Mr Kamal Khetan (Sunteck RealityLimited – Interview onIndiainfoline.com
Mr. Kamal Khetan, Chairman, Sunteck Realty Ltd is a first generationentrepreneur who founded the Sunteck Group in 2000. He has done hisEngineering in Electronics and Communication from MangaloreUniversity. Kamal Khetan has followed a diverse and dynamic pathwayto success. He gained valuable experience working in his familybusinesses of construction, finance and the service industry. Keeping inmind the global markets and the interwoven dynamics of todaysbusiness world, the group has designed world class business centers inthe hub of the commercial district at Bandra Kurla Complex andsuccessfully serviced Fortune 500MNCs and Indian Blue chipcompanies.Speaking with Anil Mascarenhas of India Infoline, Kamal Khetan says, Wewill take maximum opportunity in this lean period and provide value toour shareholders.?
By when do you see a revival in the real estate market? What are theopportunities you see amidst the slowdown?I see the market reviving in 12 to 18 months. If the market doesn’trecover by then we have reasons to worry. Else we see this slowdownmore as an opportunity. We will look for some distress sales. If anythingcomes our way we would like to grab it, of course after careful duediligence.
Brief us about your JVs.We have been very selective about our JVs and are happy with theprogress with each of them. Piramal Sunteck Realty Pvt Ltd, a jointventure with Piramal Enterprises Ltd (promoted by the Ajay PiramalGroup) focuses on high-end realty projects in the most sought afterlocations in metros and select Tier II cities in India and strategiclocations across the globe.Piramal Sunteck Realty and Omans WJ Towell (one of the oldest andleading diversified group in Oman) group have signed an agreement todevelop high-end and mixed-use properties in and around Muscat.Piramal Sunteck Realty and W.J.Towell have joined hands with BankMuscat to form a new company for development of various projects inOman.
Tell us about the private equity funding.In such a turbulent scenario, it was very encouraging to have KotakRealty converting warrants at an agreed price of Rs. 1,167 per share.Following the conversion, Kotak Realty holds 10% in Sunteck. In October‘07, Kotak Realty had agreed to pick up 10% stake for Rs 1.40bn. Theinvestment was routed through investment fund Kotak AlternateOpportunities India Fund.
You get rental income from Corporate Business Centers. How many doyou have and what is the leased area?Keeping in mind the global markets and the interwoven dynamics oftoday’s business, the group has designed corporate business centers inthe new international financial hub, Bandra-Kurla Complex and Andheri.We have two corporate business centers at Bandra Kurla Complexnamely Sunteck Centrako and Sunteck Certainty and one at Andheri (E).The total area of the business centers is appr. 90,000 sq.ft. We offerready to use office facilities which are tailor made to the client’s needsand specifically service MNCs and Fortune 500 companies.
Brief us about your other properties.Sunteck Centre (1,50,000 sq.ft.) at Vile Parle, Sunteck Grandeur(1,00,000 sq.ft.) in Andheri, a high end mixed use project of almost5,00,000 sq.ft. at Borivali, a commercial and retail project of 1.5 mn.sq.ft. at Sion, Sunteck Kanaka (1,25,000 sq.ft.) at Panjim Goa. We alsohave 2 projects in Oman. In the residential space we have theprestigious high end residential project, Signature Island (1 mn. Sq.ft.) atBandra Kurla Complex, Mumbai and a premium residential project(1,25,000 sq.ft.) at Nagpur.
How many flats have you managed to sell at Signature Island? Whatare the rates?We have already sold 21 out of the 63 apartments. Due to the ultraluxurious nature of the project amenities have been plannedaccordingly. The building will feature a lounge, coffee and miniconsumable shop, children?s play area, modern health club, spa andhealth care center, temperature controlled swimming pool, digitalsecurity systems and basement parking for residents. The amenitieswould match those of any seven-star hotel.The building has duplex apartments. Designed by architect Talati andPanthaki, this is probably the fastest construction happening in India atpresent with ~500 people working on the site 24/7. Shapoorji Pallonji isdoing the construction and they will complete it within 18-months.
What is the investment done so far in Signature Island? How much doyou expect to make out of this project?The total investment so far is Rs 2bn and we are investing another Rs4bnsoon. The approximate revenue we expect is approximately Rs15bn inthe next 24 to 30 months. We even got close to ~40,000 per sq. ft. atpeak. We are in no hurry to sell the remaining apartments. If the marketsentiment remains lower we may look at leasing out some apartmentsbut we have no reason to go in for any distress sale and lower prices.
What about your project in Sion? Is it on the backburner?We have an upcoming project in Sion, where we are evaluating variousoptions given the depressed market condition. We will decide soon andlook to create a project that will add value to our current portfolio.What are the new areas you would look at diversifying?We are into already into IT, commercial and high end residential.Fortunately, we are not into SEZ. Hotel and service apartments would bethe new areas. We will look at a good brand to manage both Hotels andservice apartments.Would you look at merging any of your subsidiaries?At a later date such options are open. These subsidiary companies aresitting on cash reserves. Either we could merge it or consider giving theamount as dividend to Sunteck Realty.What is the shareholding pattern of the company?The promoters hold 68%, Kotak has 10% and ~22% is with the public.
What is your message to shareholders?Most of our projects will take 18-36 months for completion. By the timethe projects are ready; we expect the economy and sentiment to be ona huge upswing and will look at benefiting from the same. In thismarket, we are sitting on cash. We will take maximum opportunity ofthis lean period and provide value to our shareholders.Our shareholders will be happy to know that we have managed to get aloan at a very competitive rate of 12.5%. A developer getting loans atthis rate in the current environment is remarkable. We have not utilizedthe loan. All our existing projects for the next 2-3 years are on track. Weaspire to have our projects in prime locations nationally as well asinternationally.We want to create shareholder value by focusing on quality, innovationand customer satisfaction and being one of the leading players in theindustry. We are grateful to our investors and customers for theircontinuous support they have provided all these years.