Pallonji group to set up real estate fund

Construction major Shapoorji Pallonji & Co will set up a real estate fund in the next one year. The fund will focus on investments in the domestic market, according to Shapoor Mistry, chairman of Eureka Forbes, a part of the Shapoorji Pallonji group.

The 145-year-old group has around 70 million square feet of space under development. The group is also the single largest shareholder in Tata Sons, the controlling arm of diversified Tata group, with around 18 per cent stake. The fund is expected to take its interests a step further. The group may participate in projects totalling up to over $1 billion in the next few years through the fund, though Mistry declined to confirm or deny the development. He also did not comment on whether a foreign investor would participate in the fund that the group would set up.

The Shapoorji Pallonji group, according to Mistry, will also focus on newer businesses such as renewable energy. For this, the group has taken on lease 50,000 hectares of land in Ethiopia, which will be used for cultivation of a biodiesel feedstock called pongamia pinnata. "The paperwork is being processed. We will begin cultivation in the near future," said Mistry when asked to elaborate on the group's energy plans. "The biodiesel that we produce will be exported to India and Europe. But that will happen five years from now," Mistry said, adding: "We have no intention to set up wind farms, but we will look at other forms of renewable energy."

Water, which is a key pillar for the group, will receive special attention as group company Eureka Forbes looks to penetrate deeper into the domestic market as well as take its global footprint from 30 to 80 countries in the next few years.

According to Eureka Forbes's Executive Vice-Chairman, Suresh L Goklaney, the company is open to international acquisitions. "We are looking to expand our footprint in the eastern and other parts of Europe as well as the US," he said. "We are scouting for companies that have a similar product profile as ours."

In an attempt to consolidate its position in the market, Eureka Forbes has launched a water purifier for Rs 2,290 under the AquaSure umbrella. This is the first non-chemical water storage device that uses a complex maze of positive charge attractors that traps disease-causing bacteria, virus and cysts. "It also removes harmful chemicals and organic compounds," Mistry said. "It is an affordable solution within reach of all," he said.

In recent years, Eureka Forbes's solo run in the Rs 1,500 crore water purification market has been challenged by rivals such as Hindustan Unilever (HUL) and the Tata group, whose products include Pureit and Swatch, respectively. Eureka Forbes is the leader in the electrical water storage devices space with both its AquaGuard and AquaSure range of products.

On the non-electrical side, which includes chemical and non-chemical storage devices, HUL is the leader in the chemical space with Pureit, while Eureka Forbes follows in second place. The Tata group, say industry sources, is small in the chemical water storage space having made an entry recently. "It is the non-chemical space which will heat up now with the entry of Eureka Forbes," said an industry source. According to executives at Eureka Forbes, HUL may hit back with a rival product in the non-chemical space in about a year's time. "Access to technology is not easy. So let's see what they do," said a company executive.