Real estate developer Omaxe Ltd is planning to raise Rs 600 crore in six months by diluting a 15 per cent stake in order to comply with the market regulator’s norm that all listed companies should have at least 25 per cent public shareholding by June 2013.
At present, the promoters hold a 90 per cent stake in the company. Although Omaxe has not yet identified the route through which it will offload the stake, it is expected to rope in merchant bankers soon for the same. “We may do it through a follow-on public offering, or the private equity route. It’s not decided yet,” said Rohtas Goel, chairman and managing director (CMD), Omaxe.
“Of the Rs 600 crore, we plan to use Rs 200 crore towards debt repayment and the rest towards projects development,” he added.
Of the Rs 530 crore that the company was to repay to banks in 2012-13, it has already paid Rs 270 crore. The remaining Rs 260 crore has to be paid by April 2013.
The first quarter presentation by the company reported said its gross debt fell by Rs 45 crore during the quarter to Rs 1,295 crore. By September-end, the gross debt had come down to Rs 1,200 crore, said the company. “The aim is to reduce the debt further,” said Goel.
Share price of Omaxe has hovered around Rs 157 per share on BSE over the recent months. On Friday, the scrip shed 1.23 per cent to close at Rs 164.25 on BSE, while the benchmark Sensex lost 0.63 per cent to end trade at 18,938.46 points.
Given the uncertain market conditions, the company aims at expanding the existing projects in New Chandigarh, Lucknow and Indore, rather than taking up new ones.
Omaxe reported a decline of 9.24 per cent in its consolidated net profit for the quarter ended June 30 at Rs 18.18 crore and its sales were down 16 per cent. “Sales figures vary from quarter to quarter,” Goel added.
The company’s product mix has taken a shift from commercial to residential, said the CMD. “Earlier, we were doing 75 per cent residential and 25 per cent commercial, but today it’s 90 per cent residential and 10 per cent commercial.”
However, given the opening of foreign direct investment in retail, he said, he had enough commercial land to leverage on the opportunity and a few built projects, too. Asked about foreign collaboration, Goel told Business Standard the company was in no way looking at any foreign venture or joint venture whatsoever.
A few months ago, Omaxe had settled a dispute with its Israeli joint venture partner Azorim before the Company Law Board (CLB). In 2006, Omaxe and Azorim had formed the 50:50 joint venture, Omaxe Azorim Pvt Ltd, to develop projects in Faridabad, Haryana. Azorim had alleged mismanagement in operation of the joint venture firm by Omaxe and suppression of facts by its promoters. Omaxe had said there was a deadlock in the venture due to Azorim’s non-cooperation and had requested CLB to ask the Israeli company to exit the venture.
Omaxe had also withdrawn from the Dubai market due to a near lull there, after investing $9.6 million in 2009 through a joint venture with Dubai World’s property developer Nakheel.