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Monday, 23 May 2011 |
Sensing that foreign direct investment (FDI) in multi-brand
retail is going to be inevitable, fashion major Provogue is already in talks with international brands. FDI would ease capital inflow into Indian retail feels Nikhil Chaturvedi, MD, Provogue. Meanwhile, Provogue has forayed into real estate and is launching three residential colonies -- in Indore, Coimbatore and Nagpur -- this year. The company has also started sales at its commercial office blocks at Aurangabad and the response has been very positive. So it expects a huge amount of income from real estate the coming year.
It may be noted that Prozone, a subsidiary of Provogue India, is in the business of mall development. Provogue undertakes real estate development through Prozone (a 75 per cent subsidiary), a joint venture with UK-based Capital Shopping Centres Group, to unlock value in its land bank. Provogue's foray into construction and running shopping malls came about with the opening of its first mall in Aurangabad in October 2010. This mall has a multiplex which will open in June or July 2011. The Group expects this to further enhance foot falls. The construction business, carried out through a joint venture, is supported by investments from private equity players.
Provogue sees its real estate business as a platform for FDI. It gets a minimum wage rental and a percentage of revenue. Provogue’s total debt ballooned from Rs 60 crores in FY ’07 to Rs 396 crores in FY ’10, though debt-equity was kept in check by raising equity through preferential issues and warrant conversions. And with its first mall now operational, net profit growth is expected to improve in FY ’12. Provogue owns two manufacturing facilities, with an annual capacity of over one million pieces per annum. While the entire requirement is not met through in-house manufacturing, such backward integration does help better operating margins. |
