Looking to exit

It is rumoured that the ministry of finance is looking into the grievance voiced by institutional investors and a clutch of private equity investors to provide an exit for them in their investments in stock exchanges. If reports are to be believed Jayant Sinha, the minister of state finance, is convinced that an IPO is the best exit mode. And he may well be able to persuade the BSE and NSE to accelerate the process for the IPO.

The way forward

Lighting major Surya Roshni Ltd (SRL) is exploring newer avenues to grow its business. Thanks to its strong network of retailers, the fan busi­ness (which was launched in January 2014) has received a good response in a relatively shorter period of time. Encouraged by the good response, the company has entered the home appliances business and will also be venturing into the business of pro­viding solar-based lighting systems for rural and urban use. Meanwhile in the lighting business, there has been a structural shift in the industry, which presents new growth oppor­tunity for the company in the LED (light emitting diodes) segment. Cit­ing the cost efficient nature of LEDs, the Electric Lamp and Components Manufacturers Association (ELCOMA) projects the share of LEDs to increase substantially, going forward. Major government initiatives, like chang­ing all street and public space lights to LEDs, are expected to fuel the growth of the sector. As a result, the lighting industry is expected to grow at a CAGR of 22.8 per cent over FY14- 17E to ?25,000 crore and reach the ?37,000 crore mark by FY21. This bodes well for the lighting compa­nies in general.

Debt reduction

The real estate sector is still in trouble with many developers stuck in debt. But K.P. Singh of the Delhi-based DLF is desperately trying to reduce debt and improve balance and is consider­ing various options to do so. Accord­ing to an insider, although Singh has not made much or rather slow prog­ress on a stake sale in the DevCo projects, DLF is now looking to partly monetise its annuity assets via a stake sale to a private equity partner or a REIT listing, whichever is faster. This is a step in the right direction, given that the promoter CCPS con­version deadline of March 2016, it is also beneficial to provide an exit via asset sales rather than through equity dilution. Given its high debt and planned capex, monetising its annu­ity assets to reduce debt remains key for the company’s growth plans.

Asset light

A listed education entity, Tree House Education & Accessories Ltd (THEAL) is all set to embark on increasing its geographic presence. In the past few years, the company has increased the number of its pre-school branches at a rapid pace, from 302 in FY12 to 647 (till July 2015) both in the self-oper­ated branches and franchisees format. At present, the company’s branches are concentrated in Maharashtra, with the region accounting for over 40 per cent of its branches. THEAL is now looking to expand the number of its pre-schools on a large scale and across different regions, with par­ticular focus on the Delhi and NCR region. The company would be add­ing over 150 pre-schools in FY16. THEAL has already expanded its day­care footprint to 190 centers. It has entered into tie-ups with large cor­porates in the IT, ITeS, banking and consulting space to provide day-care services for their employees. In addi­tion, the company has started pro­viding school management services to 24K-12 schools in three states in India. The company is now focus­sing on monetising its investments in K-12 school premises and moving towards an asset-light model while it would continue to provide educa­tional services in this segment. The company owned five setups (land & building) including one in collabora­tion with a joint venture (IV) partner; THEAL has a 50 per cent stake in the JV. Of these, the company has sold one school property for ?17crore; for another property, it has signed an MoU for sale of its land and build­ing in Vadodara for a consideration of ?52.5 crore. All this is a move towards a greater focus on expan­sion and debt reduction. The com­pany expects to be virtually debt free within two years.

Eye attraction

The new Kolkata Eye project, along the lines of the London Eye, is attracting attention even before the construction has started. Kolkata residents are looking forward to the construction by the river. The proj­ect will revitalise a whole stretch of around 2 km along the river, which will hopefully emerge as a major city centre attraction. The public will welcome this as a change from mill­ing around in malls for an evening’s entertainment.