NBCC: Developing Sustainably

Anoop Kumar Mittal
NBCC is pursuing PMC as a strong business model, with a focus on sustainability and cost consolidation, and is taking on mega projects. Dr. Anoop Kumar Mittal, CMD, NBCC, in a discussion with Maria R, shares information on the PSU’s growing order book within India and abroad, including development of roads and highways.

The last few years have been quite difficult for real-estate developers who failed to deliver on all fronts. As a veteran in the real-estate sector, what is your outlook for the sector?

No doubt, the sector has been struggling of late, so restoring buyers’ trust is important now. The government has introduced historic reforms to bring transparency and accountability in the sector, which are likely to revive consumer sentiment. There is a huge demand for residential, retail and office space in major cities and towns due to large-scale urbanisation and rapid economic growth. We are hopeful that real estate will be regulated and the end-users will benefit.

How do you see the long-term effect of government reforms such as Demonetization, RERA, GST, 100% FDI, low interest rates for weaker section, etc?

All these steps are in the right direction. Demonetisation is aimed at promoting financial inclusion and transforming India into a less-cash economy. The Goods and Services Tax (GST) will prevent unaccounted money flowing into real estate sector and benami transactions. It will overcome the problem of multiple taxation and simplify tax environment with a uniform tax rate across all states.

The Real Estate (Regulation and Development) Act 2016 will bring transparency and accountability in the sector. It will establish a trust-worthy relationship among developers, agents and buyers. Foreign investments and low interest rates for affordable housing are again positive developments for overall growth and more job creation.

It is over a year since RERA came into effect and the reports coming from most of the states are quite disappointing. What are your views?

Many states have constituted the Real Estate Regulatory Authority (RERA). Developers need to register all their projects and regularly update RERA with the status of each project. As a result, confidence among buyers of residential and commercial projects is growing, leading to increasing demand for real estate projects.

Transparency and credibility are the most cherished values of corporate governance in today’s economic environment. They assume even greater significance in real estate sector as project costs are high in value and yet fundamental in the development of communities. The Real Estate (Regulation and Development) Act 2016 is a structural reform which will benefit end-users in the long run.

Housing for All by 2022 is PM’s big dream, but as of today, it looks quite difficult to achieve. Don't you think the government should give tax benefits and relaxation on import duty to developers who bring innovative technologies like precast, prefab and form-work systems to complete projects faster than the conventional construction methods?

There is no doubt that innovative design and construction technologies must be encouraged along with environmental rejuvenation. The concept of green buildings is picking up fast in India. Technologies like pre-cast and pre-fab minimize the impact on environment and help in completing the project at a much faster pace than conventional methods. Incentivizing the use of such modern technologies as in Housing for All by 2022 would certainly impact the initiative in a positive way.

Convention-centreInternational Exhibition-Cum-Convention Centre (IECC), Pragati Maidan, New Delhi.

At a time when most of the construction companies are struggling with huge debts, NBCC is enjoying a massive order book. Please share your business model.

NBCC is pursuing Project Management Consultancy (PMC) as a strong business model. It is based on sustainability through light-asset businesses with focus on cost consolidation using low capital expenditures. At the same time, the company is rejigging its project portfolio to increase the scale of operations. The aim is to take on more mega projects worth ₹1,000 crore or more and cut down on smaller projects.

Our focus on redevelopment of government properties will generate huge opportunities for us.

We also plan to focus on redevelopment of government properties Pan India, which will generate huge opportunities for us. The Union Cabinet approved redevelopment of seven General Pool Residential Accommodation (GPRA) colonies in New Delhi in July 2016, of which, three are being developed by NBCC.

On what concepts does NBCC plan its redevelopment projects?

NBCC is committed to balance social, environmental and economic aspects of the industry while following sustainable business practices. That is why we use green technologies, recycled water and innovative construction technologies to minimise impact on the environment.

NBCC has imbibed green engineering which balances functionality with building’s impact on nature. It promotes a cosmopolitan way of living with easy mobility, smart infrastructure, open spaces and highly functional public facilities.

Our business is based on sustainability through a light-asset business model that focuses on cost consolidation using low capital expenditures. We aim to bring in contractors at the design stage itself, which improves the cost effectiveness and environmental efficiency of projects.

As I said, NBCC is a pioneer in redevelopment model in combination with Project Management Consultancy and maintenance works. We are the only PSU involved in Redevelopment works.

In the next five years, NBCC will place an increased emphasis on PMC in redevelopment.

In NBCC’s diversified business portfolio, which segment is its major source of revenue? Also, what is your current order book and revenue target for 2019-20?

NBCC's present areas of operations cover three primary segments:

Project Management Consultancy: Executing new projects in addition to undertaking redevelopment projects.

Engineering Procurement and Construction: Working in a niche market, constructing chimneys and cooling towers for the power sector.

Real Estate Development: Developing residential and commercial inventories for various government(s) and the public at large.

Nearly 88% of NBCC’s revenue comes from Project Management Consultancy. We are a pioneer in delivering redevelopment projects on self-financing model. During 2017-18, our consolidated net profit totaled ₹372 crore on a total income of ₹7,096 crore and an order book exceeding ₹80,000 crore. Higher capacity utilisation, cost reduction measures and impetus to high value projects are expected to propel the company on a growth trajectory in the current financial year.

World-Trade-CentreWorld Trade Centre, Nauroji Nagar, New Delhi

NBCC has recently entered the roads and highways sector, which is dominated by private players; what opportunities has NBCC tapped in this space?

NBCC has always been at the forefront to develop infrastructure across the country. Under the Pradhan Mantri Gram Sadak Yojana, we are developing roads stretching upto 12,610 km - in Tripura (2,714 km), Bihar (5,855 km), Odisha (1,506 km), West Bengal (1,543 km), and Jharkhand (992 km). Road connectivity with cities is critical for economic prosperity and transformation of remote areas. We have also signed an MoU with Ecotourism Development Corporation of Uttarakhand Ltd to construct an eco-tourism circuit along Kotdwar-Ramnagar Kandi road. The 50 km four-lane highway project will be partly a straight road and partly elevated with flyovers or bridges to allow for free movement of wild animals underneath. The project will be developed under Green Infrastructure/Green Road Model and is estimated to cost ₹2,000 crore.

NBCC is always scouting for growth opportunities in existing and new sectors. With the present government’s thrust towards roads and highways construction, we foresee immense opportunities in this space.

NBCC is executing many projects abroad: in Turkey, Africa, Mauritius etc. Please elaborate on the projects being undertaken and their valuation.

Incentivizing use of modern technologies such as prefab, precast and form-work systems as in Housing for All by 2022 would certainly impact the initiative in a positive way

NBCC is investing in business development and marketing across global markets. We hope to book orders worth ₹5,000 crore in the next five years. The company recently bagged an order worth ₹2,000 crore to build high-capacity convention centres in nine African countries. As an initiative of the Ministry of External Affairs, NBCC will build nine Mahatma Gandhi Convention Centres (MGCC) in Nigeria, Uganda, Malawi, Zambia, Liberia, Gambia, Burkina Faso, Togo and Gabon.

We have set up NBCC International Limited (NIL) to pursue international businesses. NBCC also has an office in Oman and has signed an MoU with Al Naba Services LLC to secure infrastructure projects in the region. It has also signed MoUs with Construction Industry Development Board Holdings in Malaysia and Form Yapi Malzemeleri Insaat Samayi Ticaret Ltd in Turkey.

NBCC is executing projects in Mauritius such as construction of the new Supreme Court building valuing ₹250 crore and a housing unit of ₹300 crore. Some other notable projects that have been successfully completed include a 200-bed Indira Gandhi Memorial Hospital in Maldives, a 3,600 unit Meer Housing Project in Turkey, and Indira Gandhi Centre for Indian Culture in Mauritius.

What does NBCC’s tie-up with SDI Bhubaneshwar for skill development entail?

NBCC is constructing a building for Skill Development Institute (SDI) in Bhubaneswar. We will provide all the required infrastructure in line with the government’s Skill India Mission. SDI Bhubaneswar has established a mission to equip the youth with contemporary skills for getting jobs and starting their own entrepreneurial journey. The MoU with the SDI Bhubaneswar calls for empowering the youth in Odisha with relevant skill sets and training them in various disciplines.

NBM&CW July 2018

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