Hindustan Construction Company (HCC), a leading construction house, will transfer its real estate, infrastructure and investment businesses into separate fully-owned subsidiaries in an attempt to provide these high-growth businesses with a distinct focus and identity.
HCC officials said two subsidiaries, HCC Real Estate and HCC Infrastructure, have already been formed and the third, HCC Capital, is in the process. HCC will focus on large-scale construction and engineering projects.
HCC chairman and MD Ajit Gulabchand said that they currently have presence in many infrastructure segments. He added, “We feel the restructuring will help us focus on the untapped segments”. For the past few years, HCC has been witnessing a strong growth in all segments it operates.
Mr. Gulabchand said that the number of projects being executed has increased manifold. However, most of our growth has come from the construction sector and opportunities in the engineering, real estate and other infrastructure segments are yet to be fully explored.
On Wednesday, HCC shares rose 2.7% to Rs 132.50 on BSE. The three companies will have separate CEOs and will bid for projects in their respective areas. They will also raise money and form joint ventures on their own.
HCC Infrastructure will focus on build-own-operate and transfer (BOOT) project opportunities in roads, hydropower, airports and ports. HCC is now the single-largest contractor of the National Highways Authority of India. It constructed more than 490 km of road in 2007/08 over 500 km in 2006/07. Besides, HCC Infrastructure will also bid for large projects in airports and hydro power.
HCC Real Estate will execute projects in real estate. However, HCC’s flagship real estate project, Lavasa near Mumbai, will continue to be a separate entity. A CLSA report released last week said the country’s infrastructure development is set to accelerate, backed by greater private sector participation and improved finances of government and public sector enterprises.
HCC Real Estate would build commercial centres, service apartments and hotels. HCC is currently developing an IT park called ‘247 Park’, a 1.9 million square feet project, and two slum rehabilitation schemes in Mumbai. It has plans to develop townships in Mumbai, Nasik and Nagpur.
HCC is also planning to own and finance select infrastructure projects in the future. HCC would route its investments in infrastructure projects through HCC Capital.
While continuing its operations in the construction space, HCC would mainly focus on building engineering, procurement and construction (EPC) capabilities, besides acquiring, executing EPC projects. It also has plans to enter the winery business and has acquired 400 acres of land in Nasik. For the fiscal ended March 31, HCC’s turnover crossed Rs 3,000 crore while its net profit touched Rs 108 crore.