Mahindra Lifespaces, the real estate arm of the Mahindra Group, has developed a niche business segment — integrated cities and industrial clusters (ICIC). In a chat with BusinessLine , company’s Managing Director and CEO Sangeeta Prasad spoke about the potential for ICIC business, why the residential segment will continue to be a focus area and how RERA has turned constraints into opportunities for the company. Excerpts:
You are the only pan-India player in the ICIC space. What makes this segment attractive?
There is a huge potential demand for integrated cities and industrial clusters, with a shift in the centre of gravity. People are moving to outskirts and we have built a distinct positioning for ourselves in that space. What we offer is not just the land but reliability and certainty with all the approvals and plug and play facilities. So our customers’ go-to-market is faster than competition. Here they come and focus on their business instead of worrying about clearances or putting up a sewage treatment plant. This has helped us get top companies as clients in our facilities.
Why did you foray into smaller industrial clusters segment last year?
World City (in Chennai and Jaipur) type of integrated projects can be done only if the State government is a partner and land is given at an equitable price. But there is also a demand for smaller clusters. So we went ahead with projects in Chennai and Ahmedabad under the origins brand for smaller clusters . We are very choosy about our anchor customers. Your anchor customer will define who you are. We are in the business of creating jobs and investment and not in the business of selling land.
How does your other business – residential – compare with the ICIC business?
ICIC business is not a repetitive business. It is lumpy. If you compare, residential gives more revenues, but ICIC’s contribution to profits is more. It is a very distinct business and contributes as profits and not topline.
Does it mean that ICIC, being more profitable, will be a bigger focus area for you?
The way we have structured the business, each one is not mutually exclusive. We will evaluate both. The opportunity is humongous in the residential segment also. We have brand, we have access to capital and the regulatory environment has changed for the better for responsible players like us. Implementation of RERA and Ind AS 115 is organically fitting into the way we do business. What was a limitation for us earlier is an opportunity for us now. We have only just begun.
What are these opportunities in the changed environment?
There are opportunities in the distressed assets space. We can look at joint development. But we are very cautious as we can’t let the brand get affected. My priorities are brand, regulatory processes and our product.
The belief is that your residential launches have not kept pace with the market...
We have enough and more to do in getting more launches in the market. We are setting up a pipeline of land and launches. For me, the challenge is that I need more products in the market. Especially in Mumbai, there have been projects stuck up due to various issues like regulatory uncertainty and that has affected us. But we are moving ahead with launches in other cities like Pune. The residential business has huge potential and we are committed to realising this potential.