Unitech exits New Kolkata SPV

Unitech exits New Kolkata SPV
Business Standard, June 10, 2009, Page 1

Ishita Ayan Dutt / Kolkata

Sells entire 40 per cent stake to partners, won’t say why.

Unitech, the country’s second-largest property developer, has exited from New Kolkata International Development (NKID) Pvt Ltd, a special purpose vehicle (SPV) formed to develop several large projects in West Bengal, including the proposed petroleum, chemicals and petrochemical investment region (PCPIR) at Nayachar.

Unitech had 40 per cent stake in NKID, which has been acquired by the Salim group and Universal Success. Sources said NKID was now a 50:50 partnership between these two; earlier, Salim had a 40 per cent stake and Universal had 20 per cent.

When asked why Unitech quit NKID, the former’s managing director, Ajay Chandra, said, “I have no comments on this.”

NKID is a 51 per cent partner for the Nayachar project, while the balance is with the West Bengal Industrial Development Corporation (WBIDC). PCPIR apart, NKID has a host of projects over a 15-year period, which include an Eastern Link Highway, SME industrial estates and a deepwater port close to Nayachar island.

Industry observers said one reason behind Unitech’s exit from NKID could be the long gestation period, given the nature of the projects and the huge investments. Though NKID was incorporated in early 2007, some of the projects ran into rough weather with land acquisition, the most important being the PCPIR, which was ultimately relocated from Nandigram to Nayachar.

The investment in developing infrastructure at Nayachar would be Rs 10,000 crore, while the port could cost Rs 8,500 crore. The investments proposed in NKID projects are sizeable. On the other hand, Unitech has run up debt of around Rs 7,800 crore, and plans to cut it by at least Rs 1,000 crore this fiscal. The company has sold assets over the past few months, and aimed to raise around Rs 1,600 crore for the year ending March 31, from sale of non-core assets in Delhi, Noida, Gurgaon and Kolkata. The focus for the company and all other real estate developers now is affordable housing.

Though the Nayachar investments would be made over a long period of time, smaller investments are underway. For instance, four different studies are on. Also, Singapore-based Jurong Town Corporation have been appointed as consultants. Consultants have been appointed for the deepwater port, too. Even with the offloading of stake in NKID, Unitech would have a presence in West Bengal. The company has a residential project in New Town Rajarhat and an IT park, in partnership with the Universal Success group.