Third Quarter 2010 Summary


 

TIDMNBPC 
 
RNS Number : 0518V 
Naya Bharat Property Company PLC 
27 October 2010 
 

27 October 2010 
 
                        Naya Bharat Property Company plc 
                           Third Quarter 2010 Summary 
 
The unaudited Net Asset Value ("NAV") of the Naya Bharat Property Company plc 
(the "Company") stood at USD 0.58 per share on 24 September 2010. This 
represents an increase of 13.7% from its value on 25 June 2010. 
 
The Indian economy has recovered strongly from the downturn that followed the 
global financial crisis, with the latest estimates suggesting that GDP growth 
may exceed the government's 8.50% to 8.75% target for the current fiscal year. 
The real estate sector is now benefiting from this upswing, with the residential 
segment leading the way. Sales are up and prices are firm, though demand is 
still sensitive to price to some extent. Residential demand is being driven by 
the availability of credit, rising disposable incomes and better affordability; 
mortgage growth was 11% over the year to the second calendar quarter. The 
commercial real estate sector is also showing signs of recovery with enquiries 
and leasing gaining momentum. Office demand has started increasing in the 
Information Technology and Telecommunication Services sectors but the market 
remains in the early stages of its recovery phase. 
 
This encouraging backdrop was muted to some extent by the Reserve Bank of 
India's decision to raise interest rates as reported inflation remained above 
10%, with its benchmark reverse repo rate increasing by 125 basis points to 5.0% 
over the period under review. The market seems to be taking a positive view 
however, focusing on the underlying strength of the economy rather than any 
measures that may be necessary to control it. 
 
A number of Naya Bharat's investments made strong gains over the period. These 
included Bombay Dyeing, which rose 36% after it was reported to have sold its 
polyester plant to Reliance Industries. Although denied by the company, the 
report served to highlight the value inherent in the company. Sobha Developers' 
share price also rose strongly, up 39%, after the Bangalore-based residential 
real estate company reported an encouraging set of results for the first quarter 
of the fiscal year, showing sales by area up 170% over the year, with net profit 
increasing to a similar extent. Performance was less positive outside the 
residential segment with the infrastructure group IVRCL Infrastructures & 
Projects, for example, seeing its share price fall over the period under review. 
The company posted a 21% decline in net profit for the first quarter of its 
year, despite higher turnover. 
 
The only new addition to Naya Bharat's portfolio of investments was Sintex 
Industries, a building products group based north of Mumbai that specialises in 
innovative plastics in addition to the usual doors, windows and prefabs. It is a 
relatively aggressive company, pursuing a strong growth policy with a 
significant international presence. The holding in Godrej Properties was 
divested at a profit following a period of sustained outperformance that left 
its share price with little further upside in the manager's opinion. Amongst 
other changes, there was a significant increase in the portfolio's exposure to 
DLF, India largest real estate company, after it revealed plans to raise as much 
as INR 25 billion through the sale of non-core assets. The proceeds will be used 
to reduce debt and fund its main business. Holdings in Mahindra Lifespace 
Developers, Phoenix Mills and Unitech Corporate Parks were all pared back 
slightly. 
 
The outlook for the Indian real estate market remains encouraging as the 
recovery in the sector grows in both strength and breadth. Share prices have yet 
to reflect this prospect, having been weighed down by higher interest rates and 
other concerns with the result that discounts to net asset value have widened 
significantly. 
 
The Company's share price rose by 42% over the third quarter, with the discount 
to net asset value narrowing significantly. This followed a proposal to cancel 
the admission of the Company's securities to AIM and to wind up the Company, 
liquidate its assets and return cash to shareholders. This proposal was put to 
an extraordinary general meeting of the Company but failed to win the necessary 
majority. Some of the Company's largest shareholders have subsequently expressed 
a desire to realise their investment and the Board has announced that it is 
considering strategies which will enable those shareholders wishing to exit to 
do so. 
 
 
The Company's ten largest investments as at 30 September 2010 are given in the 
table below, together with their weight within the overall portfolio at that 
time. The Company currently holds no unlisted or pre-IPO investments. 
 
TOP HOLDINGS                                       WEIGHT 
Unitech                                                       16.7% 
DLF                                                            15.0% 
Indiabulls Real Estate                                   14.1% 
HDIL                                                           10.5% 
Unitech Corporate Parks                                 8.4% 
Bombay Dyeing                                             5.1% 
Ascendas India Trust                                      4.2% 
IVRCL                                                           4.0% 
Mahindra Lifespaces                                      3.5% 
Sintex                                                           3.3% 
 
 
Enquiries: 
 
+------------------------------------+----------------------------------+ 
| Charlemagne Capital                | 020 7518 2100                    | 
| Varda Lotan / Christopher          | marketing@charlemagnecapital.com | 
| Fitzwilliam Lay                    | www.charlemagnecapital.com       | 
|                                    |                                  | 
+------------------------------------+----------------------------------+ 
| Panmure Gordon                     | 020 7459 3600                    | 
| Hugh Morgan / Stuart Gledhill      |                                  | 
|                                    |                                  | 
+------------------------------------+----------------------------------+ 
| Smithfield Consultants             | 020 7360 4900                    | 
| John Kiely / Gemma Froggatt        |                                  | 
+------------------------------------+----------------------------------+ 
 
 
Notes to editors: 
Naya Bharat Property Company is a property company focused on investing in real 
estate companies in India. The Company seeks to take advantage of perceived 
capital market pricing anomalies by investing in established listed property 
investors/developers at substantial discounts to their net asset values. In this 
way, investors in the Company will potentially benefit from both the reduction 
in the discount to NAV and the anticipated robust performance of the physical 
property market. In addition, special situations in unlisted/pre-IPO and 
property-rich small capitalisation stocks can be sought. 
 
In February 2007 the Company raised c. USD 60 million. 
 
The Company's investment manager is Charlemagne Capital (IOM) Limited which is 
regulated by the Isle of Man Financial Supervision Commission for investment and 
corporate service provider business. The Charlemagne Group specialises in 
managing funds in public and private equity in global emerging markets. 
 
Disclaimer 
This document does not constitute an offer to sell or solicitation of an offer 
to buy shares in the Company and subscriptions for shares in the Company may 
only be made on the terms and subject to the conditions (and risk factors) 
contained in the prospectus of the Company. Potential investors should carefully 
read the prospectus to be issued by the Company which contains significant 
additional information needed to evaluate an investment in the Company. This 
document has not been approved by a competent supervisory authority and no 
supervisory authority has consented to the issue of this document. The 
information in this document is confidential and it should not be distributed or 
passed on, directly or indirectly, by the recipient to any other person without 
the prior written consent of Charlemagne Capital (UK) Limited. This document and 
shares in the Company shall not be distributed, offered or sold in any 
jurisdiction in which such distribution, offer or sale would be unlawful and 
until the requirements of such jurisdiction have been satisfied. This document 
is not intended for public use or distribution. The purchase of shares in the 
Company constitutes a high risk investment and investors may lose a substantial 
portion or even all of the money they invest in the Company. An investment in 
the Company is, therefore, suitable only for financially sophisticated investors 
who are capable of evaluating the risks and merits of such investment and who 
have sufficient resources to bear any loss that might result from such 
investment. If you are in any doubt about the contents of this document you 
should consult an independent financial adviser. Investors in the Company should 
note that: past performance should not be seen as an indication of future 
performance; investments denominated in foreign currencies result in the risk of 
loss from currency movements as well as movements in the value, price or income 
derived from the investments themselves; and there are additional risks 
associated with investments (made directly or through investment vehicles which 
invest) in emerging or developing markets. Charlemagne Capital (UK) Limited does 
not guarantee the accuracy, adequacy or completeness of any information 
contained herein and is not responsible for any omissions or for the results 
obtained from such information. The information is indicative only and is for 
background purposes and is subject to material updating, revision, amendment and 
verification. All quoted returns are illustrative. No representation or 
warranty, express or implied, is made as to the matters stated in this document 
and no liability whatsoever is accepted by Charlemagne Capital (UK) Limited or 
any other person in relation thereto. 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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