Tata Group bets big on realty, infra, see Rs 70,000-crore pipeline

Written by fe Bureau | New Delhi | Updated: Jun 27 2013, 11:27am hrs
Three Tata Group entities, spanning the real estate and infrastructure spaces, expect to have projects worth R70,000 crore under their umbrella in the next five years.

Tata Housing, Tata Realty and Tata Projects, which have R15,000-20,000 crore in projects under execution in 2013-14, expect their combined portfolio to be more than three time the current size by 2018-19.

Of this, the largest chunk of R35,000 crore is expected to be in the residential real estate sector under Tata Housing, which has been seeing a compounded annual growth rate of 90-100% over the last 4-5 years.

We will grow slightly slower this year because we have been unable to monetise projects as quickly, but we still expect to see strong growth, said Brotin Banerjee, MD & CEO of Tata Housing

In order to minimise the need for capital, the company intends to follow an asset-light strategy and focus on monetising projects within a 9-12 month period on average.

While the focus for Tata Housing will be primarily domestic, the company is also looking at a large private-public partnership project in Sri Lanka, which it hopes to finalise by August.

Meantime, Tata Realty a seperate group entity which focusses on infrastructure is looking at capitalising on opportunities available in the road sector, among others.

The division expects to have road projects worth R7,500 core in the next five years. A start along these lines has already been made with Tata Realty recently acquiring projects worth more R2000 crore from the IVRCL Group.

We will be looking at either fully completed assets or assets close to completion to reduce any uncertainty in the portfolio, explained Sanjay Ubale, MD & CEO of Tata Realty & Infrastructure. Ubale added that while they will look to acquire existing projects, they hope to initiate at least 2-3 projects on their own. Currently, the division is working on one project under development.

Tata Realty, which recently bought out private equity partner Actis from a joint venture focussed on the road sector, says it will continue to hold 65% in the joint venture. The 35%, which was previously owned by Actis, is held by the Tata Opportunities Fund.

Along with roads, the division will also increase its focus on the airport development sector as and when opportunities arise, said Ubale. Projects under Tata Realty & Infrastructure are expected to hit R23,000 crore in the next five years.

At a time when core sectors such as power and oil & gas continue to look sluggish, the Tata Group intends to generate a fair amount of business from these sectors under its third arm Tata Projects. The division will execute an order backlog of R15,000 over the next three years and is hoping to see traction in power and oil & gas in particular.

We are starting to see some projects in power coming up now. The recent reforms could help increase the momentum, said Vinayak Deshpande, MD of Tata Projects. He added that oil and gas exploration would also see a pick-up in the coming years.