Construction may see degrowth of -6.5% in FY2021
Forecast for GDP growth now -6.4 per cent for FY2021: CARE Ratings. July 2020
Harshavardhan Neotia, Chairman, Ambuja Realty
In conversation with Charu Bahri, Harshavardhan Neotia, Chairman, Ambuja Realty, and Padma Shri (1999), talks about the expansion plans and projects he has lined up for coming years. Excerpts:
Tell us about your working life. What prepared you for the real-estate business?
I spent the major part of my working life with Ambuja Cement, the cement conglomerate promoted by my family that went on to earn blue chip status in India Inc. After we hived off the cement business to Holcim in 2006, I launched an all out endeavour to expand our interests in realty, healthcare and hospitality (in partnership with Swissotel Hotels and Resorts). We already had a presence in realty as I had dabbled in architecture and construction even during our cement days in the mid-1980s. At that time, our business interests in realty were not on a large scale. Still, our initiatives received customer satisfaction and appreciation. Conclave was my first commercial venture (in Kolkata) in 1986. Bengal Ambuja Housing Development Ltd was incorporated in 1993 in a JV with the West Bengal Housing Board to develop mass-scale housing and other infrastructural projects. A public-private partnership (PPP) to promote social housing, the company marked a major milestone in real-estate development. Its maiden project Udayan was declared a model housing project by the Union Government. This early endeavour focusing on our key objective - delivering value for money and changing the way people live - inspired all our subsequent real-estate projects, residential as well as our commercial City Centre projects and Ffort Raichak, Kolkata's first luxury weekend getaway. We took up real estate seriously around 1995.
How has the realty market in Kolkata changed in the past two decades?
The biggest change is the expanding periphery of the city, which has resulted in opportunities to be creative. The result: sprawling malls, condominiums, office spaces and more, many of which have been conceived according to global standards. This also augurs well for the consumer, who has a wide platter to choose from in all categories. Quality consciousness and consumer scrutiny have gone up and developers who have taken cognisance of this have continuously tried to up their benchmark. In terms of pricing, while prices have not shot through the roof like Mumbai and Delhi, there has certainly been an escalation. More important, prices have largely remained stable despite the recent downturn.
Where does Ambuja Realty see itself in coming years? Are your future projects financially provided for?
We see ourselves delivering good projects consistently and with imagination and care. We will invest about Rs 1,065 crore in developing close to 30 lakh sq ft of mixed-use space (mostly commercial). This will be funded through internal accruals. We will hopefully be able to pull it off with a 1:1 debt-equity ratio. We've already acquired the land and are in the process of obtaining necessary approvals. The projects include three green business parks (Rs 300 crore) that will target IT companies as buyers or tenants but will appeal to all commercial sectors; an 8 lakh sq ft development in Siliguri (Rs 250 crore); a 7 lakh sq ft development in Patna (Rs 300 crore); a 4 lakh sq ft development in Raipur (Rs 150 crore); a 2.5 lakh sq ft development in Haldia (Rs 70 crore); and Phase II of Ecospace in New Town, Rajarhat.
Did you put any of your projects on hold during the economic slowdown?
While 2009 opened on a depressive note, the Indian economy showed resilience as the year progressed. We saw an improvement in sentiment and in actual investment. Off-take improved in the residential sector, particularly in value-for-money products. Despite the meltdown, none of our projects were scrapped or cancelled. In fact, our Rs 300-crore Ecospace green office space project was launched in 2007 and went through tough times during the latter part of 2008 and early 2009. But we decided to press forward and it paid off as leading corporate houses like Bajaj Allianz and HDFC Bank came forward to take space as Phase I of the project reached completion in September 2009. Now, we have launched Phase II of the project and are looking to complete it by April 2011.
Will the demand for green buildings increase in coming years?
Climate change and global warming are real threats staring us in the face. There is no alternative in real estate but to respect this reality and move accordingly. Consequently, green buildings are the order of the day. They are extremely crucial in optimising energy. Our Ecospace office project is designed as a green building with LEED certification (gold standard). Our three proposed business parks in Siliguri, Patna and Raipur will be designed and built according to green building specifications.
Are you planning to establish a pan-Indian presence?
Though we are primarily focused in eastern India, we also have projects in Amritsar (Punjab) and Raipur (Chhattisgarh). AIPL Ambuja Housing & Urban Infrastructure Ltd (AAHUIL) is a JV between Advanced India Project Ltd (AIPL) and Ambuja Realty Development Ltd (ARDL), incorporated in 2006 to take up large-scale township and residential projects in northern India with a special focus on Punjab. The company has already tied up land in Amritsar and is in the process of buying more land in Mohali, Khanna, Bhatinda and Ludhiana. We are now ready with a pan-India growth strategy to deliver high-quality residential, commercial, healthcare, IT park, luxury resort and business hotel projects in forthcoming years. We are even aspiring to build a university.
Who are the architects for your upcoming projects?
We have worked with Indian and overseas architects, including Channa Daswatte of Sri Lanka, RSP of Singapore, Kapil Bhalla from Mumbai, and Vivek Singh Rathore from Kolkata. Architects are extremely important to the success of our projects. For instance, RSP of Singapore is a leading Southeast Asian architecture, planning, engineering firm that has done a commendable job on our Ecospace green office project.
How important is real-estate branding? Do you envisage the role of rating agencies to grade real-estate developers for the benefit of investors and clients?
While rating agencies may certainly have a role to play in terms of providing clarity and transparency to the customer, I think it is very difficult to completely qualify the qualitative aspects of homes, offices and other spaces. Most of these spaces are once in a lifetime investments. There is a certain emotional quotient that goes into buying. So while conveniences, safety and quality of construction may be rated, the feel and vibe of the space may be hard to rate. We have gone in for ratings for Bengal Ambuja Housing Development Ltd, which has been rated DR-1 by ICRA.
What is your USP?
We endeavour to deliver meticulous designs, standards, and quality and are wholly committed to deliver with passion to satisfy our customers. We believe winning the faith of customers and stakeholders who participate in our vision and help make it a success is our most enduring milestone.
What is your personal success mantra?
There is no substitute to hard work and integrity.
Year of Establishment : 2006
Top Management : Harshavardhan Neotia, Chairman
Centres of Operation : Headquartered in Kolkata, with offices in Siliguri and Raipur
No. of Employees : 1,100 persons (all verticals together)
Group Turnover : Rs 300 crore