Hyderabad-based Indu Projects Ltd is planning to float a separate entity to meet the funding requirements of the existing and future projects besides placing private placements at special purpose vehicle (SPV) level. The company is also planning to hit the market with an IPO sometime in the next fiscal.
According to I Syam Prasad Reddy, managing director and chief executive officer of the company, the fund requirement for the current year would be anywhere between Rs 1,000 crore and Rs 1,500 crore. “Besides sale realisations, we would like to raise funds at SPV level through private placements. During the current fiscal, the company is looking at forming a separate entity where we will invest and other investors will also put in their investments to fund the various projects. For instance, we might invest Rs 500 crore and other investors like real estate funds can bring in Rs 1,500 crore to form the entity. But the profits would be shared 50:50 instead of 25:75. It will be on a differential profit sharing model,” he said.
The company is also toying with the idea of raising funds from the market through IPO. It is yet to finalise on the idea. The size of the IPO would not be less than Rs 1,000 crore and is expected to happen sometime in the next fiscal after the ERP implementation. “The company is implementing ERP and has appointed Oracle and PricewaterhouseCoopers (PwC) as the agencies. Ernst & Young is monitoring the implementation process,” he added.
As part of backward integration, the company is setting up a centralised rebar factory, concrete block making unit, precast factory, crusher and hume pipe manufacturing factory near Shamshabad. All these things are coming up in about 25 acres of land with an investment of Rs 25 crore. The machinery for rebar factory is being sourced from Italy, while block making machines are coming from China. The block making unit would be in place within a month followed by crusher and the rebar factory.”Once we stabilise all these things we will put up farm work material and hume pipe manufacturing facilities. Except the rebar factory all the other facilities would be for captive consumption”, he said.
Indu projects is also planning to take controlling stake in existing services companies like design companies to support its activities. “Infact we have already two such Hyderabad-based companies in which we can take controlling stake. But we are yet to finalise the terms. Indu Projects has given the mandate PWC to identify such companies for us. If we pick up stake in design services companies, we are assured of dedicated services. And this saves us lot of time and investment on manpower,” Reddy said.