Page 38 - Kolte Patil AR 2019-20
P. 38

#6 Greater ownership

                          We increased our

                          economic interest in the

                          landmark Life Republic


                          In the business of real estate, a cash-light approach by
                          construction companies is achieved through the divestment of
                          project ownership in favour of external companies. During the
                          year under review, Kolte-Patil reversed this industry approach
                          through the buyout of equity ownership by external holders in
                          Life Republic, its landmark project, sending out an unmistakable
                          signal of commitment, prospects and profitability

                      Overview                              India Advantage Fund-III (IAF-III) and India
                      During the year under review, Kolte-Patil   Advantage Fund-IV (IAF-IV) managed by ICICI
                      completed the ownership of 95% all economic   Venture Funds Management Company Limited
                      interest in Life Republic to enhance ownership   (ICICI Venture) in the flagship Life Republic
                      and profits from property development and   township project.
                      shareholder value.                    The buy-out consideration was of C210 Crore
                      This buyout sends out signals: that KPDL is   to be paid in three tranches of C70 Crore each.
                      optimistic of development prospects, believes   Two tranches have already been paid largely
                      that the property has acquired critical maturity   through internal accruals. The third tranche
                      for accelerated development, returns could   shall be paid in FY21. Besides, 12 acres of land
                      far exceed returns from treasury operations   in Life Republic, with FSI required to achieve
                      (assuming that the Company’s financial   the saleable area equivalent to 1.4 million
                      resources were retained in cash) and there is   square feet, will be allocated to IAF III and
                      attractive revenue visibility from this project.   IAF IV (managed by ICICI Venture) upon the
                                                            project obtaining an FSI of 1.0 (present 0.5).
                      Fine print                            In a decisive post-Balance Sheet development
                      KPDL entered into a share purchase    (April, 2020), the Company undertook strategic
                      agreement to buy-out the 50% stake held by

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