Peninsula Land Limited
136th Annual Report 2007-08
A part of the Ashok Piramal Group,
Peninsula Land Limited has been formed
with the merger of Piramal Holdings Limited
with Morarjee Realties Limited in 2005.
Peninsula Land Limited (herewith referred to
as the Company / Peninsula Land) ranks
amongst the first few real estate companies to
be listed on the Indian stock exchange (BSE:
503031). Buoyed by its unique presence across
various realty segments, the Company’s
position is further boosted by its synergistic
business extensions. These include a domestic
real estate fund and facility management
services to manage developed real estate.
Contents
01 | Business Overview & Highlights 02 | Chairperson’s Message 06 | Business Strategy 08
22 | Directors’ Report 31| Management Discussion and Analysis 37 | Corporate Governance 46
Auditors' Report 72 | Balance Sheet 76 | Profit & Loss Account 77 | Schedules to Accounts 78 | Cash Flow Statement 99
Balance Sheet Abstract 101 | Annexure to Balance Sheet 102 | Consolidated Financials 103
Corporate Information
Notice
Corporate
Information
BOARD OF DIRECTORS
Ms. Urvi A. Piramal
Mr. V. Hariharan
Group CFO
(Chairperson)
Mr. Bharat Sanghavi
Mr. Rajeev A. Piramal
CFO
REGISTERED OFFICE :
Peninsula Spenta
Mathuradas Mills Compound
Senapati Bapat Marg
Lower Parel, Mumbai 400 013
(Executive Vice Chairman)
Mr. Kausik Nath
Mr. Mahesh S. Gupta
Company Secretary
(Group Managing Director)
AUDITORS :
Mr. Rajesh Jaggi
M/s. Haribhakti & Co.
(Managing Director)
Chartered Accountants
Mr. Amitabha Ghosh
BANKERS :
Ms. Bhavna Doshi
Allahabad Bank
Mr. C. M. Hattangdi
HDFC Bank Ltd.
Mr. D. M. Popat
Yes Bank Ltd.
Mr. Deepak Summanwar
ICICI Bank Ltd.
Mr. H. M. Kothari
Mr. Jaydev Mody
Mr. Sudhindar Khanna
1
Ready for
the future
2
At Peninsula Land, we are proud of our
ability to think intelligently and dream big.
Consistently.
By our boldness to tread the path less traveled
and courageously implement unique business
strategies. Unfailingly.
By our conviction to pre-empt generationnext trends and recognise opportunities with
certainty. Unboundedly.
By our passion for exemplary performance
and our enthusiasm to be the best.
Uncompromisingly.
Resulting in unmatched experience, expertise
and credibility, helping us build a strong
foundation for success, a foundation which
was adequately reinforced by the positive
events of the past one year.
As we move into another exciting year, we
are optimistic that our collective strengths
will usher in a future that stands for
scale, growth and positive returns to all
stakeholders.
3
Steadfastly.
Ready
for
Laying the
the
future
foundation.
The
achievements
made
in
2007-08 along with our past
credentials, proven strengths and
manpower capabilities provide
an infallible foundation to build
a whole new momentum of
progress.
4
For instance, Peninsula Land:
Inked a path breaking deal for sale of office space to Alok Infrastructure for Rs. 1,075 crores.
Executed a mega Rs. 1,065 crores transaction for sale of the two buildings (of the four-building complex) at
"Peninsula Technopark”. As part of the agreement with Swan Mills, Peninsula Land is developing, executing and
marketing this four-building complex off Bandra-Kurla Complex in Mumbai.
Raised Rs. 525 crores through Qualified Institutional Placements (QIPs).
Amicably resolved and eliminated the temporary obstacle in the development of 4 mill land projects and work is on
full swing at these project sites.
Raised Rs. 160 crores domestically for Peninsula Realty Fund.
Multi-location expansion plans being implemented to de-risk development portfolio.
5
Letter from the
Chairperson
Dear Shareholders,
minimise the impact on the Company’s profitability on
account of stoppage of work, we had taken up the matter
It gives me great pleasure to present the Company’s 136th
with the Government Authorities for amicable settlement
Annual Report and share my thoughts on last year’s
and the stop work notices were withdrawn w.e.f. 2nd April,
performance as well as the future plans of the Company.
2008. Since then, work on all projects has commenced in
full swing.
For Peninsula Land, the last year was a difficult one as
6
work on all our mill land projects in Mumbai was affected
We have substantially sold most of our Mumbai projects,
for more than six months due to stop work notices received
thereby de-risking ourselves from the threat of any
from the Municipal Authorities. As a Company, we have
downward price correction and also at the same time
always complied with rules and regulations in force and
ensuring certainty of cash inflows. We now have land in
hence the notices were, in my view, unjust. However, to
the cities of Pune, Goa, Nashik, Nagpur and Hyderabad
wherein development work is expected to commence
this because the growth drivers in case of each asset
shortly and the projects will be completed over a span of
class of real estate continue to remain robust.
3 to 5 years.
Residential - driven by a growing middle class
Inspite of the issues faced by the Company, as
population with high disposable incomes and
enumerated above, we still posted a profit after tax
increasing urbanisation.
of Rs. 129.79 crores compared to Rs. 132.04 crores for the
Commercial - driven by a sustained demand from
nine months ended 31st March, 2007. In addition to this
IT / ITeS sector as well as entry / expansion of MNCs
we were successful in raising Rs.525 crores by issue of
in India.
shares through the Qualified Institutional Placement
(QIP) route. Your Company was also successful in
obtaining PR 1 and CARE A- ratings by the Credit Rating
Institution – CARE, for the Company’s short term and
long term borrowings.
Retail - largely driven by growth of organised retail,
whose presence today is minuscule compared to our
Asian peers.
Integrated Township - driven by the demand for
quality lifestyle, walk-to work concept and the
Though the last year started on a promising note,
development of commercial, retail, residential, and
towards the last quarter, the global economy has been
leisure facilities within a given area.
adversely impacted by the turmoil in financial markets in
the United States on account of the subprime crisis. This
has been further aggravated by the unprecedented
increase in the price of crude oil. The aftershocks of the
crisis in global financial markets had its impact on the
Indian economy which had a dream run for the last
several years and is now, feeling the heat in the form of
high inflation, which is threatening to slow down the
growth. However, the silver lining is that experts still
regard India as a long term success story and hope that
the Government and industry will put their act together to
come out of this unscathed.
Turning
to
real
estate,
SEZs, which would be the next growth driver for the
manufacturing and infrastructure sectors.
At Peninsula Land, our efforts will continue to leverage
our brand equity and project management skills across
the spectrum of the real estate arena.
Finally, I thank you for the continuous support given to us
and the trust reposed in us. I am confident that with the
unstinted efforts put in by our dedicated team of
employees, Peninsula Land will continue to scale
greater heights in the years to come.
which
again
witnessed
unprecedented increase in prices, the sector is now
Yours sincerely,
showing signs of correction. However, I feel these are
short term blips and real estate as a sector will continue
URVI PIRAMAL
to be a major contributor to the Indian economy. I say
Chairperson
7
Intelligently.
Ready
for
De-risking at
the
future
path-breaking
rates.
Acute shortage of quality commercial and residential space. Saturated pockets of realty. That’s the Mumbai real
estate scenario.
Though the realty market in Mumbai has reached a saturation point in some pockets, Peninsula Land remains largely
insulated as a majority of the projects are sold prior to completion of their construction. And by choosing to follow a
de-risking strategy, Peninsula Land has by and large insulated itself from the adverse impact of this market situation.
The Company has successfully sold substantial portions of its residential and commercial properties at attractive rates
to raise funds for the future and ongoing development.
Peninsula Business Park, Lower Parel (Mumbai)
During the year, Peninsula Land inked a path-breaking deal with Alok
Infrastructure, the wholly-owned subsidiary of the integrated textile
company Alok Industries, for selling approx. 0.575 million sq. ft. of
commercial space in Peninsula Business Park, Mumbai for a
consolidated amount of Rs. 1,075 crores. Peninsula Land has received
Rs. 75 crores from Alok Industries and the balance will be received in a
planned manner over the next three years. This high value, headlinegrabbing transaction was Mumbai’s second-largest land deal and the
country’s fourth largest.
This office space is part of the modern approx. 1.2 million sq. ft. IT / ITeS
complex being developed on the land where Dawn Mills thrived once
upon a time. The work at this complex comprising of two towers one of
21-floors and the other of 19-floors (in addition to a basement and 5 level
podium, 85% open area with modern infrastructure and world-class
amenities) is estimated to be completed by September 2010.
8
Peninsula Technopark, off Bandra-Kurla Complex (Mumbai)
As shareholders may be aware, Peninsula Land entered into an
agreement with Swan Mills Limited (in 2004) whereby Peninsula Land
was to have constructed, developed and marketed a four-wing
complex, "Peninsula Technopark" at Swan Mill’s land in Kurla
(Mumbai) and premium residential project Ashok Gardens at Upper
Parel. Peninsula Land shares revenue from the sales of the complex.
During FY 07-08, Peninsula Land demonstrated not only its superior
development and construction prowess but also its sharp marketing
ability by marketing two wings of the complex (0.7 million sq. ft.) to
Essar Technology Park BKC Pvt. Ltd for Rs. 1,065 crores.
Peninsula Land also successfully facilitated the signing of a leave &
license agreement with Essar Information Technology Ltd. for another
wing of 0.15 million sq. ft. in this complex for 60 months.
Peninsula Land expects to complete the development of this project by
October 2010.
Ashok Towers, Upper Parel, (Mumbai)
In the effort to de-risk our presence in the residential sector, we have
already presold 90 per cent of the apartments at the premium Ashok
Towers project. This project (of 1 million sq. ft.) located in Parel will
be ready soon.
Ashok Gardens, Upper Parel (Mumbai)
Similarly, work at the residential project at Ashok Gardens, Upper
Parel which is likely to be completed by October 2009 has also been
largely acquired by home-owners well in advance of building
completion.
9
Ready
for
Consistently.
Endorsed
by investors.
the
future
The real estate business is fret with
challenges, especially with the perpetual
problems of carrying forward ongoing
projects and ensuring a smooth flow of
funds for the future.
But by developing a high-liquidity, lowdebt model, Peninsula Land has virtually
immunised itself to this typical industry
predicament.
It’s a business model that has been strongly
endorsed by a large number of established
institutional investors.
10
It’s a business model whose growth potential has been
amply demonstrated by the fact that Peninsula Land
successfully raised Rs. 525 crores through QIP – a gain
which will provide the liquidity to fund the future
expansion plans of the Company.
11
Ready
for
Judiciously.
the
future
Synergistic
business lines.
Peninsula Realty Fund
Given the Company’s credentials and deep
roots in the industry, an entry into real estate
investment was a natural progression.
Armed with Peninsula Land’s knowledge
and expertise, the domestic Peninsula Realty
Fund was launched in 2007.
This SEBI registered fund can invest in real
estate across geographies and asset classes to
tap on the emerging real estate opportunities,
catalyzed by India's economic boom and
availability of land beyond the current local
municipal limits.
The
Company
has
successfully
raised
Rs. 160 crores and will be concentrating on
the systematic and planned deployment of
funds over the next 18 months.
12
The Fund will be independently managed through a separate Special Purpose Vehicle (SPV) created for this purpose.
The benefits that would accrue to the Company include:
AMC fees (2% of the Fund size)
A share in the profits generated by the Fund (close to 20%, if profits cross a hurdle rate)
Opportunity to generate additional revenue (5-7% of project cost) if the Fund decides to award the project to Peninsula
Land for development, which is expected to be the case for most of the projects.
The Company may also evaluate options to enter into new areas such as Real Estate Mutual Funds (REMFs), Real Estate
Investment Trusts (REITs) at appropriate times. Peninsula Land is confident that this new business vertical will add to
the growth momentum and revenue generation efforts of the Company.
Peninsula Facility Management Services
Peninsula Land is recognised not only for quality
development but also for excellence in customer
service. The advantage stems from providing
excellent service during the purchase process and
more importantly, through professional management
of these properties. Peninsula Land has set up a
professional facility management company for the
upkeep of the premises developed by it and offer
value added services. Incorporated in 2003, Peninsula
Facility Management Services Pvt. Limited is a 100%
subsidiary of Peninsula Land currently managing
nearly 2.10 million sq. ft. of real estate. Looking at the
excellent response, the Company plans to increase
its foothold in the facility management business
servicing by introducing further value-added,
premium services and extend its coverage steadily
over the next three years - across cities and more
external clients.
13
Ready
for
Boldly.
Tiding
over challenges.
the
future
The Municipal Corporation of Greater
Mumbai (MCGM) had issued ‘stop work
notices’ at four of the Company’s projects
being developed on mill land. The Company
held detailed discussions at the highest levels
with the Municipal Commissioner and State
Cabinet Secretary, seeking legal clarifications,
counsel and advice, and has maintained the
required protocol respecting the views and
status of all concerned, and has resolved the
issue amicably, enabling the authorities to
withdraw the notices and also realigned the
project plans. Consequently, the economics
of the project in terms of saleable area
remain unchanged. Work has resumed at
all project sites.
14
15
Prudently.for
Ready
Evolving a
the
future
distinctive
approach.
Peninsula Land has charted its own trajectory
to success. A trajectory that does not follow
the beaten path. A trajectory where amassing
huge reserves does not form the core of its
business model.
It is with a focused business strategy that the
Company has surged ahead.
The Company invests in land for developing
projects on the anvil in the near term over the
next 3-5 years, resulting in a lower asset cycle.
The Company further acquires land at
a low cost either through acquisition of
development rights from old industrial
land or by forging relationships to redevelop
industrial land, thereby reducing the overall
investment costs but enhancing the revenue
earned. Again, as the total project cost is
covered by part selling at the beginning of the
project, this results in a lower working capital
requirement, and together ensures a better
return on investment.
16
Peninsula Land’s 5 large ongoing projects are in
Mumbai, India’s financial capital (also ranked as the
4th most expensive office location globally). The
Company, however, has managed to keep its
costs under control, in some cases by acquiring
development rights from old textile mills, where
Peninsula Land gets a share of the revenue (such as
Swan Mills), or by outright acquisition of old textile
mills (Dawn Mills). It has been a successful strategy
which Peninsula Land is now extending to other
cities too, such as in the purchase of land at
Hyderabad from Rallis India Limited and Nagpur
through a joint-venture with local expertise.
17
Ready
for
Dynamically.
An eyefuture
to the future.
the
Expanding presence across the
realty spectrum
Peninsula Land has a diversified product
1
portfolio with presence across various real
estate segments, ranging from residential,
commercial, IT Parks to retail.
And taking its experience forward, the
Company is now expanding into Special
Economic Zones (SEZs) and integrated
townships.
Moving further ahead, it is now getting ready
to expand and tap the hotel segment in a joint
venture with other like-minded partners.
To
enhance
the
Company’s
project
management capabilities, Peninsula Land
plans to integrate backwards and tie-up
with
established
construction
services
companies to strengthen its capabilities
in civil and structural engineering.
18
2
De-risk geographically
Choosing to consolidate its presence in
Mumbai where it has carved a niche,
Peninsula Land is now expanding its
footprints in other promising geographies in
western and southern India such as Pune,
Nagpur, Nashik, Goa and Hyderabad.
Moving forward, the Company plans to
expand
into
other
growing
cities
of
Bangalore, Mysore, Chennai, Coimbatore,
Cochin and Ahmedabad.
Thus, with 15 projects under various stages
of planning and construction, Peninsula
Land is set to successfully transform itself
from a single city-real estate Company with
4 projects, into a Company with multilocation presence in a variety of real estate
segments and asset classes, ably supported
by its property maintenance services.
19
Ready for
the
future
Project
portfolio
Residential
Ongoing
Future
Ashok Gardens, Upper Parel in Mumbai
Ashok Royale, Nashik
(Premium – 6 Towers)
(Integrated Township – Row houses &
Ashok Towers, Upper Parel, Mumbai
Town houses)
(Premium – 4 Towers)
Ashok Acres, Nashik
(Integrated Township – 1 to 5 BHK)
Ashok City, Pune
(Integrated Township)
20
Commercial
Ongoing
Future
Peninsula Business Park, Upper Parel, Mumbai
Leela Pinnacle, Nagpur
(IT / ITeS complex)
(Commercial / Retail)
Peninsula Technopark, Off Bandra-Kurla Complex, Mumbai
(IT / ITeS Park)
Center Point, Parel, Mumbai (Retail)
SEZs
Future
Peninsula Tech City at Mamurdi & Gahunje,
Pune (IT SEZ - 57 + 46 acres near Hinjewadi SEZ)
(All statutory applications made)
Peninsula Technology Park, Hyderabad
(IT SEZ) (Approval process started)
Peninsula Life Centre, Sancoale, Goa
(Bio-Technology Industry)
(Notification done, GIDC approval received)
21
Research & Design by WYATT ([email protected]) Printed at G. P. Offset Pvt. Ltd. Tel: 2850 7766
Peninsula Land Limited
Peninsula Spenta
Mathuradas Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400 013.
Phone : +91 22 6615 4651-53 | Fax : +91 22 6615 4593 | Email : [email protected]
www.peninsula.co.in