We have invested over Rs.250 crore in infrastructure

01 Mar 2015 CW Staff

Please introduce us to some key projects recently awarded to the company.

We have bagged a new township project by Prestige Group, Royal Gardens, of up to 22 floors. Apart from that, we have also bagged the contract for Waghani Group´s IT park covering 4 million sq ft.

When does your role as a building contractor come to play in the construction of a project?
We work for different developers who first identify the land, design and seek the required permissions. Then the architects are roped in. After that, we come into the picture. We have also initiated a concept of cost plus and design build, a practice we have been following on and off. In that, we are a part of the project from day one; we rope in the architects and do the budget and complete cash flow. This reduces that initial five to six months and even execution is smoother.

What are the challenges you face in interacting with specialty contractors, developers, policymakers, etc?
The biggest problem the contracting industry faces is that there is no qualification to become a contractor. Apart from that, permission issues are aplenty. The policies and norms of state governments and the Centre are different. We have been talking of doing away with red tape but nothing concrete has happened. Infrastructure is the face of any country or state, but in India, most projects are stalled and not moving ahead.

You execute projects for various types of real estate including residential, commercial, etc. At, present, which sector contributes the most to your business?
Residential is 60 per cent, commercial is 10 per cent, IT parks 15 per cent, pharma 10 per cent and industrial 5 per cent. We have been working in places like Mysore, Chennai, Hyderabad, Ahmedabad, Mumbai, Pune, Goa, Sikkim and Delhi. Pharmaceutical is our forte. We have about 25-26 clients that have repeatedly contacted us. We have completed over 125 pharma plants in the country and have done dozens for each of our clients. We have pre-opening sharing with the clients. Our country has no dearth of work. While the trend in residential is formwork, people across the country are talking of high rise, which requires capacity cranes and formwork that give higher turnout and no repetition. Manpower is increasing and hence housing will be a prime sector.

What are the trends in that sector as far as equipment is concerned? How critical does choosing the right equipment become?
Choosing the right kind of equipment is not critical but identifying the issues is important. Cranes have become a must today irrespective of job size. Also, we have shifted our focus from ply and timber to the latest aluminum and German formworks. The turnout is really fast. By the conventional method you could construct one slab a month, but with the new form-work you can bring that process down to one slab in 10 days. That is a massive change and turnout. There is a requirement for batching plants, because volumes are huge. We are highly depended on manpower in our country; of the 40 jobs we are carrying out in the country of over 4 crore sq ft, we would require a workforce of 18,000 people.

Which has been the most challenging and satisfying project for the company?
We just completed South India´s biggest mall in Hyderabad, Sujana Forum; it was inaugurated this January. It has about 2 million sq ft of recreational area and is centrally located in the city. As we started excavation, a water pipeline broke open during the rainy season and the site was flooded. Some stoppages were created; our workers worked overnight to get rid of the water on site. The project has three basement floors and four above; it was a heavy construction. Apart from that, prior to the formation of Telangana, several strikes took place that affected our work. The mall was to be completed in 24 months but was delayed by eight to nine months.

Project delivery timeframe has shrunk in recent times´ At present, the average time taken to deliver an IT park of 1 million sq ft is 12-14 months, which means that 1 lakh sq ft should be constructed every month. Today, cranes are required while producing concrete on site, and not depending on the third party, one should own batching plants, supporting pumps and transit mixers. Also, the best formwork is a must.

On an average, what is construction cost per sq ft?
What are the areas where maximum cost is invested? Construction cost depends on specs. Residential structure cost would be Rs 600-700 per sq ft and commercial around Rs 800-900 per sq ft. In terms of investment, the maximum cost is in steel and concrete. If you take an average, cost of labour would be around 15-20 per cent, material 40 per cent, overhead 10 per cent and infrastructure 10 per cent; the remaining is profit.

Projects often face delay owing to lack of land, environment or forest clearance or funds. How do you strategise to ensure hassle-free completion?
Environmental issues and acquisitions are the biggest hurdle. There are talks of acquisitions bills, but there should be something in the interest of the public at large. There is no problem without a solution. Both parties should understand each other´s problem. Our company enjoys a lot of goodwill.

How much does the company invest annually in construction equipment?
While cranes are the most commonly used equipment, we annually invest Rs 25-30 crore on an average in buying equipment.

How do you view the impact of the Real-Estate Investment Trust (REIT) on the real-estate sector?
REIT will be good for the sector as it will help bring liquidity in the market. (See story on ´Know Your REITs´ on pg 114.) For contractors, it will be good as one of the main problem areas is delay of payment.

How would you comment on the company's performance this year compared to last year?
Although the market has been tough in the past couple of years, we have been steady. We have invested over Rs 250 crore in the past 8-10 years and now is the time to utilise it. Precast is one area that we are looking at and it is the need of the hour. Even after 68 years in business, we are still going strong.

In 2008, HDFC joined the company as a partner and invested Rs 200 crore in the company at our entity level.

We used that capital to purchase a 2-acre property near Mahalakshmi Race Course in Mumbai, which we are contemplating for luxurious apartments.

Fact Sheet
Year of establishment: 1946.
Top management: Abbas Jasdanwalla, Chairman & Managing Director; Saleem Jasdanwalla, Deputy Managing Director; Mahesh Mudda, Executive Director and CEO. No. of employees: 1,600 pan-India and 18,000 labour force.
Areas of operation: Headquartered in Mumbai with Pan-India presence. Prominent clients: Prestige Construction, Reliance Industries, Sterling Developers Ongoing projects: Savvy Sports City (Ahmedabad).
Completed projects: Hindustan Unilever Ltd Development Centre (Mumbai), Nirlon Knowledge Park (Mumbai), World Trade Centre (Bengaluru).
Upcoming projects: Prestige Group township project, Waghani Group´s IT Park. Turnover: Rs1,000 crore (FY14).
Suggestions on contractors to be covered? Write in at feedback@ASAPPmedia.com

Mahesh Mudda, Executive Director and CEO, New Consolidated Construction Company Ltd A 68-year-old company, New Consolidated Construction Company Ltd (NCCCL) has been delivering contracts for various structures across the country. With an order book of Rs 4,500 crore, the company happily boasts repeat orders from clients. ´Our company enjoys goodwill in the market,´ beams Mahesh Mudda, Executive Director and CEO, NCCCL. In conversation with the CW team, he reveals more about the company´s key projects and how it operates in the building contracting sector. Please introduce us to some key projects recently awarded to the company. We have bagged a new township project by Prestige Group, Royal Gardens, of up to 22 floors. Apart from that, we have also bagged the contract for Waghani Group´s IT park covering 4 million sq ft. When does your role as a building contractor come to play in the construction of a project? We work for different developers who first identify the land, design and seek the required permissions. Then the architects are roped in. After that, we come into the picture. We have also initiated a concept of cost plus and design build, a practice we have been following on and off. In that, we are a part of the project from day one; we rope in the architects and do the budget and complete cash flow. This reduces that initial five to six months and even execution is smoother. What are the challenges you face in interacting with specialty contractors, developers, policymakers, etc? The biggest problem the contracting industry faces is that there is no qualification to become a contractor. Apart from that, permission issues are aplenty. The policies and norms of state governments and the Centre are different. We have been talking of doing away with red tape but nothing concrete has happened. Infrastructure is the face of any country or state, but in India, most projects are stalled and not moving ahead. You execute projects for various types of real estate including residential, commercial, etc. At, present, which sector contributes the most to your business? Residential is 60 per cent, commercial is 10 per cent, IT parks 15 per cent, pharma 10 per cent and industrial 5 per cent. We have been working in places like Mysore, Chennai, Hyderabad, Ahmedabad, Mumbai, Pune, Goa, Sikkim and Delhi. Pharmaceutical is our forte. We have about 25-26 clients that have repeatedly contacted us. We have completed over 125 pharma plants in the country and have done dozens for each of our clients. We have pre-opening sharing with the clients. Our country has no dearth of work. While the trend in residential is formwork, people across the country are talking of high rise, which requires capacity cranes and formwork that give higher turnout and no repetition. Manpower is increasing and hence housing will be a prime sector. What are the trends in that sector as far as equipment is concerned? How critical does choosing the right equipment become? Choosing the right kind of equipment is not critical but identifying the issues is important. Cranes have become a must today irrespective of job size. Also, we have shifted our focus from ply and timber to the latest aluminum and German formworks. The turnout is really fast. By the conventional method you could construct one slab a month, but with the new form-work you can bring that process down to one slab in 10 days. That is a massive change and turnout. There is a requirement for batching plants, because volumes are huge. We are highly depended on manpower in our country; of the 40 jobs we are carrying out in the country of over 4 crore sq ft, we would require a workforce of 18,000 people. Which has been the most challenging and satisfying project for the company? We just completed South India´s biggest mall in Hyderabad, Sujana Forum; it was inaugurated this January. It has about 2 million sq ft of recreational area and is centrally located in the city. As we started excavation, a water pipeline broke open during the rainy season and the site was flooded. Some stoppages were created; our workers worked overnight to get rid of the water on site. The project has three basement floors and four above; it was a heavy construction. Apart from that, prior to the formation of Telangana, several strikes took place that affected our work. The mall was to be completed in 24 months but was delayed by eight to nine months. Project delivery timeframe has shrunk in recent times´ At present, the average time taken to deliver an IT park of 1 million sq ft is 12-14 months, which means that 1 lakh sq ft should be constructed every month. Today, cranes are required while producing concrete on site, and not depending on the third party, one should own batching plants, supporting pumps and transit mixers. Also, the best formwork is a must. On an average, what is construction cost per sq ft? What are the areas where maximum cost is invested? Construction cost depends on specs. Residential structure cost would be Rs 600-700 per sq ft and commercial around Rs 800-900 per sq ft. In terms of investment, the maximum cost is in steel and concrete. If you take an average, cost of labour would be around 15-20 per cent, material 40 per cent, overhead 10 per cent and infrastructure 10 per cent; the remaining is profit. Projects often face delay owing to lack of land, environment or forest clearance or funds. How do you strategise to ensure hassle-free completion? Environmental issues and acquisitions are the biggest hurdle. There are talks of acquisitions bills, but there should be something in the interest of the public at large. There is no problem without a solution. Both parties should understand each other´s problem. Our company enjoys a lot of goodwill. How much does the company invest annually in construction equipment? While cranes are the most commonly used equipment, we annually invest Rs 25-30 crore on an average in buying equipment. How do you view the impact of the Real-Estate Investment Trust (REIT) on the real-estate sector? REIT will be good for the sector as it will help bring liquidity in the market. (See story on ´Know Your REITs´ on pg 114.) For contractors, it will be good as one of the main problem areas is delay of payment. How would you comment on the company's performance this year compared to last year? Although the market has been tough in the past couple of years, we have been steady. We have invested over Rs 250 crore in the past 8-10 years and now is the time to utilise it. Precast is one area that we are looking at and it is the need of the hour. Even after 68 years in business, we are still going strong. In 2008, HDFC joined the company as a partner and invested Rs 200 crore in the company at our entity level. We used that capital to purchase a 2-acre property near Mahalakshmi Race Course in Mumbai, which we are contemplating for luxurious apartments. Fact Sheet Year of establishment: 1946. Top management: Abbas Jasdanwalla, Chairman & Managing Director; Saleem Jasdanwalla, Deputy Managing Director; Mahesh Mudda, Executive Director and CEO. No. of employees: 1,600 pan-India and 18,000 labour force. Areas of operation: Headquartered in Mumbai with Pan-India presence. Prominent clients: Prestige Construction, Reliance Industries, Sterling Developers Ongoing projects: Savvy Sports City (Ahmedabad). Completed projects: Hindustan Unilever Ltd Development Centre (Mumbai), Nirlon Knowledge Park (Mumbai), World Trade Centre (Bengaluru). Upcoming projects: Prestige Group township project, Waghani Group´s IT Park. Turnover: Rs1,000 crore (FY14). Suggestions on contractors to be covered? Write in at feedback@ASAPPmedia.com