Rohtas Goel, Chairman and Managing Director, Omaxe Ltd
The brand is the essence of multidimensional expertise, especially considering its forte in contracting and real estate. With its keen and unwavering focus on customer satisfaction, Omaxe has garnered the reputation of being one of India’s leading real-estate developers today. Despite exponential growth and success, however, Rohtas Goel, Chairman and Managing Director, Omaxe Ltd, remains modest about the company’s achievements. Excerpts from an interview with CW...
Shed some light on the company’s journey since inception.The company was originally set up as Omaxe Builders Pvt Ltd in 1989 and executed construction contracts for a number of prestigious Indian private sector, public sector and multinational clients. It changed its constitution to a limited company in 1999 and entered the real-estate development business in 2001, rechristening itself as Omaxe Ltd. Today, the company has delivered more than 47 million sq ft since inception; 30 million sq ft as construction projects and 17.82 million sq ft as real-estate developments.
Tell us about your diversified project basket.The company is currently working on 52 real-estate projects: 21 integrated townships including a hi-tech township, 20 group housing projects, nine shopping malls and commercial complexes, and two hotel projects. Besides, Omaxe also has a diversified portfolio of infrastructure and construction contracting businesses with a book value of about Rs 1,251 crore. In this vertical, there are 11 ongoing projects that include EPC contracts, roads and bridge construction. The company posted a net revenue of Rs 1,014.7 crore and net profit of Rs 112.5 crore (on a consolidated basis) in FY2009-10.
You construct largely in Northern India. Do you plan to diversify geographically?Real estate is largely speaking region-specific and our main strength lies in understanding the dynamics of the northern belt. However, we have a presence in 11 states throughout the country including Madhya Pradesh, Andhra Pradesh and Orissa as well, but largely for construction projects. Peripheral locations in North India offer high investment avenues. As the Indian realty market is getting organised, northern corridors are emerging as strong investment destinations. Places such as Ludhiana, Patiala, Ambala, Mullanpur, Rohtak, Palwal, Sonepat and Baddi are blessed with sustainability, real-estate growth momentum and a favourable economic environment. We are focused on our existing projects and would prefer expanding in tried and tested markets.
When do you expect the realty industry to reach its peak?Indian real estate is still in the initial stage of the business cycle. According to a Planning Commission report, there is still a gap of more than 26 million dwelling units in the country and 90 per cent of demand falls in the affordable housing category. It will be a long-term game and the business shall be perceived as any other manufacturing business where the play will be more of volume than value.
You seem to be venturing heavily into infrastructure with the construction of roads and bridges. We recently forayed into highway and bridge construction by bagging a contract from Greater Mohali Area Development Authority (GMADA) to construct highways and three high-level bridges in Punjab. The project will be executed by our subsidiary Omaxe Infrastructure & Construction Ltd (OICL). The total value of the infrastructure and contracting projects including the recent contract is more than Rs 1,200 crore.
What is the secret behind the company’s jump in net profit in the second quarter? We have reported net sales of Rs 354 crore for the quarter ended September 30, 2010, compared to Rs 224 crore in the corresponding period of the last fiscal year and registered a growth of 58 per cent. This can be attributed to the strong economic growth and positive macroeconomic signs.
How much is your current land bank? Are you trying to acquire more land?Our land bank is about 4,500 acre. As a strategic decision, we are looking at JVs at the land level for our various hi-tech township projects to minimise the cash outflow and expedite the execution of such huge projects. Land buying at other places will be done in tandem with the company’s expansion plans with addition of land largely in those places where we have existing projects.
How do you see the real estate industry in terms of pricing and performance in the coming fiscal?2010 was the year of recovery and the trend is likely to continue in 2011 as well. We expect it will be a more stable year and bring good sales numbers across geographies, especially in tier II and III markets as the disposable income is going up and people are demanding quality housing. Given the present inflationary pressures, we will see an increase in prices to the extent of 10-15 per cent in selected geographies and product categories.
How is the outlook in terms of the commercial front? Are you seeing any momentum?Generally speaking, the thrust will remain more on the residential segment but proportionate commercial space will also be developed primarily to give support to the residential development. Standalone retail and commercial projects will see comparatively marginal interest from buyers.
Tell us about your dream project?Our slogan is, ‘Turning dreams into reality’–for us, all our projects are dream projects as they involve the aspirations of our customers. Owning a home brings a sense of pride and responsibility and being in such a business enables us to help our customers fulfil their dreams.
What about the reinterpretation of the classic Connaught Place in Delhi?Omaxe Connaught Place (OCP) attempts at creating a reincarnation of the ambience of Connaught Place in Greater Noida in a modern form, replete with all the latest facilities.
In the current time when rentals are shooting up in Lutyen’s Connaught place, OCP is finding greater acceptance as retailers are discovering the necessity for product and brand adjacency. It will be spread over 1,900,000 sq ft and boast of a large-format hyper market, multiplex, family entertainment zone, five-star hotel, and a modern office complex. Moreover, the proximity to the proposed interna-tional airport will make it a preferred location. We aspire to complete the project within 18 months.
What are your future plans?We will focus more on deliveries and fast execution of ongoing projects. We’ll also expand our infrastructure portfolio with new projects. The new launches planned for the coming months include a hi-tech township in Lucknow, plotted development in Mullanpur and Sonepat, and residential option in an Allahabad hi-tech township.
Establishment: March 1989Top management: Rohtas Goel, Chairman and Managing Director; Sunil Goel, Joint Managing Director; Jai Bhagwan Goel, Whole Time Director.Centres of operation: Punjab, Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Uttarakhand, Himachal Pradesh, Andhra Pradesh, Orissa, Delhi.No. of employees: 1,368 (as of March 2010)Group turnover: Rs8,073.46 million.Ongoing projects: 52 projects under execution and planning.Total area under development: Approximately 164 million sq ft.