The Rs. 500-crore Ambattur Clothing Ltd. (ACL) is making a `serious diversification’ attempt that will see it set up hotels, large residential housing projects and IT (information technology) parks.

A definite re-entry into branded garments two years hence is also a part of this diversification exercise.

The closely held company was founded by Vijay Mahtaney, one of the men who launched the ColorPlus brand and introduced smart casuals to corporate India in the mid-Nineties.

In an interaction with The Hindu recently at his office in the Ambattur industrial estate, Mr. Mahtaney, who is currently the Managing Director of ACL, said the foray into real estate “is a serious diversification, which we are treading cautiously.”

The ACL Group had invested close to Rs. 150 crore over the last five years in creating a sizable land bank across several cities in the country. “These are fully funded, and not leveraged,” he pointed out. The group, he said, had already commenced work on a high-end 220-room hotel, coming up in a prime location in Chennai.

The group had penned a management contract agreement with a large American hotel chain, Mr. Mahtaney said. The group was also setting up a 220 to 250-room hotel in Coimbatore. Both projects would go operational in two years, he added.

The group’s entry into IT Park, he said, was trigged by the decision of the management to unlock the value of the land that ACL had at Ambattur. The IT Park — christened Ambit — would come up on a five-and-a-half acre plot opposite ACL’s existing facility.

It would have a built-up space of 1.2 million sq. ft. The hotels and IT Park would together entail an investment of Rs. 400 crore. About 70 per cent of this would be funded through internal resources, Mr. Mahtaney said.

The group’s foray into residential projects would begin with a 110-apartment complex at Perungudi, off the IT highway on the outskirts of Chennai. This mid-market apartment complex, Mr. Mahtaney said, would come up in 18-20 months. This would be jointly developed with a local partner, he added. He also indicated that the group’s real estate projects and land bank would be spun off into a separate company, Ambattur Developers Pvt. Ltd., with its own management team.

ACL would also have a subsidiary, which would handle the hospitality part of the diversification.

Mr. Mahtaney indicated that the hotel subsidiary could go public once the projects were up and running a few years down the line. However, the flagship company, ACL, would not see any equity dilution, Mr. Mahtaney asserted. Source: TheHindu