Dr Anoop Kumar Mittal, CMD of state-run construction behemoth National Buildings Construction Corporation Limited (NBCC), is highly excited about his company’s upcoming e-commerce foray. Stressing on the major difference between the NBCC’s proposed realty portal with the existing ones, he told Realty & More Editor Palash Roy in an exclusive interview that since it will have the credibility of NBCC’s association, buyers will be assured of the project’s delivery. Besides dwelling on the Kidwai Nagar redevelopment project, the man at the helm of the Government-run Navratna enterprise since April I, 20 I 3, talks about a whole range of activities the NBCC is involved in.
What is your roadmap and what’s the target that you have set for 2015-16?
We have two targets- one, we have agreed with DPE (Department of Public Enterprises) wherein we have signed an agreement or MoU as per which, for excellent rating we have to achieve f4,BOO top line or turn over. But internally I have set a target of Rs 6,000 crore. I am quite sure that minimum Rs 5,500-cr turn over we will achieve.
How much of it has already been achieved?
I think we have already achieved Rs 2,500 crore
Which are the smaller, non-metro towns where you are operational right now, and where all do you plan to expand in your real estate vertical?
In real estate business, I can say that except in Kolkata and Delhi, we are operating in 25-30 projects, all in non-metro towns, like Ghaziabad, Faridabad, Lucknow, Surat, Kochi, Patna, Alwar, Jaipur, Raipurand Meerut, etc.
Which are the Tier-II cities where you see more potential?
It is very difficult to say that this particular town has maximum potential. It varies. Bigger non metros are obviously having more potential. But by way of generalising, we can say that East has comparatively less buying capacity, in South people are more conservative and in North people are aggressive in property buying.
What all redevelopment projects are currently on?
Currently Kidwai Nagar project in Delhi is the largest undergoing redevelopment project. In pipeline are the redevelopment project of All India Institute of Medical Sciences (AIIMS) and then the Indian Institute of Public Administration (IIPA), Delhi. Then, three-four projects for Waqf Board, Bengaluru and Jodhpur. Then immediately one project with Rajasthan Government under our 50:50 joint venture company with the state Government. Then, one or two projects in Bhubaneswar also.
Can you tell more about the AIIMS redevelopment project?
Apart from the main AIIMS building, they have four-five more complexes – they have residential complexes, trauma centre, Ayurvigyan Nagar. Of these we are redeveloping two pockets – one is Ayurvigyan Nagar, another is west campus of AIIMS, which is just opposite the main AIIMS campus. So these are two land parcels, where we will develop residential colony, and for revenue generation, we’ll develop some commercial complexes also.
How much area of redevelopment will these two amount to?
Both these are 30-40 acres each. So, the redevelopment will be of about that much area.
How are you preparing yourself to garner maximum revenue out of the Government’s Smart City thrust?
There are two-three components in Smart Cities where NBCC is already present. The main is infrastructure development – road, drainage, sewage, etc. We are already in such works. But the crucial thing is that to develop smart cities, all city governments and municipal corporations need money. They are thinking the money will come from FOI, which is not the only solution. Since we are in redevelopment business, we are suggesting that you redevelop your properties, so that you can generate revenue from that. Since NBCC has experience, I can say that it is the only one which can do this. So, these are the reasons for which I am saying that we will gain maximum from smart cities.
Have you made any estimates as to how much additional revenue will you generate from the Smart City project?
No, we have not! We are waiting for the finalisation of the first phase of the Smart City project. After the Government declares this, we will see how much the estimated cost of each city is. Then only we can estimate the revenue that will come.
Have you any plans for technological collaboration with any global or Indian company?
As far as the technology transformation or support is concerned, we have already set up an R&D centre in Greater Noida in association with liT Roorkee. Both of us are running that centre.
What sort of R&D work is being done there?
We are doing research on faster construction technology. Research is undergoing on various aspects related to construction, for example cement, sand and their alternatives. Also, on how construction cost can be reduced. So research with liT Roorkee is on all these aspects. Apart from this, we have associations with certain foreign companies also, like few companies from Malaysia and Korea.
Association with foreign companies for what?
Technology transformation, particularly for smart cities. Then we have an MoU with IBM also for providing smart city solutions.
What is the contribution of the real estate business to the total revenue of NBCC?
Presently it is about 15 per cent.
Do you expect it to go up further?
No, not in a big way really, because the market is not that exciting. Maybe, 2 to 3 per cent or more! But we are focussing more on redevelopment projects.
What is rate of revenue growth you expect in real estate business?
See, we have not worked out the growth projections for real estate business, because the strategy will depend upon how the market is behaving. For other verticals we have some corporate plans, but not for real estate.
Apart from Gurgaon residential project. do you have plans to come up with any residential project in NCR?
We are already doing projects in Loni, and we have more land parcels there. Depending on the response, we can come up with more.
When are the Ghaziabad and Faridabad projects expected?
One project likely in this financial year, and the other one in the next fiscal. These are mixed land use projects.
Which one of the two will come first?
Not decided yet. It all, again, depends upon the market behaviour.
What is the update on the Karkardooma and Sanjay Lake projects with DDA?
Both the projects are in design stage, and both are huge projects. Our estimate is that it will take at least six months’ time to finalise the design. We are inviting competition for one project in the month of December, where an international jury will judge the design. After that, the design will be finalised and work will start. Both these projects will be showcase projects.
What is your total land bank and where is the biggest parcel?
The total land bank is of about 180 acres.. The largest chunk of this, if you talk about a single location, is in Loni, NCR.
Is this entire land bank earmarked for real estate business?
Yes, this is only for real estate business.
Are you going to be benefitted by the land pooling policy?
You see, the land pooling policy is for the land owners, and there are maximum private landowners. Strategically, we are not touching private land in our real estate business. So we are not looking at the land pooling policy as NBCC’s business opportunity. We are more into Government land.
What is the update on your e-commerce foray? Can you give more details on the proposed venture?
You have to wait. It is something very exciting we are working on. Give me some more time to unveil more. If worked out, it will be something beyond your imagination.
Do you think people will do high value transaction on home?
It’s not online purchase. It is a portal where properties will be listed. The difference between such existing portals and ours will be it will have certified projects, and will have credibility of NBCC’s association. So a buyer will be assured that since property is certified by NBCC and listed
on its portal, so it shall be delivered.
What will be the revenue model of this business?
We will take some charges from both developers as well as buyers. But we are working on all these, in which scale and manner we shall proceed, all the pros and cons are being looked into.
The Government has recently relaxed FDI norms for many sectors, including construction. What impact do you think it will have on the sector?
As far as NBCC is concerned, we don’t need money and so we are not concerned. For small developers this is very good step as the ceiling is removed, the exit policy is now easy. So definitely this will have a positive impact on the sector.
In which segment do you see more potential – affordable, mid-segment or luxury?
Affordable, the most, and then the mid-segment, not luxury segment. This is because luxury is for a certain class, but the demand will be from the masses.
Do you have any housing plans for Mumbai or MMR?
No. It is very difficult to enter into the Mumbai real estate market. One of the reasons for this is the high rates. NBCC being a public sector company, our target is buyers for affordable or mid-segment houses.
NBCC has grown hugely in the past few years. What steps are you taking to ensure good governance?
Our major focus is on transparency. We are the first one to start e-tendering, e-payment. Everything is now being done electronically. Almost every month we are doing workshops on how we can bring in more transparency. We are also starting a portal to address the grievances of our vendors, associates and contractors, etc. With all these we are progressing towards no-grievance, no complaint and zero-corruption. This is a major focus now on my agenda. We are also the first one to abolish interview systems in jobs.
Lastly, given a choice, where would you invest-in NBCC flat or in NBCC shares?
(with a big laugh) I cannot invest in NBCC shares.
But what would you suggest?
Even I would like to know the answer. You tell me..
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