IVR PRIME URBAN DEVELOPERS

IVR Prime Urban Developers is entering the capital market on 23^rd July 07 with a public issue of 141.50 lakh equity shares of Rs.10 each, in the band of Rs.510 to Rs.600 per share.

The land reserve of the company as on 21-06-07 is about 2479 acres being developed in 75.45 million sq. ft of saleable area, of which 72.45% is residential being 54.59 million sq. ft.,  23.98% is commercial being 18.07 million sq. ft., 2.19% is for retail being 1.65 million sq. ft. and 1.38% is for hotel and other uses. All these projects are expected to be completed by 2012 and are in the cities of Hyderabad, Vishakhapatnam, Chennai, Bangalore, Pune and Noida. Of this, 47.62 million sq. ft. of saleable area is in Chennai including mass housing, an IT Park, Hotels, Golf course and convention centre. Of this, residential is about 32.27 million sq. ft.

The total cost of land to the company is about Rs.1,126 crores of which Rs.620 crores is for Noida land having 79.51 acres of land with saleable area of 6.73 million sq. ft. This means cost of about 9% land is about 55%. So it is very important to have quality land in Tier I and Tier II cities.

Till date the company has developed about 2 million sq. ft. consisting of 17 high rise towers with 664 apartments and 125 villas. The promoters IVRCL Infrastructure and Projects Ltd. had constructed approx 15.40 million sq. ft. of residential and commercial projects. Now, development of over 75 million sq.ft. is being talked and planned.

The company has acquired rights in plot at Noida in sector 118 of 33.05 acres having 2.87 million sq. ft. of residential area for about Rs.262 crores, from IVRCL, the promoters, vide agreement dated 24^th April 2007. IVRCL got the allotment of this land from Noida authority by an allotment letter dated 18-04-2007 by paying 10% of the amount. An additional 30% of the premium is required to be deposited within 60 days from the date of issue of allotment letter, which has been paid by IVRCL but not accepted by the bank on behalf of Noida. Also, the obligation of payment of this money rests with the company, but the same has been paid by IVRCL. The whole transactions defied the terms of allotment between Noida authority, IVRCL and the company.

The company cloaked a turnover of Rs.147 crores and PAT of Rs.20.68 crores for FY 07 resulting in an EPS of Rs.4.14 for FY 07. Post issue the equity of the company would rise to Rs.64.15 crores. If we calculate the market capitalization of the company, at both the bands of issue price, the same works out to Rs.3,850 crores at the upper band of Rs.600 and Rs.3,270 crores at the lower band of Rs.510. If we compare the same with Omaxe Ltd. a company, also tapping the capital market, has saleable area of 149.82 million sq. ft. with market capitalization of Rs.5,410 crores at the upper band, which has better quality of land bank.

As at 31-03-07, the company has a debt of Rs.316 crores and current liabilities of Rs.673 crores which are largely backed by work in progress of Rs.821 crores. Nothing has been paid by the company for Noida properties. The estimated fund requirement of Rs.850 crores is totally being met from the proposed issue, of which Rs.276 crores would be utilized to repay IVRCL.The structuring of the issue has been made in this company while total finances has been provided and met by IVRCL. The sole aim is to mobilize money from the public.

Issue is definitely expensive at both the end of the price band.