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With India's real estate development activity percolating to Tier 2 and 3 cities, Prozone CSC seizes the opportunity to engage in efficient real estate development with the help of an endearing business model and optimal financing.


Real estate development activity, which once mushroomed in India's large and metro cities, has today filtered down to Tier 2 and 3 cities, largely due to the significant cost arbitrage. With India witnessing sustained economic growth in the last decade and with consumerism booming, Tier 2 and 3 cities have gained the spotlight. Environmental pollution, traffic congestion, power and water shortage, are some reasons integral to the lifestyle in bigger cities and make these cities score an edge over metro cities.

Smaller towns and cities have also benefited from the trickling down of growth from bigger cities, resulting in increased demand for real estate– commercial and residential. Demand for retail space in Tier 2 and 3 cities will rise due to an expected spurt in the growth of the consuming middle class from 300 million to 500 million in the next 5 years.

Prozone Capital Shopping Centres Limited, the demerged arm of the clothing retail player Provogue, is poised to leverage on its strategy to capitalise on the rising demand in these cities. Prozone CSC is jointly developed by Provogue (India) Limited and FTSE-listed Intu Properties (formerly Capital Shopping Centres Group), based in the UK. Intu Properties has a current market capitalisation of 3.3 billion pounds and managing assets worth over 7 billion pounds.


Prozone CSC is engaged in creating, developing and managing worldclass regional shopping centres in the emerging cities across India and also associated with mixed-use development pan-India. The Company's first shopping centre in Aurangabad was launched in October 2010. It has a fully paid-up land bank of 17.8 million square feet (msf) spread over 6 cities in India in Aurangabad, Coimbatore, Indore, Nagpur, Jaipur and Mysore.

Prozone CSC is determined to create a paradigm shift in the way real estate is sold in India due to its "clearly thought out" and "well planned" business strategy in real estate development. With a focus on affordable luxury housing projects in these cities, Prozone CSC develops largescale land parcels through mixed-use development to facilitate retail investments. Under this model, 75% of the land is developed as Residential & Commercial (Build & Sell model), while the remaining 25% is developed under Build & Lease Model.

This business model proves to be advantageous since cash flows from Build & Sell portfolio facilitate the Build & Lease model, resulting in debt-free annuity assets and free cash flows for future developments. Its strategy is to develop large land parcels for mixed-use development for residential and commercial properties and for Malls. Another prudent policy it adopts it to achieve financial closure for retail projects. It intends to utilise the cash flows from residential projects to facilitate the construction of Retail Malls. However, as a prudent measure, the Company will have debt financial closures for both the retail mall projects in Nagpur and Coimbatore to avoid any cash flow mismatches.



Prozone CSC follows a residential strategy of building the entire site infrastructure and Clubhouse upfront before the launch of the project. The premium Clubhouse is spread over 5-6 acres of land parcel and offers one of the finest leisure experiences. The Clubhouse provides an entire gamut of luxurious and modern amenities such as an aroma garden, a meditation centre, therapeutic walk, tennis court, cricket pitch, multipurpose court, swimming pool, Jacuzzi, barbeque pavilion, outdoor dining plaza, jogging and cycling track, amphi-theatre and a kids play area.

The strategy helps the realty company establish itself as the strongest and the most credible player and accelerate sales of its project, resulting into better cash flows. This also provides an added comfort to the home buyer as they can visit the Clubhouse personally before actually investing money in the property. For its Nagpur property, Prozone CSC has pre-sold 315 units, almost 30% of the total asset portfolio of the property. In fact, so overwhelming has been the response to this property that Prozone has stopped accepting any bookings for now. Concurrently, Prozone has outperformed the "best real estate players" in the market.


Prozone's principle focus area is to get its projects executed on time and generate free cash flows. It has already launched three of its residential projects in Nagpur and Coimbatore, which will facilitate and support cash flow requirement for the Mall. Construction of its retail project at the Coimbatore Mall has commenced, resulting in debt-free annuity assets. With its key residential projects having been pre-launched, it has shifted its focus on execution of these high-quality retail assets, which will generate cash flows for the company.
The company is financially well capitalised with a strong balance sheet, large land bank fully paid (17.8 msf ) spread over 6 cities in Aurangabad, Coimbatore, Indore, Nagpur, Jaipur and Mysore; and a planned pipeline of projects and a strong domestic execution team. All the properties of Prozone fall in high-growth corridors within city limits. Its net debt is that of only ` 1 billion (net debt : equity of 0.2 times) with an ability to monetise the land bank over the next few years.

Prozone CSC has attracted investments from major institutional investors, notably the Triangle Fund (anchored by Old Mutual Group, South Africa) and the Lewis Trust Group (the River Island promoter's family fund) into step-down subsidiaries for three projects in Aurangabad, Coimbatore and Nagpur.