Shriram Properties has always focused on the asset-light model, which has turned out to be very successful for the company, Chairman and Managing Director Murali M said in an interview to CNBC-TV18. The comments from the Shriram Group company's management come as Shriram Properties launched an IPO to raise Rs 600 crore.
The Shriram Properties CMD said the company has only one property owned by it. The real estate developer engages third-party developers to construct buildings, he said.
“We do not do land banking. We have only one piece of land in the entire portfolio. We have a portfolio of about 47 million square feet today whereas we have got just one piece of land in the entire 47 million square feet. So we are a completely asset-light model,” said Murali.
Shriram Properties specialises in areas such as product design, product marketing and market intelligence, he said.
“Customers make the bookings based on our trust. As we can see, the market has gone through a consolidation, none of the major developers do the construction by themselves, it is all outsourced. So the risk remains with us only but we engage good quality construction companies for doing the project for us,” Murli said.
The Kolkata market is working well in the affordable housing segment, he said.
“In Kolkata, we have got 314 acres of development. We have spent about Rs 350 crore in acquiring this asset and it’s a very low value on FSI for us. We expect to liquidate this asset in the next 5 years’ time and create a lot of cash flow to us,” said Murli.
Shriram Properties shares are available for bidding in a price band of Rs 113-118 in multiples of 125. The Shriram Properties IPO
will close for subscription on December 10.
The share sale is a combination of fresh issuance of equity worth Rs 250 crore, and an offer for sale (OFS) of equity worth Rs 350 crore by promoters and existing shareholders.
Shriram Properties shares are likely to be listed on stock exchanges BSE and NSE on December 20.