Vascon Engineers: Optimism is the Ultimate Survival Skill

Santosh Sundararajan
"We are optimists, as otherwise you can't survive. I think we all have seen a long enough bear market. But now the bull is just around the corner and the future is exciting. Once optimism sets in and the overall economy is on the growth path the demand will pick up and there will be delivery pressure on projects. Innovations both with respect to mechanization, construction friendly designs, and sustainable methods are all happening and lot of them are waiting to happen. We are excited at the prospect of creating new landmarks and leaving these bear years behind us," says Mr. Santosh Sundararajan, Chief Executive Officer, Vascon Engineers Ltd. in an interview with Maria R.

A word about the evolution of your company 'Vascon Engineers' since 1986 from a mere Engineering, Procurement and Construction (EPC) services to real estate Development Company.
You are right. We started as an EPC company way back in 1986 and then made our entry into premium residential real estate development in 1989. Since then we have continued to grow in both fields of EPC and real estate. In real estate we boast of many prestigious landmark developments mostly in the city of Pune. This includes Marigold in Kalyani Nagar and the Weikfield IT City on Nagar road, and Suzlon's headquarters in Hadapsar among many others. In the EPC space we have executed landmark projects like the MLCP at Terminal 3 in the new airport in Delhi which is the biggest MLCP in Asia, as well as the Ruby mills tower in Dadar which is among the tallest buildings in the country.

The Group has established its credentials and specialization in undertaking EPC projects. How is your EPC business growing and the revenue the company is generating from there?
The EPC business saw a very tough time over the last couple of years with the overall sentiments on infrastructure projects and real estate projects taking a beating. Heavy inflation in labour and construction material coupled with delays in projects due to labour shortage as well as clients inabilities to pay on time created a very turbulent situation for us. Barring the last couple of years, EPC in the past has been a profitable business though the margins in this field are never high. Going forward we are concentrating on projects where we can add value with our design and engineering capabilities and are shying away from labour intensive projects. We do hope to grow in this sector from here after taking a breather for the last two years.

What, according to you, is sustainable construction and how have you incorporated this essential ingredient in your prestigious projects like 'Suzlon One Earth', and the 'Multi Level Car Parking' at Indira Gandhi International Airport, Delhi and others?
Sustainable construction is two fold: Sustainability of the design of the buildings for the long term usage is one most important aspects. The other aspect is sustainability of the methods of construction, during the construction period. In Suzlon One Earth we were fortunate to have a client who had a clear business interest in sustainable energy themselves. So they understood the benefits of capital expenditure to create a green building. There are many aspects to making a building sustainable. Sustainability is a new field still in its nascent stages. Daily there are new innovations that promise to reduce the carbon footprint. We did our best in Suzlon and MLCP with the innovations available at that point of time.

Going for green means investment in terms of more initial cost; do you think in India clients are giving you the flexibility to spend extra amount on the project?
This is definitely an issue. Even before we can make that decision, the exact cost savings in long term for certain capital expenditure to be incurred are not clear to us even today. As I said there are innovations daily in this field in all aspects of building construction, and evaluation of each innovation with its cost benefit analysis in the long term is tough. Only time and real usage will give the true report cards for many of these innovations. However some techniques or innovations have their cost benefit analysis proven over the last few years and the industry does accept these long term benefits. A client who is a single owner of a premise and who is educated in this aspect of sustainability normally encourages us to incur these capital expenditures. However when we make buildings with multiple clients, like residential even, the increase in capital expenditure becomes an issue. However, step by step I think tested and proven techniques of reducing energy consumption in the long run will become a norm and the capital expense will get accepted.

Vascon Suzlon One Earth

In the given scenario of massive construction activities, there is a constant threat to the environment. How does your company policy address this concern in your projects? What are some innovative practices you have introduced in the field?
We are an ISO 14001 company. We have set our own internal norms to be followed during construction. Trying to reduce transportation during construction is a simple way to reduce threat to environment. Simple efforts to design using local material, and to use techniques of design that consume lesser material help in this aspect. We have set our own standards to steady the usage of wood based construction material as well.

According to a report by Cushman & Wakefield, tier-II and tier-III cities are being reckoned as the growth engines of the future. How do you see this market and which segment is most promising in these cities?
Growth will definitely continue to happen in tier I cities as well. Growth will of course happen in tier II and tier III cities as these cities have a bit of catching up to do in terms of quality infrastructure. As of now the low cost housing segment seems to be the most promising in these cities with a good demand for budget homes. But with slight optimism in the markets overall, soon the demand for slightly higher quality premium spaces will be generated in these cities as well.

Vascon Suzlon One Earth Panorama

What according to you are the obstacles hindering project completion on stipulated time which also lead to cost overrun?
Obstacles have been shortage of labour and non timely payments from clients as far as EPC is concerned. As far as real estate is concerned, approvals have been a major dampener. Also the velocity of demand has been on the decline. Large wholesale commercial spaces have close to zero demand in many locations. Retail sales are slow. Once optimism sets in and the overall economy is on the growth path then demand will pick up and there will be delivery pressure on projects. Then mechanization and smart designs will be inevitable. Labour shortage can be dealt with designs that employ more mechanization and standardization. But this will happen only when there is immense pressure for delivery for which the overall sentiments have to revive.

What is your company's take on the infrastructure development being witnessed in the country and how do you look at the future business of the company in the next 3-4 years?
Windermere Vascon Engineers Ltd

We are optimists, as otherwise you can't survive. I think we all have seen a long enough bear market. The bull has to be round the corner and the future is exciting. As I said, innovations in our field both with respect to mechanization, construction friendly designs, and sustainable methods are all happening and lot of them are waiting to happen. The best projects happen when there is immense delivery pressure. For this to happen of course the finances for the project completion would have to be in place. The bull will bring along many such projects. We are excited at the prospect of creating new landmarks and leaving these bear years behind us.

The company has numerous awards/recognition to its credits for quality, excellence etc—can you name some of the important ones?
We have constantly received awards from various bodies for our quality of construction. Suzlon One Earth is of course a landmark, we are very proud of which it received many awards. Most projects executed by us have at least been nominated in some category for an award. We recently won an award from CIDC for, "The Best Professionally Managed Company". This was also satisfying and a change from the awards for our construction.
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