Babulal Varma, Managing Director, Omkar Realtors & Developers Pvt Ltd, has more than 15 years of technical expertise in the industry. With his vision and dynamism, Babulal Varma has steered the company on an aggressive growth path. With an eye for precision, he is a visionary leader who has infused professionalism by leading a team of experienced industry professionals.
Omkar Realtors & Developers Pvt Ltd is a growing infrastructure development company. Backed by five decades of heritage and strong financials, the company’s expertise is showcased through an array of commercial, residential, hospitality and retail projects. With the objective of changing the skyline of Mumbai, the company is currently developing projects having an area of about 20 million sq. ft. in the Mumbai Metropolitan Region (MMR) with specific focus on the island city and the sub-urban districts. In a bid to provide quality infrastructure and aid urban development, product and design innovation is an incessant process for the professional team at work.
Speaking with Yash Ved of IIFL Babulal Varma says, "We are in the process of raising Rs6bn for three more projects."
Brief us about your current and upcoming projects in residential, commercial, retail and hospitality space?
We are currently developing 20 projects having an area of about 10 mn sq. ft. in the Mumbai Metropolitan Region (MMR) with a specific focus on the island city and the sub-urban districts. We foresee huge potential in Mumbai especially in suburbs with burgeoning middle-class and high disposable incomes. Over a period of time, we foresee the development of premium residential and commercial projects. Our ongoing projects include The Residency in Parel and Chembur, Woodside in Dadar. These are being developed in an area of over 4mn sq.ft. By the end of 2011, we are planning to launch around 11 projects in areas such as Malad, Andheri,Vile Parle, Kurla, Mulund, Chembur and Sion, Parel, Dadar and Worli. In Panvel, we have taken up a massive township project in an area spread over 200 acres. The deadline we have set for the completion of all the projects is 2- 3 years.
Are you planning to raise funds to invest in new projects?
We have already got financial closure for Worli and Malad projects and secured funds to the tune of Rs5.50 bn from a leading private sector bank and a couple of public sector banks. We are in the process of raising Rs6bn for three more projects.
What is the price scenario in Mumbai and other cities?
As compared to last year, the price has increased more than peak level. Mumbai’s realty market is definitely premium compared to other cities. The property demand in Mumbai has picked up faster than other cities and price rise is also higher. Real estate prices in Mumbai having gone beyond the pre-crisis levels, something which was noted by the RBI governor himself in his monetary policy statement. There is supply coming in on all segments of residential, from luxury to mass housing. Home prices across the country’s commercial capital have crossed their peak levels as developers raised prices in the backdrop of improved demand. The commercial and retail segments are also yielding enough supply to keep the market going over the next year. Demand for commercial spaces is improving and will continue to do so until the end of 2010. In commercial segment, small offices are growing, while demand for big commercial office spaces require some more time. This will translate in to a large number of transactions, both in terms of leases and outright purchases. I expect prices to remain stable.
There are reports that Unitech ended JV with your company for Mumbai projects?
Even though the JV ceases to exist at an entity level, the working arrangement between the two companies is being redefined to an SPV arrangement for which the modalities are being worked upon. Under the JV, we were committed to delivering 2 mn sq.ft and this commitment is being honored through the SPV arrangement. The SPV serves the objectives of the financial arrangement and will not bring about any changes to the business model of the company. As Omkar plans to embark upon an aggressive growth trajectory of delivering nearly 10mn sq.ft in the next 3 years, the demerger between Unitech and Omkar is the outcome of an amicable decision and both the companies share an excellent understanding and working relationship
Your view on the real estate regulator?
It is not possible to set up the real estate regulator for real estate companies. This will not be beneficial to either the consumers or the real estate companies and the industry as a whole.
How do you see the redevelopment trend in the coming months?
In a megapolis like Mumbai where real estate is premium, redevelopment is the best possible option for builders, developers as well as buyers. In Mumbai, as land is hardly available (which translates into high cost of acquisition) , it is only redevelopment that provides and paves the way for a land bank to be created. It is also a profitable model that helps in rationalizing all outflow towards development and thereby arriving at a sale value that is competitive in an overtly price sensitive market . In the recent past, several builders have taken up massive redevelopment works of old dilapidated buildings owing to incentives offered by the government.
The trend will continue as the builders will benefit from the government’s recent relaxation of floor space index (FSI). For redevelopment projects, builders get higher FSI of up to 4, compared with 1.33 in island city and 1.00 in suburbs. This is one of the major factors that is driving builders to take up redeveloped projects.
How do you see TDR prices going forward?
We have observed a large number of project launches in the suburbs. If the same trend continues, TDR prices will see an escalation to the tune of nearly 10-12%.
Brief us about your financials?
We have sufficient net worth and have got financial closure for our five major upcoming projects. During the year 2010-11, we expect our top lines to be around Rs3.5bn with 20% profit margins.