IVRCL to merge BOT arms with IVR Prime

City-based infrastructure major IVRCL Infrastructures and Projects Limited is in the process of demerging its intermediary holding companies – IVR Strategic Resources and Services Limited and IVRCL Water Infrastructures Limited – and amalgamating them with its publicly-listed real estate subsidiary IVR Prime Urban Developers.

While IVR Strategic has four build-operate-transfer (BOT) road projects under its fold, IVRCL Water holds the asset ownership of one desalination project and a sewage plant in Chennai, which together are worth around Rs 1,900 crore.

IVRCL holds 62.35 per cent in IVR Prime, while 7-8 per cent is held by foreign institutional investors and 14 per cent by the promoters. The rest is with the public. The promoters' holding in IVRCL currently stands at 9 per cent.

“We (IVR Prime) are on a sticky wicket and the ball is flying all over our heads. The purpose of the merger is to be among the top three companies in terms of networth holding with about Rs 20,000 crore assets in the next three years,” IVRCL Infra chairman and managing director E Sudhir Reddy, told mediapersons here on Friday.

Reddy said the company had appointed six big ticket consultants including Cushman & Wakefield and Enam Securities for the valuation and the reports were expected to be submitted in the next three to four weeks, after which the share swap ratio would be worked out.

IVR Prime reported a net loss of Rs 6.98 crore for the second quarter ending September 2009, as against a profit of Rs 6.91 crore for the corresponding previous quarter. Its turnover stood at Rs 34 lakh as compared with Rs 37.16 crore during the same period a year ago on account of the continuing slump in the real estate market.

The company’s scrip plummeted 4.54 per cent to end the trade at Rs 123.05 on the BSE on Friday, as against the previous close of 128.90.

“Post the merger, IVR Prime will have the asset ownership of all the BOT projects while IVRCL will remain a pure play EPC (engineering, procurement and construction) contractor having the first right of refusal,” Reddy said, adding IVR Prime, if required, would raise about Rs 1,800 crore in the first quarter of the next financial year to fund its existing or future BOT projects.

Meanwhile, IVR Prime, hit by poor realty market conditions, is putting up for sale a portion of its 3,000 acre land bank – 60 acre in Chennai, 100 in Pune, 100 in Bangalore and 30 acre in Delhi.

“It is not a fire sale and we are expecting a fairly decent amount of money from this to the tune of Rs 250 crore,” Reddy said.