangalore ensuring the project stays on course. Formerly a business development manager at Larsen and Toubro in Chennai, yhr 29-year old Murali was hired to head Shriram Properties in 1997.
"It was a strategic decision to have Bangalore as our headquarters when the company was promoted." The Rs5-crore equity Shriram Properties rode on the booming real estate wave in Bangalore.
From a turnover of Rs2 crore in 1998, the company closed last fiscal with a turnover of Rs140 crore. "This year we will close with a turnover of Rs260 crore. In two years the turnover will be around Rs1,000 crore," says a confident Murali.
According to him the company has constructed around 4-million sq.ft space and another 14-million are in various stages of comppletion.
The residential property centric Shriram Properties is now expanding into other cites and also undertaking the development of commercial property. Today, the company has projects in Coimbatore and Hyderabad. But what is interesting is its entry into commercial space development in a very big way.
JVs for IT SEZ and townships
Shriram Properties acquired the defunct Standard Motors' 58-acre factory land and machinery in a court auction for Rs154.10 crore. The Shriram group has decided to develop the land as IT SEZ in joint venture with the US-based Sun Apollo fund. Sun Apollo is a joint venture between the Delhi-based Sun group promoted by the Khemkas and the US-based equity fund management group.
Says Murali, "It is a 50:50 joint venture. A new company has been formed by name Shriram Properties and Infrastructure Limited. The Standard Motors land has been transferred to the new company. We have got the SEZ status for the project from the central government."
The Rs2,500-crore project will have a total built up area of around 5.3-million sq.ft. According to reports, apart from the SEZ the project includes a 5-star hotel, a mall and serviced apartments.
The other mega projects being planned by Shriram Properties are the development of six townships in Chennai, Kolkata and Bangalore. "The total land area will be 1,200 acres and the built up area will be around 50-million sq.ft. The project outlay will be around Rs23,000 crore," says Murali.
The Shriram group will promote the projects in partnership with foreign realty funds. "The group will continue to own Shriram Properties. We will have project wise joint ventures," explains Murali.
He does not find the shift from residential property development to commercial property a major challenge. "We outsource the construction activity. Marketing the property will not be a problem as we have a good brand equity in the market and also have good rapport with multi national companies (MNC) and others," he concludes.
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to auction Standard Motors plant and machinery