Ansal Properties & Infrastructure Ltd. will invest 20 billion rupees ($413.2 million) in the current financial year through March 31 as it seeks to capitalize on the demand for low-cost housing in India, its vice chairman and managing director said.
The investment will be the last installment of a total of 60 billion rupees earmarked last year by the company as the main investment to develop 19 integrated townships over five to seven years, Pranav Ansal told Dow Jones Newswires in a recent interview.
Ansal Properties spent 40 billion rupees of the total in the last financial year, he said.
Higher borrowing rates and property prices and fear of job losses in a slowing economy had hurt the demand for real estate in India last year. But, a series of stimulus packages - including tax cuts and incentives for affordable housing - and a reduction in loan rates by commercial banks are leading to a gradual recovery in demand this year.
Companies such as Ansal, DLF Ltd. and Unitech Ltd. are developing affordable housing properties to tap the vast number of India's middle-class buyers.
"There is a lot of demand coming into the real-estate market for housing," Mr. Ansal said.
"There is a lot of demand for the mid and the low segment, or what we call affordable housing. The bread and butter comes from this segment," he said. "In the high-end segment, there is demand, but it's very limited."
Mr. Ansal said all the 19 townships being developed by the company currently are in the affordable housing segment. Such houses generally cost 2 million rupees to 3 million rupees each.
"We have already sold 6,000 affordable homes since December last year," he said.
"When completed in five to seven years, these projects will have a total realization of 250 billion rupees," Mr. Ansal said, adding, the company is developing nearly 6,000 acres of land, covering the 19 townships, malls and industrial parks.
The company will fund the projects primarily with its current cash reserves and future cash flow, Mr. Ansal said. "Our cash flows are good enough (to fund the ongoing projects). As of now we are all right, there's no stress at all."
Mr. Ansal said the company expects its revenue to grow 15%-20% in the current financial year because of an improvement in the demand for residential properties.
The company, which last year announced a follow-on public offer to raise 11 billion rupees, has indefinitely put the plan on hold, Mr. Ansal said.
"Because of market conditions, it (the offer) didn't happen," he said. "We just raised money last month, about 2.03 billion rupees, through a preferential allotment."
Ansal Properties had 11 billion rupees of net debt as of March 31, he said, adding, the company's debt and equity are at an equal level now.
He said the company plans to diversify into new businesses such as higher-education services and hotels.
"Education is a big focus area for the group," he said. Also, "we will build eight to 10 hotels in the next few years, which we will manage ourselves."
He said the company's first hotel - being built at Ajmer, a town in the northwestern state of Rajasthan - will be operational by next year.
Ansal Properties, which has the federal government's approval to build three industrial parks, has put on hold the work on two of them.
"Two information-technology special economic zones have been put on hold. The demand from the sector is really weak as of now," Mr. Ansal added.
