India's Raymond Ltd is venturing into real estate business to monetise its land bank, the textile and branded apparel company said on Wednesday, at a time when the sector is reeling from rising debt and funding crunch.
Several project failures have made banks cautious on lending to developers, leading to a slump in a property market that relies heavily on borrowing for both homebuilding and buying.
However, a tax cut by Prime Minister Narendra Modi's government should boost home sales, but by itself might not be enough to put cash-strapped developers on solid ground, industry executives have said.
Raymond's new real estate venture dubbed 'Raymond Realty' will build 3,000 two-bedroom housing units across 14 acres of land at Thane in Maharashtra, in the first phase of the project over five years.
The company will invest up to Rs 250 crore ($36.54 million) in the project until the 2020 financial year, majority of which has already been used up for planning and regulatory approvals, Raymond said.
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