Diversifying for Growth

    Diversifying for Growth

    In a move to broaden their market presence, many leading companies are entering into the other Infrastructure Sector, which is currently the prime focus of the government.

    A trend that is being noticed in the last one year, is that of companies diversifying from their core business to the Infrastructure Sector, where they are seeing a good potential for expanding their business footprint. Prospective segments are roads and highways, industries and real estate. Many companies are collaborating with global players to bring superior quality, efficiency and expertise in developing the projects. Here's a look at some of the companies and their ventures.

    Adani forays into road construction

    Adani Enterprises (AEL), the flagship entity of the Adani Group, which has a presence in the power, coal and maritime sectors, has won a contract for a four-lane road project under the hybrid annuity model (HAM) in Chhattisgarh, worth ₹1,140 crore. Adani was the lead partner in a consortium that bid for the project.

    It has been reported that the Adani Group was evaluating acquisition opportunities as it was looking for a quick entry in the road sector. It has roped in Essel Highways (the road development arm of Essel Infraprojects), to spearhead its entry into roads construction. The company's non-banking financial arm, Adani Capital, had invested ₹100 crore in December 2017, in Hyderabad-based BSCPL Infrastructure. The hybrid annuity model project, awarded under the Bharatmala Pariyojana programme, is for a 53-km stretch between Bilaspur and Pathrapali. Construction is to be completed in 730 days, while the length of the concession is for 15 years from the start of commercial operations.

    Says an AEL official, "We remain committed to maintain our leadership position in resources, energy, infrastructure, agro 8- logistics businesses. AEL is focused on incubating successful businesses to address the country's growing appetite for energy and infrastructure. It has been evaluating opportunities in public transport infrastructure, which holds promise of growth in the next decade. As the government is contemplating doubling the length of the country's highways to two lakh km, Adani Group considers this a growth opportunity for the company."

    Diversifying for Growth

    Omaxe enters highway and bridge construction

    Real estate player Omaxe has won its first contract to construct a highway and three high level bridges in Punjab. The contract was awarded by Greater Mohali Area Development Authority (GMADA) and its value is pegged at ₹704 mn.

    Omaxe Infrastructure & Construction Ltd (OICL), a wholly owned subsidiary of the company, will build a 200-ft wide road from Mullanpur/UT boundary up to T-junction of Kurali-Siswan road at SAS Nagar in Mohali, Punjab. The total length of the road is 8 kms. The company will also build three high level bridges and culverts on the same road. The project is expected to be completed in 16 months.

    Rohtas Goel
    Confident of the strategic diversification,Rohtas Goel, CMD, Omaxe Group, said: "This is our first venture in highway construction and we are determined to provide superior quality development and maintain consistency in our work. We are committed to the government's vision of developing world-class infrastructure and this project will be a model for future projects. We are extremely delighted that on-going projects are in sync with the proposed timelines, making it easy and credible for us to bag more contracts."

    Tulip makes in roads in infra sector

    Tulip Infratech, a Gurugram-based real estate company, has joined hands with China's CCTEB (China Construction Third Engineering Bureau). The two companies have formed a joint venture to construct roads, highways, flyovers etc.

    Parveen jain
    Praveen Jain, CMD, Tulip Infratech, said that they were in talks with the Chinese conglomerate for a long time and were waiting for the right time to enter the market. "Teaming up with China Construction is not only to build, but also to maintain infrastructure projects as the company has a rich expertise in this area. To begin with, Tulip will be focusing on three areas: infrastructure, affordable housing, and high-rise buildings."

    He added, “Unless proper infrastructure is developed in our country, its growth will be hampered as infrastructure is the basic requirement in town planning. Real estate, housing, commercial and office projects, accessibility, water supply, sewerage and electricity, provision of all amenities and landscaping are required at both micro and macro levels.”

    Mahindra Lifespace to set up industrial clusters

    Mahindra Lifespace Developers Ltd. (MLDL), the real estate and infrastructure development company of the Mahindra Group, has two industrial cluster projects under the brand name Origins. The projects will provide land and infrastructure to industrial units to start production in 9 to 12 months.

    Diversifying for Growth

    The company, which runs two Mahindra World Cities in Chennai and Jaipur under the PPP model, had acquired land from private parties to set up these industrial clusters. The first project is coming up in north Chennai on NH-16 in the Gumidipoondi region on the Chennai-Kolkata highway. This will be a 60:40 joint venture between Mahindra World City and Sumitomo Corporation of Japan. In the first phase, 264 acres is being developed and this could expand to 500 acres in due course. Japanese high-tech companies supplying components to local industries and those keen to set up export hubs are expected to operate from this cluster, which is already in the development stage.

    infrastructure sector

    The second project, located near Ahmedabad on NH 8A on the Ahmedabad-Rajkot Highway, is being developed with International Finance Corporation (IFC) - a strategic partner of MLDL. Both have an equal stake in this project, which will come up on 268 acres in the first phase. Another 130 acres may be added in the next phase.

    MLDL has invested ₹600 crore in land acquisition and development of infrastructure. These industrial clusters are expected to create 20,000 direct jobs apart from attracting investment to these regions. Companies across engineering, medical equipment, food processing, packaging and logistics sectors would come up in these clusters.

    Anita Arjundas

    Said Anita Arjundas, MD, MLDL, "Our vision is to develop a pan India network of robust manufacturing ecosystems where businesses can thrive. These industrial clusters will support the shift towards development beyond current urban centres."

    sangeeta prasad

    Sangeeta Prasad, CEO, Mahindra World City, said that companies that set up operations at the two clusters were expected to invest about ₹4,000 crore. "These corridors would enable a faster go-to-market for both domestic and foreign companies by way of clear land titles, plug and play infrastructure, and business support services," she added.

    IL&FS sets foot in real estate market

    IL&FS Group has forayed into residential real estate segment with its affordable smart homes project in GIFT City, Gandhinagar, through the company's subsidiary IL&FS Townships & Urban Assets.

    With a target of developing 10,000 homes in the next 5 years, the Group will be scouting for joint venture and public private partnership (PPP) opportunities in the identified micro-markets, having potential of mass housing developments. IL&FS has already secured requisite approvals for launching smart homes project in GIFT city in Ahmedabad and is in advance stage of finalization of land parcels in Chennai, Hyderabad, Alwar, and Bengaluru.

    Hari Sankaran

    Hari Sankaran, Vice Chairman, IL&FS Group, said, "Formalisation of housing presents a huge opportunity for private players in India. We have put together a plan for affordable residences that address the need for housing by keeping in mind the limited ability of people to pay, and individual aspirations for a better lifestyle, along with potential avenues for livelihood within the ecosystem." The company will also be leveraging its capabilities in multi domain infrastructure to provide low-cost affordable housing with improved services.

    Sumitomo in JV with Krishna Group to enter Indian real estate sector

    Japanese conglomerate Sumitomo Corporation has entered into a partnership with Gurgaon-based Krishna Group to venture into the Indian real estate sector. Both corporations have formed a 50:50 joint venture Krisumi Corporation to develop real estate projects across the country.

    Ashok Kapur, Chairman, Krishna Group, said, "The biggest challenge facing the Indian real estate industry today is with regard to quality, efficiency and commitment to timelines, all of which is what Japan is known for. In fact, Japan is already beyond RERA. We are certain that our partner, Sumitomo Corporation (part of the 400-year-old Sumitomo Group), with their extensive global experience in real estate development, shall contribute tremendously in creating projects with endearing value for our clients as well as the local communities."

    Diversifying for Growth

    The first project to be undertaken by the joint venture will be Krisumi City on a 65-acre plot in Sector 36A of Gurgaon with an investment exceeding $2 billion. The total build-up area of the project is expected to measure over 18 million sq.ft, and it will be developed in phases over 4-5 years. "The first phase will comprise 1.2 million sq.ft. of built-up space, consisting of 430-450 apartments and will be completed in 4-5 years. I want to create a Japanese city here," said Kapur.

    The Krisumi City project will be located next to the Delhi - Mumbai Industrial Corridor's Global City and at the confluence of southern peripheral road, NH-8, Central peripheral road and the Dwarka expressway.

    sumimoto krishna krisumi
    Masahiro Narikiyo, CMD, Sumitomo Corporation India, said that India's real estate sector is going through an interesting phase. "While consumer expectations have evolved manifold, most of the traditional developers are finding it extremely difficult to cater to all their requirements. In this backdrop, we believe that there is a huge vacuum for quality housing backed by a name that the buyers can trust. Which is why we are extremely excited about this new venture with our partner Krishna Group, which has all the qualities required to succeed in today's environment."

    The master plan and architectural design of Krisumi City has been developed by world-famous Japanese design firm NIKKEN SEKKEI, which has also worked on the renowned Tokyo Sky Tree. Along with apartments suited for different budget groups, the project will feature a high-end retail mall, education institutions, a premium hotel and high-end office spaces.

    Sumitomo Corporation, which has completed 300 real estate projects around the world, will be adding its technical expertise to the Krisumi City project. Valued at $40 billion, the Tokyo-based company has undertaken real estate projects in Japan, China, USA and Indonesia.

    NBM&CW July 2018

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