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Harshavardhan Neotia entered the real estate, hospitality and healthcare scene in West Bengal decades ago.
But, before he could grow it Neotia was sucked into the family business in cement.
The break came in 2006, when Holcim acquired Ambuja Cement.
Back with his first love, Neotia grew the business both in and outside Bengal.
In an interview with Business Line, the Chairman of Kolkata-headquartered Ambuja Neotia group elaborates the journey and the road ahead.
From real estate, Ambuja Neotia has spread its wings to hospitality, healthcare and education sectors. What is the road ahead for the group?
The areas that I am working on now, are the areas I am excited about.
Some areas or opportunities may come in the future but at the moment there are four areas that we are working on.
What I am looking forward to is pushing the envelope in terms of (product) innovation.
Hotel room capacity in Kolkata is set to double in a year or two. While some of the hotels, like your Swissotel, are already operational, many more will open soon. Do you expect any impact?
In the short term, there will be some impact.
But the good news about hotel capacity borne out of international players is more the rooms, more are the businesses. Indore and Jaipur are classic examples.
The convention market is driven by the number of rooms available. Weddings require a large infrastructure and it is a good market.
Higher room capacity means more flights coming into the city and convenient travel time. This is one of the simple economic generators.
Yes, the room capacity might come before the flight capacities are there. But it takes time. There will be a period of time these mismatches will be there.
Can you give us some idea about Ambuja Neotia’s finances?
We have a turnover of somewhere around Rs 900 crore.
Hotel, healthcare and education contribute around 25 per cent.
Real estate will account for the remaining 75 per cent. But as we go forward, the share would be closer to 50:50 because we are expanding on the other three fronts.
Overall, we are leveraged at 0.8:1 debt-equity.
You still are not thinking of going public?
We will, but, not at this moment. Currently we are not of the size where we need to go public.
From a West Bengal-based group, you have recently started moving outside. Is there any shift in your focus area in terms of geographies?
Not really. If you consider our history, Ambuja Neotia (earlier Ambuja Realty) came in April 2006. Earlier, I was full time in cements. This was a side business that I was doing.
In 2006 our (Ambuja Neotia) turnover was around Rs 90 crore. We had a staff strength of around 300 which has now grown to 2,500.
From 2006, we decided to expand our real estate business beyond Bengal.
It’s a different matter that it took 4- 5 years to get the necessary clearances.
Can you brief us about your ongoing projects?
Our Amritsar township project is likely to be completed by next year.
The project should have a turnover of Rs 600-700 crore over a 5-6 year period.
We now have three “City Centre” malls in Kolkata and Siliguri in Bengal.
The next one will open at Raipur in Chhattisgarh in August. The project was delayed by the slowdown in 2008.
In Patna, we bought land in 2008 for City Centre Mall. We got the clearances in 2012.
Work started in October last year and it will take another 2 to 2.5 years to be complete.
Over and above, Swissotel (2010) and Ffort Raichak (1997), we are creating a network of “Kutir” branded luxury boutique resorts.
The first one was opened at Raichak in 2008 in West Bengal. Five more are under implementation in north Bengal, Darjeeling hills and Sikkim (two).
There have been sizable investments outside Bengal during 2006-08.
Which projects are now on the drawing-board stage?
We have in Khanna (Punjab) another piece of land. In Raipur, we got another 35 acres of land. But we are yet to start work there.
In Nagpur, we have 20 acres and also in Silchar in Assam. These are a bit long-term projects.
Any plans to have more large hotels like Swissotel?
No plans yet. But we have some space in Raipur and Patna in our existing premises to build hotels. We will take a call on that later.
Any plans for expanding hospital network?
We are planning another speciality hospital in Kolkata.
We want to wait for the Siliguri hospital to stabilise, may be another six more months, before we move on to the next one. We have a land in Rajarhat.
You have a number of Tea Junction outlets in Kolkata. Any plans to expand the chain?
Tea Junction is positioned a notch lower than a tea/coffee lounge. We serve tea the way most of the people in this country drink it.
We have 22 outlets right now including four in Siliguri.
It’s a very low margin business and requires a back-end.
Whereever we have our mall, we want Tea Junction to piggy back on the food court, before investing in a separate kitchen.
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