‘Lavasa isn’t a real estate project’

Slowdown has hit the realty sector rather hard. Infrastructure projects too have slowed down somewhat. But Ajit Gulabchand, chairman and managing director of Hindustan Construction Co Ltd (HCC), is not worried. The company is going full throttle on its ambitious Lavasa lake city project and has also bid for the Worli-Haji Ali sealink project. In a chat with DNA, Gulabchand elaborates on the reasons behind these moves. Excerpts…

On Friday, the government said GDP grew 5.3% last quarter. How did you react to this news?
I’m not at all surprised. What surprises me is that the government is finally admitting it. Just 10 days ago, everyone was talking about over 7.1% GDP growth and the central statistical organisation now says it actually is 5.3%. I have been screaming for the last four months that the GDP growth will go to 5% or 5.5%.

A lot has been said about your Lavasa project. How is it coming along?
We were so encouraged by the sales during the last one year that we have advanced the phase that we were to complete in 2022 to 2015. By 2012, there will be 10,000 students and executives studying there. By then, there will be 1,000 rooms. Phase 1 B and phase II will begin together. What we hoped to complete by 2030, we will complete by 2022.

A lot of people, especially analysts, have misgivings about the project….
It’s time to stop calling it a real estate development. I would like to say we are in the business of comprehensive urban development and management in which real estate is just one vertical. This is about creating a whole new hill station town, a whole new urban centre with hospitality and tourism and education at its centre.

It’s not a resort town. It is being sold across socio-economic strata. On the one side, we have studio apartments for Rs 10-15 lakh. On the other, villas for Rs 1.5 crore. We also have a lot of affordable housing on rent. There will be 50,000 people living there and 20,000 tourists on any given day. There will be 1,00,000 chawl-like places for people like drivers to stay in. We are going to have star hotels and also Rs 150-a-day dormitories. We are now in the process of discussing a private-public partnership for providing police services in Lavasa.

Would you still call it a real estate project? Is it being seen as a large real estate project because it’s a new idea?
About 1,50,000 people have visited our sites and 70,000 have made serious enquiries. We keep the people informed about any progress on Lavasa - good news or bad. If someone files a public interest litigation, we put it on our website and send it to all the 70,000 people, not all of whom are our customers.

We have 1,400 customers and 3,000 associates and suppliers. For those who wonder if any work is happening there, we have put three cameras outside and people can watch the work in progress on our website.

There are standards for green buildings but there are no standards for towns. We are working with Leeds, which is an experimental town, on creating standards. For example, the maintenance of the whole project will be through geographic information system. Moreover, we are going to have e-governance. There are 65 parameters for e-governance. Vancouver is the best, having met 48 parameters. We plan to meet all.

In your last analyst meet, it was said that you have hiked the per sq ft rates in Lavasa despite the slowdown. Analysts found that hard to believe...
People forget that we were advised to charge a premium over the going rates per sq ft in Pune and Mumbai when we were selling at Rs 2,000 per sq ft. The approach then was to provide our customers with an opportunity to gain from their investments. Now, we are selling at Rs 3,500 a sq ft and there are takers.

We have data to support our claims. Everybody these days seems to want results in 6 months or 16 months maximum, which is not possible for most big infrastructure projects or companies. Analysts, investors, hedge funds have all got used to quick returns.

Given the state of the equity markets, when will you launch an initial public offer (IPO) for Lavasa?
We are in no hurry. We will wait for the equity markets to recover.

You didn’t have too good an experience with the Bandra-Worli sea link. So what made you bid for the Worli-Haji Ali project?
The government started the Bandra-Worli project without preparation. Also the government changed and the whole attitude of making something happen wasn’t there anymore.

There were changes in the design to the tune of 80% of the original plan. This took a toll on the execution. Why we went into the Worli-Haji Ali project is because it’s a concession project. So design and building it is all in our hands.

Besides, we now know the sea there and know how to build/execute the project efficiently. Today, we are the best qualified to handle and execute the project because we know the exact situation in the sea there.

Was it worth the effort?
It’s ten times harder to live in India than in the United States. But where will you and I go to live? We have to live here in India and we need a job to survive. I have to find a way to work with the Indian government and if something like this happens, we have to analyse it and move on.