Tata to develop unused land through its two realty arms

Tata to develop unused land through its two realty arms
The Economic Times, June 15, 2009, Page 5

Sachin Dave MUMBAI

THE Tata Group is working on a plan to unlock value from unused land belonging to various group companies by developing them through its two realty subsidiaries, Tata Housing and Tata Realty.

According to two persons familiar with the situation, an internal study by the salt-to-telecom conglomerate has identified excess land parcels of 800-1,000 acres across the country on which the group’s two realty companies may develop commercial and residential property. Companies like Tata Motors, Tata Tea, Tata Steel and TCS, amongst others, have considerable land which could be developed.

Tata Housing has already initiated discussions with some group companies for this purpose, said one of the persons, adding that the process will take some time as most of the firms are listed entities which necessitates approval from the respective boards. It is learnt that some of the major group companies could announce their plans by the end of this year. Though it is difficult to put an exact price tag on this land as it is spread across the country, estimates suggest it could be anywhere between Rs 30,000 to Rs 50,000 crore. Importantly, a significant part of the total land bank is housed in prime locations across India.

Earlier on February 14, ET, had reported that Tata Housing plans to leverage its tie-up with banks and financial institutions by developing properties on surplus land owned by other Tata group companies. Now after the internal study it is believed that the total excess land bank owned by Tatas would be developed after raising capital through the private equity route in case of Tata Housing and through the $ 1 billion raised in case of Tata Realty.

A mail sent to Tata Realty did not elicit a response while Brotin Banerjee, Managing Director, Tata Housing refused to share details and merely said, "We are studying various options though it would be premature to comment." According to the plan charted out by the group, the process of developing the land could be done in three major ways. Elaborating on this, one of the officials said, "One option could be Tata Housing working with the company that owns the land. Tata Housing can also take the SPV route and then decide on the profit sharing ratio.