National Buildings Construction Corporation ltd (NBCC) was established as a Government of India enterprise in 1960, under the Ministry of Urban Development, Government of India. Since inception it has been executing landmark projects in diversified areas both at home and overseas. ANOOP KUMAR MITTAl, Chairman cum Managing Director, tells Neeti Nigam how they are pitching for projects in Commonwealth of Independent States (CIS) countries and buying land to build residential and commercial complexes in India to earn profit
How does NBCC operateIJ
NBCC’s operations can be categorised into three main segments, that is, Project Management Consultancy (PMC), Real Estate Development and EPC contract. In Real Estate, NBCC has two segments; one is direct real estate projects wherein the company buys land from private and government agencies, develops it and then sells it. In other segment, NBCC participates for re-development of government colonies via PPP mode, such as the recently developed New Moti Bagh colony under GPRA scheme. Out of all these, EPC contract contributes to a total of four to five per cent of business. Reality business is around 10 per cent and remaining is the PMC.
Who are your clientele and what all projects is NBCC handlingIJ
For EPC and PMC, we only deal with the government sector and PSUs. In real estate segment, we buy land from local bodies, state and central government, construct buildings and sell them to individual home buyers. Generally for commercial spaces, our clients are government departments (70-80 per cent).
Today, we have around Rs 20,000 crore PMC work at hand. EPC contract is Rs 500 crore. In Real Estate, we have around 150 acre of land across the nation. These properties are mainly for residential and commercial complexes. We are trying to start construction in more properties. At present, we are constructing real estate projects in Gurgaon and Okhla. In Gurgaon, we have sold 40 per cent of our flats in the first phase. Transaction for the second phase will start in September. We also have residential and commercial properties in Patna and in Khekra, Delhi-NCR. Recently, we have started redevelopment projects which is worth about Rs 4,500 crore on PPP (Public Private Partnership) model. We are generating 1.3 million sq ft commercial office space and constructing 4,747 houses. It is our mandate to sell all office space to government departments, PSUs and autonomous bodies.
The money generated from sale will be used for construction and maintenance for 30 years. Three more similar projects in Delhi at Thyagraj Nagar, Kasturba Nagar and Netaji Nagar are also in the pipeline. These properties are for redevelopment and sale purposes. We are reconstructing all 20 government presses under PPP model.
What are the green buildings that are being constructed in the country by NBCCIJ Also, tell us about the new construction ventures you have undertaken internationally.
The projects undertaken by the company are presently spread all across India. We have recently constructed a green building named Indian Institute of Corporate Affairs, Manesar. The building has achieved the prestigious gold rating under lEED India for new construction, awarded by Indian Green Building Council (IGBC). This is the first government green building in the millennium city of Gurgaon to receive IGBC’s gold rating and also the first certified green building executed by NBCC.
In the overseas market, our presence is in Maldives, Botswana and Turkey. In Maldives, we are constructing one hotel management institute that is a gift from the Indian Government to Maldives. Two more projects are coming up, that is, a police academy in Maldives and the second phase of Indira Gandhi Memorial Hospital.
Now we are looking for EPC contracts particularly in CIS countries. Recently I went to Kazakhstan and Khyrgystan. I found there were a lot of opportunities there. We are planning to start a small office in Almaty to cover all CIS countries. We recently signed a MoU with TCIl. They have presence in 60 countries for their telecommunication business. We will now bid for EPC contracts in these countries.
These are the initiatives we have taken abroad to expand business. We aim to get Rs 3,000Crore international projects from which we will earn 5-7 per cent profit in next three years.
How about the economical projectsIJ
The Khekra project in loni is a low cost housing project. We started selling these houses at the rate of Rs 1,200-1,300 per sqft and ended at Rs 1,800 per sq feet which you won’t find anywhere. Our cost is much less than the other public sector companies. Whatever estimate we submit to the clients, we never ever go for a revision. Rather, we give them saving that we use for value addition. Our cost never exceeds the sanctioned cost.
What were the main challenges that you faced while working in NBCCIJ
The most challenging projects were the Seelampur Metro Station, which was inaugurated by the then Prime Minister AtalBihari Vajpayee. E Sreedharan was a demanding and a tough task master. He used to keep coming for inspection every week. Also, we completed the water pipeline from Muradnagar to Sonia Vihar which is the source of drinking water for the residents of Delhi. It is 32 kms in length. In 1999, the pipeline was constructed by NBCC.
The Company also led Defence Housing Projects, Para-Military/NSG Projects, ESIC Projects, Border Fencing works at Indo-Bangladesh/Pakistan Borders, Solid Waste Management Works, JNNURM/ UIDSSMT Projects, Sewerage Treatment Plants, various Governmental Projects in North-East Region, et al.
At present, we are rebuilding the Indian Museum and the Victoria Museum in Kolkata. These are over 60-70 years old and were built with old technology. Through this Rs 100 Crore project, the two buildings will witness a makeover in a year.
What has been the net profit in fiscal year 2012-13IJ
NBCC has registered 45.25 per cent increase in net profit at Rs 95.97 crore in Q4. For the entire 2012-13 fiscal, net profit increased to Rs 207.50 crore from Rs 190.17 crore in 2011-12. NBCC is a certified ISO 9001:2008 company in project management & consultancy division.
Please elaborate on the success story.
As recognition of NBCC’s significant contribution in diversified areas of business, the company has been recently felicitated with a series of awards amongst which the much coveted Golden Peacock Award – 2013 in Occupational Health & Safety, prestigious Indian Green Building Council Award 2013; The Special Jury Governance Now PSU Awards 2013; and last but not the least, popular Time Research Business leadership Award for Real Estate Company of The Year stand noteworthy.
Earlier, the company was listed amongst top ten CPSEs for the year 2004-05, 2005-06 & 2006-07 by Department of Public Enterprises, Government of India. Prior to that, NBCC had duly won SCOPE Turnaround Award in 2005-06 & 2006-07 and was chosen for SCOPE Excellence Award for Outstanding contribution to the Public Sector Management. In addition, the SCOPE Meritorious Award for Corporate Social Responsibility (CSR) & Responsiveness in the year 2007-2008 was also conferred on NBCC.
During the year 2004-2010, NBCC received “Excellent” rating and “Excellence Award” from MoUD and Ministry of Heavy Industries & Public Enterprises, respectively. In 2007, NBCC paid dividend to the government for the first time and since then, it has been paying dividend every year. It was declared as a debt free company in 2008. The same year, the Department of Public Enterprises, Ministry of Heavy Industry and Public Enterprises, agreed to the approval of the Ministry of Urban Development to upgrade NBCC from a Schedule “B” to a Schedule “A” Public Sector Enterprise. Subsequently, on October 14, 2008, the NBCC was granted Schedule “A” PSU status.
Further, in 2011, Ministry of Commerce & Industry and the Development Commissioner, NSEZ awarded an “Appreciation Shield” to NBCC for quality and timely completion of NSEZ Noida Project. The corporation was also conferred “Performance Excellence Award” for the year 2010-11 by Indian Institution of Industrial Engineering & 10th edition of Construction World Global Award 2012 for 50 years of service to the nation.
NBCC’s excellent performance in various financial parameters over the last 5-6 years, led the Govt. of India to go ahead with the Company’s offer for sale. Healthy response from the investors by way of over 5 times subscriptions of NBCC’s IPO, has resulted in fixing the price of IPO by the Government at upper band and garnering Rs 125 Crore from the sale.
Recently, the company has also been notified as a Public Works Organization (PWO) explicitly, a construction agency covered under revised Rule 126 (2) of GFRs, as per which Government Department(s)/PSUs and Autonomous Bodies can award the works to NBCC on nomination basis. The Company has also been receiving “Excellent” rating from Govt of India consistently since 2004.
In the coming years, which region will see more growth in real estate sectorIJ
There will be growth in Tier II and III cities. That is why we have purchased properties in Alwar, Ghaziabad, Meerut, Hapur, Patna and Bhubaneswar. The business in Delhi and Mumbai is saturating. More than 50 per cent houses are empty. We are planning to increase 30-40 per cent business so that our dependence on project management works from government reduce. Our butter is coming from PMC and cherry from real estate.
Please elaborate on the Solid Waste Management (SWM) project.
Solid waste management was started in the country by the NBCC. In Pune, we have established a plant of 1,000 metric tonne per day where we are developing fuel for electricity generation. A similar plant of 700 metric tonne per day capacity was recently built in Faridabad. In Harayana, we are constructing seven-eight sewage plant in Karnal and so on. In healthcare sector, we are the only government agency which is constructing more than 12 medical hospitals in the country. The cost of medical colleges itself is Rs 1,000 crore.
How about the CSR activities of NBCCIJ
We are funding the education of poor girls of Northeast, Jharkhand and Bihar for last two years and will keep doing it for another five years.