Interviews

Exclusive Interview of Dr Anoop Kumar Mittal, CMD, NBCC

Set up under the Ministry of Urban Development, the National Buildings Construction Corporation (NBCC) has come a long way since its formation in 1960. Its operations in the real estate vertical relates to buying land from private and government agencies, developing the land and selling it off, besides its well-acknowledged expertise in the redevelopment of government colonies. NBCC’s chairman-cum-managing director (CMD) Dr Anoop Kumar Mittal spoke to Realty and More’s editor Palash Roy of his company’s aims this financial as well as other key aspects, what stands out is a plan with the purpose for a bigger role.

PR : What is the roadmap for 2014-15 and what are the targets set?

AM : For Financial Year 2014-15, we have signed an MoU with the government targeting at a Rs.4,200 crore turnover with a profit in the range of 7 per cent. And we will definitely cross this target.

PR : Apart from the metros which cities are you planning a foray in the coming fiscal for your realestate business ?

AM : Apart from the metro cities, we are doing some projects in Tier 2 cities. Our projects are currently on in cities such as Alwar, Patna, Kochi, Khekra Baghpat, Jaipur, etc. So not just in the metros, we are present in many other cities.

PR : Are there any plans to expand to more such smaller cities?

AM : Yes, there are, but our plan is to focus more on tier 2 cities. Of course, Delhi will remain our focus region as we are present there and the real estate market in Delhi is very exciting. But after that we are focusing on Tier 2 cities. We also have ongoing projects in Lucknow, Bhubaneshwar and Faridabad etc. So we are focusing on state capitals and then the Tier 2cities. In the days to come we will explore more such cities such as Raipur , Ranchi, Dehradun, Pune, Nagpur , Surat, Rajkot and similar kind of smaller cities .

PR : Among Tier 2cities, which are the ones with more potential?

AM : It is very difficult to say. For example, Ahmedabad is already having an oversupply issue while Raipur has more potential but may be nearing saturation . But definitely a city like Bhopal is having more potential than Indore, which is already developed. Then there is Surat or Rajkot, which I think has more potential . In Uttar Pradesh, Ghaziabad and other NCR areas are already developed, but if you go towards Aligarh or Moradabad or Bareilly , there is definitely much more potential .

PR : What are the redevelopment plans in the pipeline in Delhi?

AM : We are doing redevelopment work in Kidwai Nagar which is a huge project. Then, three more government colonies are in the pipeline for which engineering work is in progress. The cabinet note is also in process for areas like Netaji Nagar , Kasturba Nagar and Tyagraj Nagar.

PR : When is the Kidwai Nagar redevelopment project slated for completion and what is the Cost of the project ?

AM : The Kidwai Nagar redevelopment project is slated for completion by 2018-19 while the cost of the project is about Rs 5,000 crore.

PR : How many housing units would be available post completion of the Kidwai Nagar redevelopment project and what would be the available area ?

AM : There would be in all about 4,700 housing units which in terms of area would be more than 70 lak square feet plus 1 .5 million square feet of office area .

PM : What would be the procedure of selling or leasing these spaces?

AM : This is the redevelopment of a government colony .The model is that NBCC will lease out the entire office complex and 10 per cent of the housing units, which means about 450 houses, to the government, PSUs and autonomous bodies for a period of 30 years . The revenue generated out of this will be employed for the construction of the entire complex. So this model is not for the general public .

PM : When do you expect to start work on the three other proposed redevelopment projects in Delhi?

AM : I expect to get government approval for these in the third quarter of this financial year while work will start in the next financial year.

• Delhi will remain our focus region as we are present there and the real estate market in Delhi is very existing. But after that we are focusing on Tier 2 cities.
• In the days to come we will explore more such cities such as Raipur, Ranchi, Dehradun, Pune, Nagpur, Surat, Rajkot and similar kind of smaller cities.

PM : How much time it will take for completion of the projects?

AM : In another four to five years from the start of the work. As these are redevelopment projects, first we have to get them vacated, then demolition work, followed by lots of approvals, and then only construction work will start. All this will take four to five years.

PM : How much additional residential space would be available post completion of these redevelopment projects ?

AM : The additional residential space post completion of all these three projects would result in more than 3,000 housing unit .

PM : Any other redevelopment plans?

AM : We are redeveloping government presses. The Government of India has about 18 presses – in Delhi, Kolkata, Nasik, Coimbatore, etc. The Government has now given the mandate to redevelop them all. We are redeveloping the presses on the same model as that of Kidwai Nagar. These are all very old presses. The cabinet note for this has already been sent.

PM : What are your global plans?

AM : We are already doing a few projects outside Indian Maldives, in Turkey, and also in Africa. We are also doing housing outside India. In Turkey, we have done 4,000 units in 8 months time. We are also Planning to open an office in the Gulf- maybe in Dubai or in Oman and another one in Africa. But Primarily they would be for infrastructure and housing and other building projects. For real estate, we have not thought in terms of going abroad right now. We will see the market conditions and then take a call.

PM : Do you plan any technical collaboration with any international company?

AM : Yes, we are in talks with a project management company of the US. I can’t name the company now. Also we are in talks with a Malaysian company. These will be collaborations for technical expertise, Project management etc.

PM : What is the contribution of the real estate business in the total revenues of NBCC?

AM : Presently it contributes about 10-15 per cent. Our target is to raise the real estate business in the range of 25-35 per cent within the next two to three years.

PM : In absolute terms how much does this translate into?

AM : In absolute terms now it is about Rs 500 to 600 crore, may be little more, and in next two to three years we are targeting more than Rs 1, 500 crore .

PM : What is the rate of revenue growth you expect for NBCC?

AM : The total revenue growth target CAGR for NBCC would be 12- 15 per cent .

PM : How much funds have you earmarked for the real estate business?

AM : There is no such budgeting that we do. But in general, the practice is to invest the profit earned from the real estate business into the real estate division. So in a way it is a separate unofficial company. Also, some part of the profits earned from other businesses is also invested in real estate. All these depend on the opportun ities we get, but there is no bar or limitations, so we can spend even more.

PM : Apart from your ongoing Gurgaon project, what are your plans for NCR? Do you plan to come out with new residential projects in NCR?

AM : We are doing one project in Bag hpat, in Loni just next to Shahadara, then we are planning to do some work in Ghitorni where we have a piece of land. We are in discussions with the Delhi government as they also have a stake in that property. That will be a huge project as we have about 40 acres of land in the main Ghitorni village, Mehrauli road. Recently we have completed one office project in Okhla which we have started selling. Tal king again of NCR, we are starting one project in Faridabad, another housing-cum-office complex in Ghaziabad. We a lso have three land parcels in Alwar where we are already doing some work.

PM : When are these projects in Ghaziabad and Faridabad expected ?

AM : Both the projects are expected anytime in the second quarter of this financial year. All t would be available for the general public.

PM : What is your take on the land pooling policy? Will you be benefitted by that ?

AM : In general I don’t think it would be of much help to NBCC as this is meant more for private landowners. But in case DDA wants to give some land parcels to N BCC then something might be worked out. But not otherwise, as these days we a re not buying a ny land, not as a rule but we a re generally avoiding it.

PM : And why is that so?

AM : Due to the high cost of land, acquisition related issues, litigations, unstable market conditions. Also, there are always possibilities of allegations and litigations after purchasing private properties. So we a re generally avoiding land purchases.

PM : But you can tie up with DDA, where in DDA pools in land and you develop?

AM : We a re already in discussions with DDA on this matter. Though the road map has not been fi nalised, the issue has been discussed with DDA. This is a possibility and it is in the pipeline.

PM : Whenever land pooling comes into effect, did you think it has a substantial effect on the prices?

AM : Yes. The prices will come down.

PM : What is your land bank at the moment?

AM : We a re having a land bank of a bout 170 acres in about 251 ocations pan-India of which 80 percent is under use.

PM : Compared to the financial year just gone by, how do you think the current financial year will be like for the real estate sector in general?

AM : I think 2014-15 would be good for the real estate sector as well as for the economy too. Starting from the third quarter of the financial year, things will be better.

PM : What is your outlook on interest rates for this financial year?

AM : I think rates will come down in the near future, which would have a positive impact on the real estate sector.

PM : In which segment do you see more potential affordable, mid-segment or luxury?

AM : Equally for all three. If you go to Tier 2 cities, then affordable housing or real estate housing is the most lucrative business. If you are in Delhi, or around Del hi, then definitely luxury housing segment has got good potential, but that is not the case in other metro cities such as Kolkata. In Mumbai it is completely different. if it is south Mumbai, then luxury is in demand, if you go to Kandivali or New Mumbai side, then it is the affordable or the mid-segment which is in demand.

PM : Since you are talking about Mumbai, do you have any housing plans for Maharashtra in general and Mumbai in particular?

AM : No, because historically Mumbai has always been dominated by private players in real estate. Del hi NCR is comparatively very new. Not only land is very costly in Mumbai, the rules are also very different there, which keep on changing . So immediately we don’t have business plans for Mumbai.