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ORBIT IN THE NEWS

21 April 2011

CEO & Managing Director, Pujit Aggarwal speaks to IIFL

Replying to Anil Mascarenhas of IIFL, Pujit Aggarwal says, “Investors investing in realty sector should increase their investment time horizon as quarter on quarter financial performance of a realty company may not be an appropriate parameter to judge its true value.”

 

Brief us on the ongoing projects that are under development?
Orbit Corporation Limited has eleven ongoing projects of which one is commercial in nature. Each project is a masterpiece in itself and a true landmark. The locations selected are top-of-the-crop and are addresses that customers desire to own and take utmost pride in.
Today, the company has to its credit four prestigious awards: Realty Plus Award for ‘Luxury Project of the Year’ – Orbit Arya, CNBC Awaaz CRISIL CREDAI Real Estate Award for ‘Best Residential Property’ – Villa Orb, Accommodation Times Award for ‘Premium Residential Property of the Year’ – Villa Orb and Realty Plus Excellence 2010 Award for ‘Developer of the Year – Residential’.

The portfolio of ongoing residential projects comprises 

Villa Orb Annex, Orbit Arya, Orbit Haven and Orbit Ocean Parque at Napeansea Road

Orbit Enclave at Prarthana Samaj

Orbit Laburnum at Gamdevi

Orbit Grand, Orbit Eternia & Orbit Terraces in Lower Parel

Orbit Residency Park at Andheri Saki Naka

Orbit JSW House, our commercial project, at BKC

Orbit Enclave is a 39 storeyed, vaastu and aura conformed residential tower of finer design and aesthetic appeal with open decks. 304 grade stainless steel water supply pipes, high end security systems and enhanced structural safety against earthquakes make Orbit Enclave not just a lavish pad but also a secure place to live in. Choice of apartments from the 27th floor onwards provides for a panoramic view from every room. Every owner will have complete access to a health club with fitness centre and swimming pool.

Orbit Haven is an exclusive 33 storeyed residential tower with duplex apartments of international zest. With its attached sky gardens and double height terraces, one can expect to pamper one’s sight with a conspicuous view of the ocean on one side and the city on the other. 

First habitable floor begins from the 16th floor onwards. Erected with stainless steel reinforcement bars, each carefully crafted home conforms to vaastu and aura. Every owner will have complete access to a health club, swimming pool, landscaped garden and children’s play area. An exclusive lounge too awaits to cosset not just the residents but their guests as well.

Villa Orb is a 28 storey residential tower with exquisite ocean facing apartments – one on each floor. The first habitable floor starts from ninth floor onwards, giving each and every apartment owner an ocean view from all rooms. The building comprises 4BHK homes with study area, with an apartment size of approximately 7,700 sq. ft. The building will host a Seven Star Health Club with swimming pool, gymnasium, approx. 10,000 sq. ft of landscaped garden; children’s play area and a state-of-the-art lounge.

Specifically in Mumbai and adjoining areas, what is the area under development? 

We are a Mumbai Metropolitan Region (MMR) focused real estate developer. Currently, the area under development in Mumbai is approx.1.3 million sft. Apart from this, we are also developing a Gated Community Township, “Orbit Mandwah”, in Alibaug which is proposed to be developed over 200 acres of land. The first phase of Orbit Mandwah is estimated to generate ~ 1 million sft saleable area.

Brief us on your financials and what is the outlook? 

The company’s total income for Q3-FY11 stands at Rs1150mn, an increase of 16.4% compared to Q2-FY11.The company’s profits in Q3-FY11 increased to Rs231mn from Rs160mn in Q2-FY11. The company recorded fresh sales of 62,158 sft for a value of Rs1335mn in Q3-FY11.

Our pipeline will help us to continuously churn out projects in prime locations of MMR, thus giving us a robust order book, and a strong visibility on revenue and profit growth in the future years.

What are the growth factors you see which will hold the company in good stead? 

Orbit Corp. Ltd. has a strong pipeline of about 0.9 million sft saleable area for premium luxury homes in South Mumbai alone. The property rates in this location typically range between 60,000 - 80,000 rupees per square feet. We also have a project under pipeline in Santacruz which will add 0.6 mn sft to our portfolio. Additionally, we are planning a very large scale development in Lalbaug to be executed in a phased manner. 

Orbit has been selectively identifying opportunities for participation from strategic investors at the project level to help fund the growth. High level of effort is being put in multiple areas like human resources and enhancement of execution capability to be ready to ride this new phase of growth.

What is the demand-supply gap in South Mumbai? 

The shortage of supply in South Mumbai shall continue due to lack of fresh land supply. Additionally, the demand for good quality residential projects has been persisting for a long time. Due to constrained supply, the demand remains unmet. Moreover, rising income levels and nuclearisation of families is further fuelling the demand for ultra-premium housing in South Mumbai.

With mega projects and high rise buildings being announced in Mumbai, do you see a supply glut? Would the current prices be sustainable? 

Excessive supply in Central Mumbai, particularly in areas like Lower Parel, was expected in the wake of announcement of several new projects during the past 9-12 months. Due to this, we were already witnessing price softening in this region. But owing to change in the market dynamics during past 3 months, owing to various commercial and regulatory reasons, expected supply in Central Mumbai in the next 4 years could get extended to 7 years. Keeping these developments in mind, we believe the prices would largely be stable or see a marginal decline.

However, prices in South Mumbai have been stable and we believe, owing to demand supply scenario in this micro-market, the situation is likely to remain the same going ahead. 

Is there a need for a Regulator? What kind of regulatory changes do you seek? Suggestions especially on improving the financial aspects? 

There is a pressing need for a regulator for the real estate sector to encourage transparency and quicker resolution of grievances and setting up reforms like single window clearance, digitization of land records etc. The sector today should be conferred Industry status, given its contribution to the GDP and the employment that it generates.

Financial stimulus needs to continue in order to maintain and sustain the current growth rate of the sector. REIT/REMF structures need to be refocused on to yield assets.

A single tax regime should be developed for the sector, which brings uniformity in the nature and quantum of tax payable by the customers and the developers. There should be effective incentives, fairer taxation and market friendly policies to encourage the private sector to contribute to the infrastructure investment requirement of the economy. It’s about time to expand the definition of infrastructure under Section 80 (IA) and award infrastructure status to townships. Tax breaks under Section 80 IB (10) for housing development and creation of a dedicated housing fund should be provisioned. Also, Tax deductions can be extended to builders incorporating energy efficient technologies and materials.

Even the FDI norms in real estate needs to be relaxed such as minimum investment limit and minimum area for the project in metropolitan cities like Mumbai, Delhi etc.

We believe that the limits for loans that are qualified for affordable housing should be revised based on the prevailing market conditions in the respective cities. A continuous supply in affordable housing can be ensured through Special Residential Zones (SRZ), complimented by strict monitoring and project execution, proper infrastructure, concessions in taxes and duties, and rational FSI.

There should be an increase in the limit of housing loan repayment and interest payable for the purpose of tax exemption for individuals.

What growth initiatives have you planned?

Orbit Corp. Ltd. has a strong pipeline of about 0.9 million sft saleable area for premium luxury homes in South Mumbai alone. The property rates in this location typically range between Rs60,000-80,000 per square feet. We also have a project under pipeline in Santacruz which will add 0.6mn sft to our portfolio. Additionally, we are planning a very large scale development in Lalbaug to be executed in a phased manner. 

Orbit has been selectively identifying opportunities for participation from strategic investors at the project level to help fund the growth. High level of effort is being put in multiple areas like human resources and enhancement of execution capability to be ready to ride this new phase of growth.

What are the latest trends that you are witnessing in the real estate market? 

Good quality real estate has been available in a large quantity only since 2007 and so the latent demand is kicking in. There is genuine demand from premium house segment and supply has been scant.

The phase post slowdown has influenced the sales by leaps and we are moving ahead with newer projects, setting up higher standards of luxury and exclusivity.

Niche and luxury segments are driven by the badge value, which is intrinsic to the quality and uniqueness of the product one offers. Customers are usually willing to shell higher premiums to possess this value. Only handfuls have made their mark in the luxury segment. The key driving factors that propel one to buy an Orbit home is its sift location, construction quality, trust, value addition and above all, the Orbit brand, which over the last few years has evolved to be one of the finest in the Island city.

What is the mix between residential and commercial projects? How do you see the pie changing? 

Our primary focus is on developing high-end residential and "built-to-suit" commercial properties. We have two commercial properties in our portfolio out of which one has already been delivered and the other is under construction. Going ahead, we shall keep our focus in the residential properties primarily.

What is your message to shareholders?

My suggestion to the investors investing in realty sector is to increase their investment time horizon as quarter on quarter financial performance of a realty company may not be an appropriate parameter to judge its true value. Some of the critical factors to judge a company are its transparency, disclosure policies and investor friendly practices.

With a handful of developers operating in the luxury segment, the future looks bright. However what differentiates Orbit from others is it’s phenomenal, well-chosen and sift location, iconic architecture, proprietary construction material, construction quality and Orbit brand which has evolved to be synonymous in the super luxury category. With higher demand and limited credible developments, the distinction can be sought by customers. Hence, for Orbit the future is not just bright, it is a vision beyond. 

 

As published in the IIFL website.

 
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