Arihant Superstructures' ambitious plans ahead

BSE listed Arihant Superstructures Limited (ASL) is a real estate company with a difference. ASL has been showing robust performance when the entire industry is going through a rough patch. This is due to its unique project portfolio mix. Around 95 percent of the Company’s project portfolio is in the Affordable Housing Segment, which is always in demand. Besides, ASL has the strength and ability to pick up strategically located projects and is able to turnaround the same in a short span of time.

 

In today’s volatile real estate market, ASL’s turnover has grown from Rs. 12.74 Crore in FY 2010 to Rs. 65.37 Crore in FY 2012 (unaudited). ASL’s PAT has increased from Rs. 1.31 Crore in FY 2010 to Rs. 8.39 Crore in FY 2012. Today, the return on Net Worth of the company for FY 2012 was approximately 23% compared to the industry average of less than 15%. 

 

Commenting on the growth of Arihant Superstructures Limited, Ashok Chhajer said “I am proud that today when the industry has been showing negative growth, ASL stands tall. We have presence in the luxury, mid-income and low-income category. But, our main thrust is on the affordable housing segment, which is continuously in demand. Around 95 percent of our business comes from this segment. The Group has successfully constructed and delivered 2.07 million squarefeet through 34 benchmark residential projects till date. Besides, we always look for opportunities to acquire land at low cost. The current land bank with a construction potential of 12.5 million square feet has been acquired at a very low cost and thereby de-risking the business model. We have planned huge developments for the future thereby aiming to create enormous wealth for our stakeholders”.

 

Chhajer further said, “Future plans on the real estate front for ASL revolves around the land banks, having construction potential of12.5 million square feet, which are fully paid up and these projects will be constructed over a period of six to seven years in growth centers of Mumbai MMR Region and Jodhpur, Rajasthan. The major focus area for development of the group has been in the category of flats in the range of Rs 18 Lac to Rs 70 Lac which largely falls under the affordable segment. This segment constitutes around 95 percent of the total developable area under construction planned within six to seven years.” 

 

Speaking on the future projections, Chhajer said, “Till date, revenues have been recognized from current projects which constitute only six percent of the total construction area in hand. Revenues are yet to be recognized for 94% of our project portfolio.  With more than 12.5 million square feet of the projects planned to be completed in the next seven years, our profits are expected to grow at CAGR of approximately 60 percent for the said period”. 

 

Commenting on ASL’s backward integration plan, Chhajer said “In an attempt to consolidate its market position further and as part of our backward integration plan, ASL is going in for manufacturing of fly ash Autoclaved Aerated Concrete (AAC) blocks. The process for this has already begun and our first plant for manufacture of 150000 cubic meters AAC Blocks per annum is coming up shortly at Barmer District, Rajasthan. It will take 12 months for the plant and building construction and machinery installation. Production will start from June 2013. 

 

Fly ash blocks are a replacement of red bricks which are normally used in construction of houses.  It is a highly technical product which has dual environmental benefits derived from raw material as well as finished goods. Fly ash is generated by power plants, which as per environmental regulator is to be consumed since it is hazardous material and cannot be disposed off because it pollutes air/water/soil. Consumption of fly ash for bricks replaces and reduces the consumption of top layer of mother earth which is fertile soil and air pollution due to baking of bricks in kilns.

 

“Looking at the ever growing requirement of housing, there is a continuously growing demand forConstruction raw materials. Hence the AAC Blocks industry has anassured year on year growth” Chhajer added.