Prajay charts Rs 500-crore plan

Hyderabad-based realtor Prajay Engineers Syndicate Limited is planning to get into the hospitality business in a big way.

By the end of 2008-09, the company plans to operate at least 500 three-star and five-star hotel rooms under its banner in Hyderabad and Bangalore. For this, it has outlined an investment of up to Rs 500 crore (Rs 5 billion).

"At present, there is a boom in the hospitality business. According to the market trends, the boom is slated to last for quite a few more years from now. We are, therefore, betting big on this business," Ravinder Reddy, director (operations), Prajay Engineers Syndicate Limited, told Business Standard.

Reddy said that PESL got approvals to set up a 60-room three-star hotel on its club premises at Shamirpet. The three-star hotel would later be developed into a five-star one with 120 rooms.

The work on the hotel is slated to start in the second week of July and is likely to be completed within 15 months after that. The company would be investing between Rs 10 crore (Rs 150 million) and Rs 18 crore (Rs 180 million) for the said purpose.

PESL has Celebrity Club (recreation centre) besides a number of commercial complexes, independent houses and housing colonies to its credit.

"We are also in the process of finalising land at Shamshabad and Hitech City to set up either three-star or five-star hotels. This apart, we are also scouting for lands in Banjara Hills and Bangalore for the same purpose," Reddy said.

PESL is also bidding for a four-acre property of the Andhra Pradesh Tourism Development Corporation at Shilparamam to set up a five-star hotel.

"APTDC has also invited for expressions of interest for a property at Durgam Cheruvu to develop a three-star hotel. We have also bid for this property," he added.

The company, according to Reddy, may even tie-up with an existing hotel chain to manage its hotels. For all this, PESL would require a minimum amount of Rs 350 crore (Rs 3.5 billion). As the costs escalate in future, the company expects its investment to go up to even Rs 500 crore (Rs 5 billion).

Although a part of the investment for this mega plan would be raised through internal accruals, Reddy said that they may have to source some funds from banks also. "We may also go for an initial public offering in 2006," he added.

The company is also setting up a 180-hole PGA class golf course in an extent of 130 acres on the outskirts of Hyderabad. The land has been taken on a BOT basis from APTDC for a period of 33 years. The ground-breaking ceremony is expected to be done in August this year and the golf course is expected to be operational in 18 months from then.

"Adjacent to this land, we have 80 acres of land of our own where we will be developing high-end golf-view villas and condominiums," Reddy said. The entire investment for this purpose is estimated to be around Rs 180 crore (Rs 1.8 billion).