Jk Corp Hiving Off Real Estate Arm

Once the newly formed company gains business volume, J K group, which already has two real estate companies will be gradually amalgamated in J K Realty, say sources close to the company.

The financial structure of the nascent company would be a combination debt and equity portions.

The equity portion would amount to over Rs 40 crore, of which Rs 20 crore would be contributed by other J K Group companies through share holdings.

The remaining Rs 20 crore would be mopped up from the capital markets through a public issue of the same amount next year.

The company is also in the process of buying land in Gurgaon to develop it into a commercial complex.

 

The total project cost would be over Rs 50 crore including the land price.

Negotiations with Industrial Finance Corporation of India (IFCI) are in its final stages for the financing of this project through institutional credit.

Once the project is in place, it would be leased out to tenants on rents. The rental income from the commercial complex would be a source of working capital for J K Realty, sources added.

Although the debt-equity ratio of the company is not known, sources feel that it could be high considering the healthy balance sheet of the company.

Besides the Gurgaon project, it would initially start off with various other projects on other parts of the country whose total investment is around Rs 80 crore.

Besides developing land owned by the industrial house, it aims to have a diversified portfolio which includes contruction and maintenance.

The company would be collaborating with foreign companies for technical expertise before taking up massive construction projects like bridges and dams.

J K Realty would also be undertaking overseas projects. Sources say that the company would have collaborations various local companies in foreign countries to enhance its operations in those countries.

The formation of the new real estate company of J K group comes close on the heels of similar operations by other companies to have independent real estate company such as Lalbhai Realty of the Sanjay Lalbhai controlled Arvind Group amongst others.