This story is from June 27, 2005

Investors scan balance sheets for land

SRIKALA BHASHYAM / TNN / Jun 27, 2005, 21:44 IST

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BANGALORE: Investment analysts in India are beginning to see big treasure lying in land.

BANGALORE: Investment analysts in India are beginning to see big treasure lying in land. Research analysts have begun to look for companies, especially textile companies that are sitting pretty on huge tracts of land.
And it doesn't matter if the company in question is carrying a heavy load of debts.
"We look at companies which have assets in the form of land.They have turned attractive because most textile mills are looking at disposing off their land assets to cash in on the current real estate boom.
This is a good investment trigger as it would also improve cash flow for companies," says a Mumbai-based analyst.

A fund manager says while most textile scrips soared a year ago on the back of the outsourcing story, the current rise in textile stocks has a lot to do with real estate deals.
"After the Supreme Court ruling which allows textile companies to sell land even when they are going strong, textile companies have turned hot," says JM Financial Mutual Fund's fund manager, Sandeep Neema.
Like the Sensex, real estate prices have been on a sharp uptrend and textile companies are benefiting from it. Earlier this month, the government owned National Textiles Corporation (NTC) sold its land in the central district of Mumbai at a whopping price of Rs 7,500/sq ft. Other biggies like Bombay Dyeing too have been beneficiaries of the current real estate boom.

Investors who couldn't capitalise on this phenomenon earlier, are now chasing smaller textile companies. A number of mid-cap textile scrips like Ruby Mills, Phoenix Mills, Dawn Mills, NRC have had a smart run on the bourses on the expectation that these companies too would resort to disposal of their land assets.
In the case of many smaller companies, the land deals are being pursued more for retiring high cost debts rather than for expansion of capacities.

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