Birla Group lines up Rs 1,000 cr capex for housing projects in FY22

Birla Group subsidiary Century Group is now turning its focus onto the real estate business and has lined up Rs 1,000 crore for capex in FY22 for ongoing and future projects that also includes the super-premium Worli project. A top official of the AV Birla Group said that at this point, the capital expenditure is nine times the other two businesses. Birla Estates started as the real estate business vertical of Century Textiles in 2016. It has a large bank protecting the cost impact, which makes it more engaging considering the huge cost of property in the cities it is focusing on -- Bengaluru, Mumbai and its suburbs, Pune and Delhi-NCR. JC Laddha, Managing Director, Century Textiles, in a weekend interaction, told the media that they have set aside Rs 1,000 crore in capex for Birla Estate this financial year. Moving forward, their main focus would be on real estate, and they want to be amongst the five leading players in the next three to five years. As corresponding to this, the pulp & paper vertical, which brings up 70% of the topline, has a capex of just Rs 100 crore and that too for routine technology updates and other working capital expenditures. Adding to it he said, the paper tissue vertical also has sufficient installed capacity. Laddha said that of the Rs 2,567 crore income it earned in FY21, the pulp & paper business provided over 70% of it, textiles contributed 25% and the remaining 5% of about Rs 125 crore was contributed by realty, by way of rental income from the many Mumbai assets. Century Textiles, which dates back to the British time, was created in 1897 as a textile firm. The Birlas bought it in 1951. It has experienced three significant restructurings since 1994. By the end of the licence raj in 1991 with the liberalisation launch, it joined six verticals but now has only three. It joined the paper & pulp business in 1984 after a takeover in present-day Uttarakhand and closed the Bombay Mills in 2008. Also, the business renovation observed its cement business getting merged with group flagship Ultratech and Century Rayons going to Grasim on contract. The paper & pulp business, with an established volume of 4.9 lakh tonne per annum, will get Rs 100 crore each in Capex yearly for the next five years. On the other hand, the tissue mill doubled capacity last year and is the highest now with 72,000 metric tonnes annual capacity. Birla Estates has four plans under development now -- one is in Kalyan, one in Gurugram and the remaining two joint development projects in Bengaluru. In FY21, it made a booking for Rs 1,000 crore but it was not shown in the FY21 balance sheet because of the Rera rules that enable a developer to account for sales only after giving ownership. Of the total sales of Rs 1,000 crore, Rs 600 crore is from the Gurugram project and the remaining balance from the Kalyan project. It can be recorded into the P&L account only in FY23 when the projects would complete. Laddha said that his duty is to drive Birla Estates to be among the top five realty members over the next three-five years with an income of Rs 10,000 crore -- a lofty job given the quality of the business capacity of the binding market leaders. He said that while their focus would be on joint development wherein the partner brings in the property and all other work would be completed by them. They have about 50 acres spread over Pune, Mumbai, Kalyan, and Thane, and a small area in Delhi. The Bengaluru and Gurugram projects are joint developments. The ongoing Birla Vanya in Kalyan is on a 22-acre plot with an income capacity of Rs 1,150 crore, of which they have already sold units valued at Rs 400 crore. The profitable area here is 1.3 million sq ft on the 13 acres they are advancing in the first phase. The Gurugram project (Birla Navya) is much bigger, with an income capacity of above Rs 4,500 crore when the entire three phases are executed. The project at Sector 63A in Gurugram is being advanced together with the Anatha Raj Group, and from the first phase, they already have bookings for Rs 600 crore. Phase one has 300 units valued at Rs 1,200-1,500 crore, phase two would have 350 units, and the third phase would also have over 350 units, and the entire project would be spreading 65 acres with an income capacity of Rs 4,500 crore, he stated. Likewise, the Birla Alokya in Bengaluru is a joint development with Sudhrashan Mills owner. It will launch this year on a five-acre plot or a 6 lakh sq ft area with an income capacity of Rs 600 crore. The second project in the Whitefield space is on 8 acres or 0.55 million sq ft valued at Rs 400 crore and already have pre-bookings of 50% of the project, he said. The Worli project would be their biggest project, and they are intending to start it in December if it gets approvals by then. Image Source Also read: Century Real Estate raises Rs 175 cr for luxury housing project Also read: Kolte Patil signs two new projects in Pune