NBCC (formerly National Buildings Construction Corp), a Navratna PSU, has been growing from strength to strength. Its CMD Anoop Kumar Mittal tells Pankaj Kumar that it has signed an MoU with DDA for development of an East Delhi Hub, which will be the first ‘smart city’ in Delhi.

While many PSUs are running in losses, how has NBCC managed to grow from being a category ‘B’ PSU in 2008 to a Navratna company in 2014?

NBCC believes in setting high standards when it comes to the construction business and also delivering projects on time. We have adopted the best practices and state-of-the-art technology in construction business to achieve a premier position and gain sustainable competitive advantage. Our commitment to produce the best in the shortest time possible has led us to scale greater heights. I would like to share with you that during the last couple of years, the company has established a niche for itself by taking up a plethora of new initiatives. These include putting extensive focus on redevelopment of the government properties with incorporation of maximum green features, and aiming to take care of sustainable aspect in construction which is the order of the day. It is fair to say that due to all our accomplishments in such a short span of time, we have set the benchmark as a pioneer in the construction domain in the 21st century.

The centre has approved 15 percent disinvestment in NBCC. What is your take on the government’s renewed disinvestment plan?

The government of India has carefully researched and taken this significant decision. It concerns not only the company, but the overall growth of the country. We are doing exceptionally well and we are pleased with the outcome, so even though the centre approved 15 percent disinvestment in NBCC, I am confident it will not affect or undermine our performance.

Do you think loss-making PSUs can be turned around? If yes, then how?

Absolutely. What matters is how well researched one is, in his or her own field. One must learn to work constantly on the loopholes/gaps till one arrives at a solution. In the years 1998-2000, NBCC was a loss-making company but that did not deter us. With our positive growth in the later years, we were listed as a Miniratna enterprise in 2012, and now we stand strong as a Navratna company. In fact, we recently took over Hindustan Steel Works Construction (HSCL) and since both companies share similar business activities, we [hope] to see positive results with this merger.

Reports suggest that NBCC wants to take up projects in the government’s smart cities mission. Can you elaborate?

With regard to smart city initiatives, we signed an MoU with IBM India Pvt Ltd on July 12, 2016, for strategic co-operation and joint exploration to develop sustainable smart cities and green building technology. We have also signed an MoU with DDA for the development of East Delhi Hub at Karkardooma, under TOD [Transit Oriented Development] norms. This will be the first smart city in Delhi based on the concept of smart mobility, smart living and smart infrastructure. This is a huge project, which shall include a 100-storeyed tower, a rooftop revolving restaurant, a helipad and discotheques. NBCC’s exclusive expertise in the areas of redevelopment of government properties makes it a company that has an edge over others. We are hopeful that the company [will] bag more projects in the near future. The sheer expertise of NBCC in this field puts it in good stead and many government bodies are approaching the company for redevelopment of their properties and smart city implementation.

NBCC has been involved for a long time with urban development and redevelopment projects. Is the government’s ambitious smart cities project feasible?

After successful redevelopment of the government’s New Moti Bagh GPRA [General Pool Residential Accommodation] complex in Delhi, now certified as the largest Green Home Complex of its kind in India, NBCC has started getting huge work orders in this segment. This has been followed by the ongoing Rs 5,000 crore East Kidwai Nagar Redevelopment Project, another zero waste disposal project of its kind. Realising the importance of innovation and the competitive world that we live in, we have always desired to be at the top of our game. We have taken some concrete steps as part of our initiatives with regard to technology innovation and upgradation in the construction sector.

The recent setting up of an Innovation and R&D Centre by us, in association with IIT Roorkee, is also a step forward in this direction. [This] would facilitate innovation, technology upgradation and impact smart city implementation venture of the company. So, yes, we are prepared and are optimistic that we will do the country proud with our smart city projects.

How do you perceive various reform initiatives and infrastructure development plans of the government? Last year, PM Narendra Modi had said that stuck infrastructure projects worth Rs 4 lakh crore have been rolled out. Do you see it happening on the ground?

As far as NBCC is concerned, we have faced no hassles as such. All our construction projects have taken off smoothly and in fact have been completed well before time. To ease the problem of shortage of government accommodation in the national capital, the government decided to rebuild seven housing colonies to double existing housing from 12,970 units to 25,667 units at a total cost of Rs 32,835 crore. The union cabinet, headed by prime minister Narendra Modi, approved the redevelopment of seven GPRA colonies in Sarojini Nagar, Netaji Nagar and Nauroji Nagar through NBCC and in Kasturba Nagar, Thyagraj Nagar, Sriniwaspuri and Mohammadpur through Central Public Works Department (CPWD) to replace the existing housing stock. 

Under the NDA government, some JNNURM projects have been shut down while some others have seen grant being cut. Was there a need for the smart city project when we already had JNNURM?

The smart city project and JNNURM have their individual significance. They are different and unique in their own aspects. While smart city deals with 70 percent construction, and NBCC has vast expertise and knowledge in this field, we see ourselves as a significant participant in this initiative and as I have mentioned earlier, we are already associated with some projects of smart city implementation. To my knowledge, projects under JNNURM have not been affected and everything is in order.

NBCC has a large land bank. What’s the plan on that front?

NBCC is working mainly in three segments: PMC, real estate (RE) and EPC. Real estate is also one of main verticals where we have to work like other developers. NBCC has to purchase low-cost land, mostly in tier-2 and tier-3 cities. We have land parcels in the entire country with locations at 30 places including Alwar, Jaipur, Kochi, Agartala, Gurgaon, New Delhi, Lucknow, Vadodara, Ahmedabad, Patna, Bhubaneswar, Meerut, Faridabad, Ghaziabad and Coimbatore.

As the land parcels are purchased by NBCC [for which no debt is taken], we develop these land parcels as per the market condition and as per the demand. Internally, the management has decided that NBCC would not be launching any real estate project with less than 18 percent IRR [internal rate of return].

What are your future plans for NBCC? How will you achieve the targeted turnover of Rs 10,000 crore by the financial year 2020?

I have mentioned earlier about our extensive operations overseas. NBCC indeed has a very strong global reach. In the domestic sector, real estate and redevelopment are the front-runners that will bag us more projects in the coming days.

In the next financial year, we are expecting huge contracts that will further enhance our order book and we are certain of a very bright future. As far as our turnover of Rs 10,000 crore by FY 2020 is concerned, I’m 100 percent sure that we will achieve that very soon. The rate at which NBCC is growing is phenomenal and we are expecting even better results in the coming years. We are certain that we will continue to acquire more projects in areas of redevelopment as our splendid work speaks for itself. NBCC is a 100 percent dividend paying company and our order book has grown exponentially which is definitely a positive sign. For coming years, we have a few new major projects like AIIMS redevelopment, which is already approved and we will start very soon. Second is Pragati Maidan Exhibition Centre.

pankaj@governancenow.com

The interview appears in the August 1-15, 2016 issue of Governance Now